The Code on Wages

2019

India’s first step towards

Consolidation of Labour laws
 Evolution Of The Wage Code

MARCH 10, 2015 DECEMBER 18, 2017 JULY 24 & JULY 30, 2019
Draft of Wage Code The Bill lapsed with New Bill (Code on Wages
was discussed in the dissolution of the 16th 2019) introduced and
first tripartite meeting Lok Sabha passed by the Lok Sabha

MARCH 21, 2015 AUGUST 21, 2017 AUGUST 2, 2019

Draft Wage Code was The Bill was referred The Code on Wages
placed for public to a Parliamentary 2019 was passed by
consultation Standing Committee Rajya Sabha

AUGUST 10, 2017 AUGUST 8, 2019

APRIL 13, 2015 The Code on Wages 2019
Second Tripartite Wage Code Bill was received Presidential
first introduced in the assent & was published
discussion
Lok Sabha in the official Gazette

2
 PAYMENT OF
WAGES ACT

CODE
PAYMENT OF MINIMUM
BONUS ACT
ON WAGES ACT
WAGES

EQUAL
REMUNERATION
ACT 3
Why does India need a Wage Code?

1. India has approximately 44 Central and 100 state

specific Labour Laws.
2. Present minimum wage system is complex with
states fixing rates for 1709 and centre for 45
scheduled employments
3. Bring down 2000 plus wage rates to as low as
possible.
4. Rationalize Penalties and accordingly increase
implementation

4
Why does India need a Wage Code?

5. Remove Multiple definition and Authorities

6. Expand the ambit of Law
7. 33 % of wage workers were paid less than the
indicative minimum wage as per Ministry of
labour.
8. Give the right to Minimum wages to entire 50
crore workforce (except MNREGA workforce)

5
STRUCTURE- Code on Wages

6
 CHAPTER I- Applicability of Code on wages

Minimum Wages Act

Payment of Bonus Act

Equal Remuneration Act

• Applicable to all • Only to • Applicable to
Payment of Wages Act
• Applicable to
defined/ industries and scheduled every
notified types of industries & employer
industries establishment employment • No limitation
• To persons hiring 20 or • No on industry
earning up to more persons dependence or no. of
Rs 24000 • To persons on no. of person
salary per earning up to Rs persons employed or
month 21000 salary employed or salary paid to
per month salary paid to them.
them

- Concept of scheduled
- Number of employed
Under Code -Applicable to all industries person Unchanged industries & employment
removed No Change
-Salary Threshold removed - Salary Threshold to be
notified - Now made applicable to
all

7
 CHAPTER I- Preliminary

Appropriate Government
 Central Government
(i) an establishment carried on by or under the authority of the Central
Government
(ii) railways, mines, oil field, major ports, air transport service,
telecommunication, banking and insurance company
(iii) a corporation or other authority established by a Central Act
(iv) a central public sector undertaking or autonomous bodies owned or
controlled by the Central Government, including establishment of
contractors
 State Government , in relation to any other establishment
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CHAPTER I- Preliminary

Employee Worker
Any person employed on Any employee EXCLUDING (I)
wages by an someone who is employed
establishment to do any mainly in a managerial or
skilled, semi-skilled or administrative capacity; or (ii)
unskilled, manual, someone who is employed in a
supervisory capacity drawing a
operational, supervisory,
monthly wage exceeding INR
managerial, 15,000 or such amount as may
administrative, technical be notified by the Central
or clerical work for hire or Government.
reward
Under The Code, all workers are employees but
all employees are not workers

9
 CHAPTER I- Preliminary

Contractor Contract Labour

A person who, A worker who shall be hired in or in
(i) undertakes to produce a given connection with such work by or
result for the establishment, through a contractor, with or without
the knowledge of the principal
other than a mere supply of
employer and includes inter-State
goods or articles of manufacture migrant worker but EXCLUDES who is
to such establishment, through regularly employed by the contractor
contract labour; or and (ii) gets periodical increment in
the pay, social security coverage and
(ii) Supplies contract labour for other welfare benefits
any work of the establishment as
mere human resource and
includes a sub-contractor.

