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Code of Wages

The Code of Wages was introduced in Lok Sabha in July 2019 and passed later that month, subsuming four existing labour laws related to wages. Key features of the new code include expanding coverage to all employees, standardizing the wage definition, establishing a floor wage set by the central government that states must meet or exceed, prohibiting payment below minimum wages which will be reviewed every five years, allowing longer work days of up to 12 hours with additional leave, requiring full payment of wages within two days of leaving a job, capping deductions at 50% of wages, entitling employees below a certain wage threshold to an annual bonus, and prohibiting gender discrimination in wages or hiring.

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73 views2 pages

Code of Wages

The Code of Wages was introduced in Lok Sabha in July 2019 and passed later that month, subsuming four existing labour laws related to wages. Key features of the new code include expanding coverage to all employees, standardizing the wage definition, establishing a floor wage set by the central government that states must meet or exceed, prohibiting payment below minimum wages which will be reviewed every five years, allowing longer work days of up to 12 hours with additional leave, requiring full payment of wages within two days of leaving a job, capping deductions at 50% of wages, entitling employees below a certain wage threshold to an annual bonus, and prohibiting gender discrimination in wages or hiring.

Uploaded by

suru1smarty
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Code of Wages, 2019

The Code of Wages was first introduced in Lok Sabha on July 23, 2019 and was passed in the house
on July 30, 2019. Rajya Sabha gave its assent to the code in August, 2019. This code subsumes the
provisions of 04 labour laws of the country, namely, The Payment of Wages Act, 1936, The
Minimum Wages Act, 1948, The Payment of Bonus Act, 1965 and The Equal Remuneration Act,
1976. 

Salient features of the code:

  Coverage – The code will cover all employees including employees in managerial cadre.
The Central Government have the power to take wage-related decisions regarding
employments in sectors such as railways, oil fields and mines, etc. State governments have
the power to take decisions for all other employments.

 Wage Definition – The definition of wages has been standardized under this code. Wages
include salary, allowance or any other kind; however, this does not include HRA, bonus
payable to employees or travel/conveyance allowance of any kind

  Floor Wage – Per this code, the central government would fix floor wages taking into
account living standards of workers. This floor wage would differ on the basis of geographic
location. Consultation with the central advisory board and state governments could be done to
form an optimum floor wage. State governments’ minimum wages must be aligned to the
floor wage and should also be higher than it. In the case where minimum wage is already
higher than the floor wage, government is not allowed to reduce the minimum wage.

 Minimum Wage Fixation – The code prohibits employers from paying below the minimum
wage assigned by the central and state government. The determination of minimum wage
would be done on the basis of criteria such as skill level and geographical region. Also, there
would be a review of minimum wages after every 5 years.

 Overtime and Leave Policy – Under the new code, employers are allowed to increase daily
working hours to 12 hours from 09 hours. However, the employer would need to provide an
additional day off. Thus, when daily working hours are 12, an employee would work for 4
days a week instead of 5.  If an employee works for more than 48 hours a week, he/she is
eligible for overtime payment.
  Settlement Time – Employers are required to pay the full and final settlement within two
days from employee’s last date of working. State governments are allowed to form guidelines
around the time period for full and final settlement.
 Deductions – Employees’ wages may be deducted on grounds of fines, absence from duty,
accommodation given by employer or recovery of advance given to employees. However,
these deductions are capped at a monthly limit of 50% of the total wages.

 ·Bonus Payment – Employees’ whose wages do not exceed the amount specified by central
and state government are entitled for an annual bonus. The bonus has to 8.33% of wages or
Rs 100 whichever is higher. An employee can receive a maximum bonus of 20% of annual
wages

 Gender Discrimination - The Code prohibits gender discrimination in matters related to


wages and recruitment of employees for the same work or work of similar nature.  Work of
similar nature is defined as work for which the skill, effort, experience, and responsibility
required are the same

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