THE CODE OF WAGES 2019A c t N o . 2 9 o f 2 0 1 9 *

The Code of Wages, 2019 has received Presidential Assent on 8th August 2019

The Code of Wages, 2019 (“Code”)The Code has been enacted to amend and consolidate the laws relating to wages and bonus and mattersconnected therewith and incidental thereto.

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Laws consolidated by the Code

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CHAPTER I CHAPTER II CHAPTER III CHAPTER IV

The Equal Remuneration

Act, 1976*

The Minimum Wages Act,

1936*

The Payment of Wages Act,

1936*

The Payment of Bonus Act,

1965*

*These Acts shall be repealed after all provisions of the Code have been notified

Salient Features of the Code

Key Concepts

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Distinction between Employee and Worker

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Employee – An employee isany person who is employed inan establishment for wageswhether the work is skilled,semi-skilled or unskilled,manual, operational,supervisory, managerial ,administrative, technical orclerical in nature

Worker – A worker is anyperson employed in anyindustry whether the work ismanual, unskilled, skilled,technical, operational, clericalor supervisory but does notinclude persons employed inpurely managerial oradministrative capacity orsupervisory capacity drawingwages exceeding INR 15,000/-per month

Relationship between Key Concepts

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Establishment

Industry

Employee

Worker

Genus SpeciesEmployee Workman

Establishment Industry

Industrial Disputes

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Industrial dispute has been defined under Section 2 (q) to include any dispute or difference between –

Employers and Employers

Employers and Workers

Workers and Workers

Dispute between employee and employer are not covered under the Code.

Contours of Industrial Dispute

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Individual Worker

Discharge

Dismissal

Retrenchment

Termination

Employment Non -Employment

Terms of Employment

Conditions of Labour

Concept of Wages

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Wages

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Wha

t it e

xclu

des

Wha

t it i

nclu

des

Sect

ion

2(y)Wages

include allremuneration paid to apersonemployedwhether byway ofsalaries,allowancesorotherwiseforemployment or workdone inrespect ofemployment.

Basic Pay;

Dearness Allowance; and

Retaining Allowance, if any

Bonus payable under law;House accommodation/supply of amenitiesPension or employee PF contributionsConveyance allowanceSpecial expensesRemuneration paid under award or settlementOvertime allowanceCommission payableGratuityRetrenchment compensation/ Retirement Benefit

Excludedpaymentscannot exceedone half of allremunerationor suchpercentagenotified byCentralGovernment.

Key Changes

■ Exclusions from definition widened■ Seems as a response to Supreme Court

judgment specifying amounts paid asremuneration by whatever name calledshall be deemed “wages” unless employercan prove otherwise (available athttps://sci.gov.in/supremecourt/2008/2232/2232_2008_Judgement_28-Feb-2019.pdf)

Minimum Wages

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Minimum Wage Rates

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■ Minimum Wage – Right of every

Employee

■ To be notified by Central Government

■ Rates revised every 5 years

■ Floor Wage for Workers to be fixed by

Central Government

Minimum Wage

Components

Basic Rate + Cost of living

allowance

Basic Rate / Cost of living allowance + cash value of concessions

All of the above

Payment of Wages

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Principles for Payment of Wages

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Mode of paymentWages to be paid in cash or cheque or credit of wages to

their bank account or electronic mode

Time of payment of Wages• End of Shift (Daily Employees);

• Last working day of week (Weekly Employees);

• End of Second day after fortnight (Fortnightly Employees);

• Expiry of 7th day of next month (Monthly Employees.

Deduction of Wages to be made only if authorized under the Code.

Fines on any employee to be imposed only after granting opportunity tobe heard.

Payment of Bonus

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Payment of Bonus – Key Variations

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Bonus to be paid to each

employee subject to wage limit notified by

Government

No change in minimum

rate of bonus

Conviction for sexual

harassment – new

ground for disqualifica

tion for bonus

Distribution of gross profits in

proportion to wages subject to maximum

20%

Departments/ Undertakings/ Branches of an

establishment to be considered as

same establishment

unless separate balance sheets have been filed in the relevant

accounting year.

Does not apply to employees in any public

sector establishment

Authorities and Compliances under the Code

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Competent Authorities

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Functions - Fixation or revision of minimum wages;

- Increasing employment opportunities

for women;

- Hearing of claims arising under the

Code;

- Advice to workers and employers on

compliance with Code; and

- Inspection of establishments

The Advisory Boards shall be represented by employers, employees and independent persons. The

Inspector cum Facilitator will be appointed in each state.

Central Advisory

Board

State Advisory

Board

Inspector cum

Facilitator

Claim Officers

Compliance Requirements

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Maintenance of Registers

Notice at a prominent place of the establishment

Display wage rates, wage period and time of payment

Address of Inspector cum Facilitator

Issuance of Wage Slips

Offences, Penalties and Adjudication

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Categories of Offences and Penalties

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Payment of amounts less than prescribed

by the Code

INR 50,000/-

Imprisonment –3 months or fine INR 1,00,000/-

or both

Contravention of Code or any Rule

INR 20,000/-

Imprisonment –1 month or fine

INR 40,000/- or both

Non – maintenance of records

INR 10,000/-

Cognizance of offence under Code

Complaint under authority of

Central Government

Employee or a Registered Trade

Union

Rights of Employer and Limitation Period

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• Opportunity to be given to rectify the non –

compliance

• Opportunity to be given to produce the

actual offender

• Limitation period for filing claims before

the competent authority enhanced to 3

years

Right of Rectification

Exemption from Liability

Claim Limitation Period

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