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 CHAPTER I- Preliminary

Employer Establishment
A person who employs, Any place where any industry,
whether directly or through trade, business, manufacture or
any person, or on behalf of occupation is carried on and
any person, the authority
includes Government
specified for deptt carried by
central or state govt., by the establishment;
head of such department, in
this behalf or where no
authority, is so specified
following includes: contractor,
legal representative of a
deceased employer.

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 CHAPTER I- Preliminary (EQUAL REMUNERATION)

Do Not Discriminate on Grounds of Gender

Equal Remuneration Act Code on Wages
• Employer to equal remuneration to men & • There shall be no discrimination in an
women workers for same work or work of establishment or unit thereof among
a similar nature employees on the ground of gender in
matters relating to wages by the same
employer, in respect of the same work
or work of a similar nature done by any
employee.

 In light of the recent passing of the Transgender Persons (Protection of Rights) Bill
2019 by the Lok Sabha it is expected that the Code on wages would include
transgender employees within its purview.

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 CHAPTER II- Provisions Related To Minimum Wages

Applicable to all employments


Fixation of Minimum Wages

Time-work (Minimum Time Rate)

Piece-work (Minimum Piece-Rate)

Minimum time-rate for piece-rated work (Guaranteed time rate)

Minimum Wage Rates may be

By the hour
Where rates are fixed by hour or day or

By the day the method of calculating wages shall be

By the month

Wages for 2 or more classes of work to be paid in respect of the
time respectively occupied in each class at not less than the
minimum rate in force in respect of each such class. 13
 CHAPTER II- Provisions Related To Minimum Wages


Power of Central Government to fix Floor Wages

National Minimum Floor Level Wage is now statutory

No minimum wage to be lower than Floor Wages

Minimum wages will not be reduced if they are higher than Floor
Wages

Method of fixing minimum wages (draft central rules)

Originates in the ILC’s recommendation (1957) and SC Judgment
(1992)

Based on the principle of household needs (includes )

food, clothing, housing rent(10%), fuel, electricity and miscellaneous
(20%)

Children’s education, medical requirement, minimum recreation
14
(25%)
 The CII (Confederation of Indian Industry) said that the states
should have the power to determine minimum wages as
the concept of a national minimum wage will affect job
creation.

An expert committee constituted by the Ministry of Labour

and Employment had proposed Rs 375 a day or Rs 9,750 per
month as a single national minimum wage at an all-India
level. It also suggested an alternative: a range of minimum
wages — from Rs 8,892 to Rs 10,036 — for different regions.
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 CHAPTER III- Provisions Related To Payment Of Wages

All remuneration whether by way of salaries, allowances or otherwise,

expressed in terms of money or capable of being so expressed which
would , if the terms of employment, express or implied, were fulfilled,
be payable to a person employed in respect of his employment or of
work done in such employment, and includes,—
a)basic pay; b)dearness allowance; c)retaining allowance, if any
exclusions under wages:

Provident fund, pension Value of any house Conveyance allowance/ value of

and interest accrued accommodation travelling concession
thereon
Sum paid to defray special Commission Remuneration payable under
expenses Other Retiral Benefits any award or settlement (New )
Gratuity Other Retiral Benefits Overtime (New)
Retrenchment HRA Bonus ( New)

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 CHAPTER III- Provisions Related To Payment Of Wages
• Time for paying wages
Wage Period Time for payment Prescribed in Code on Wages
under existing Act
Daily At the end of shift
Weekly Last working day of the week
Not Prescribed
Fortnightly Before end of 2nd day after
fortnight
Monthly (Less than 1000 7th of every month
Employees)
7th of every Month
Monthly (More than 1000 10 of every month
th

Employees)
If removed, dismissed or resign Within 2 working days

• Method of Payment of Wages

Code Consistent with current Payment of bonus is to be
on legislations and Electronic paid only electronically in
Wages & Digital mode the bank account

Current Coin or currency notes, or

through cheque or bank
Act a/c
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 CHAPTER IV- Provisions Related To Payment Of Bonus

Eligibility - Drawing wages not exceeding such amount per

mensem, as determined by notification. Has put at least 30
days work in an accounting year
Bonus - 8.33% of the allocable surplus or Rs. 100,
Disqualification- Now also includes Conviction for sexual
harassment in consistent with other provisions of Payment of
Bonus Act.
Payment of Bonus - If there is a dispute for payment at the
higher rate, the employer shall pay 8.33% of the wages earned
within a period of 8 months from the close of the accounting year.

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CHAPTER V - Advisory Board

Employer

Women- 1/3rd 5 members of State

of Total BOARD Govt. nominated by
Members central Govt.
COMPRISES
REPRESENTATIVES
OF

Independent
Employee
Person
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ADVISORY BOARD- BEFORE Wage Code

• Advising the appropriate

Minimum Wages Government generally in the
Act matter of fixing and revising
minimum rates of wages

• For the purpose of providing

Equal
increasing employment
Remuneration opportunities for women.
Act

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 CHAPTER V - Advisory Board

The Central Advisory

Board constituted
shall from time to
time advise the
Central Government
on reference of
Any
Fixation
other &matter
revision
Increasing related
of minimum
employment to this
issues relating to–– code
wages
opportunities for women

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 CHAPTER VI- Payment of Dues, Claims & Audit
Heading CoW PoWA MWA PoBA
Responsibility of Employer Employer Employer Employer
payment of
Various Dues
Payment of (a) Nominated (a) Nominated To be (a)Authorized
various person; or person; or deposited by employee
undisbursed (b) deposited (b) deposited with the (b) Heir by
dues in case of with the with the Prescribed application to
death of authority authority authority authority
employee.
Authority Gazetted Officer Commissioner for Labour Collector
undertaking nominated by WC, Officer of Commissione
Claims appropriate CG, Officer of SG, r OR a Judge
govt. Presiding officer of a Civil
of Lab Court or Court
Ind Tribunal,
Judicial
Magistrate

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 CHAPTER VI- Payment of Dues, Claims & Audit

Heading CoW PoWA PWA PoBA

Procedures Filed within a Within 12 within 6 Within 1 year
thereof period of 3 months months
years from the
date on which
claims is due

Audit of Authority Not mentioned Not mentioned Collector may

account of undertaking direct the
employers not claims may employer to get
being direct the his accounts
corporations or employer to get audited
companies. his accounts
audited

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 CHAPTER VI- Payment of Dues, Claims & Audit

Heading CoW PoWA MWA PoBA

Reference to Application & Payment of Paid less than Wrt Bonus
Disputes fixation of wages is minimum payable under
bonus or delayed wages this Act or with
eligibility for OR OR respect to the
payment of Any deductions Paid less than application of
bonus contrary to overtime rate this Act.
provisions of of wages
the act

Application (a) the employee concerned; or

before the (b) any Trade Union registered under the Trade Unions Act, 1926 of
authority which the employee is a member
(c) the Inspector-cum-Facilitator.

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 CHAPTER VI- Payment of Dues, Claims & Audit
Heading CoW PoWA PWA PoBA
Appeal To the Before the Not mentioned Not mentioned
appellate Court of Small
authority Causes and
within ninety elsewhere
days from the before the
date of such District Courts
order within 30 days
of the date on
which the order
was made.

Records, 1. maintain a (1) registers 1. Registers 1. Register &

Returns and register and records 2. Exhibits records as
Notices 2. display a (2) Preserved 3. Wage prescribed.
notice for a period books/slips
3. issue wage of three
slips years

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 CHAPTER VII- Inspector cum Facilitator

 Added with an objective of removing the arbitrariness and

malpractices in inspection
 Inspector-cum-Facilitator may advice employers and
workers relating to compliance with the provisions
 Inspector-cum-Facilitator may inspect the establishments as
assigned to him by appropriate government
 Appropriate government may lay down inspection scheme
 Web-based inspection
 Call for information electronically
• Labour inspectors to be computer-chosen and assigned 1 or
more establishment, irrespective of geographical limits.
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By having every form online, the entrepreneur will hopefully not have
to see the evil face of the dreaded corrupt labour inspector. Not
allowing inspectors to visit an entrepreneur except when the computer
picks up an anomaly is theoretically a good idea. It has been in practice
in the income tax department for some time, but citizens have reported
that in practice officers and inspectors find a way to get around it. –
Gurcharan Das
Author and former CEO of P & G India

Since the abour inspector is now merely

a ‘facilitator’, it gives discretion to the
inspector-cum-facilitator to negotiate
between workers and employers if there
is a grievance.
Ritesh Sharma
Labour rights lawyer
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 CHAPTER VIII- Offences & Penalties

OFFENCE PENALTY (COW) PENALTY (BEFORE COW)

pays to any employee less Fine upto  ₹ 50000 Max fine ₹500 Or/ &
than the amount due Imprisonment of 6 months
pays to any employee less Fine upto ₹1 Lakh Max fine ₹22500.
than the amount due for Or/& Imprisonment Or/ & Imprisonment of 1-
the 2nd time in 5 years upto 3 months 6 months
Contravenes any other Fine upto ₹20000 Fine upto ₹10000 Or/ &
provision of wage code Imprisonment of 1 years
Contravenes any other Fine upto ₹40000 Max fine ₹7500.
provision of wage code 2nd Or/& Imprisonment Or/ & Imprisonment of 2
time in 5 years upto 1 months years
non-maintenance or Fine upto ₹10000 Max fine ₹7500
improper maintenance of
records in the
establishment

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CPM backed CITU says the Code opens the door to longer
working hours and dilutes the inspection and penalty system".

Further the inspector-cum-facilitator must give an

opportunity to the employer to comply with the provisions of
the code before initiating any prosecution.
Ritesh Sharma
Labour rights lawyer
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 CHAPTER IX- Miscellaneous

•Bar on Suits – Courts will not entertain matters that are

related to/have been adjudged/can be recovered under this
code
• Burden of Proof lies on employer whenever a claim is made
related to wages/bonus
• Provisions of Code to supersede any other laws/contracts
• Exemption of employer in cases where he can prove

That he has exercised due diligence

That another person has committed the offence,
without his knowledge
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 Opinions/Reactions

“The fear is that the floor wage might be worse than the market wage rate in
which case the entire purpose of having minimum wages and improving
standard of living collapses,” says KR Shyam Sundar of XLRI, Jamshedpur.

The Federation of Indian Chambers of Commerce and Industry (FICCI)

says the Code should apply only to blue-collar workers with a salary ceiling.
Enforcing floor-level wages or minimum wages in such operations will indeed
be difficult.

The Confederation of Indian Industries (CII) said that the states should
have the power to determine minimum wages as the concept of a national
minimum wage will affect job creation.
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 Opinions/Reactions

CITU- "These so-called labour reforms have meticulously removed

and diluted rights for protecting workers, and opens the door to
longer working hours and dilutes the inspection and penalty
system"
Bharatiya Mazdoor Sangh (BMS) calls the Code a historic
legislation.
All India Central Council of Trade Unions (AICCTU) – In COW, the
penalty of imprisonment is done away with, at least in the first
instance of violation”
International Trade Union Confederation (ITUC), world’s largest
trade union federation, has come out with a statement, in
32
solidarity with Indian workers who are resisting the labour codes.
 Analysis of the Code
The Code on Wages now merely awaits its effective dates
as different provisions may have different effective dates.
• Though the minimum wage is yet to be set by the
Central Govt. if it is higher than the current wage rate it
may result in retrenchment.
• Factors such as skill of worker, Geographical area and
nature of work to be taken into account for fixing
minimum wages.
• Overtime and bonus has been excluded from definition
of wages.

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 Analysis of the Code

• There is rise in monetary penalty but penalty of

imprisonment is not there in 1st instance of violation of
any provision in the code.
• Inspector cum facilitator will be computer chosen for
inspecting any establishment.
• Fixing time limit for payment of wages is one major
change from employee’s perspective.
• Given the massive increase in its coverage, especially
concerning minimum wage and payment of wages, the
enforcement of the code will be a challenging task.
• Growth in skill of workers/employees have not been
mentioned in Code on wages
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 What the CODE means for BSL ?

• Now payment till 7th in place of current 10th

• Appropriate Govt to be central govt.. Earlier it was
state government.
• Inspector cum facilitator & establishment to be
inspected to be web based.
• Higher minimum wage will affect the estimate rate
for contractual workers.
• Now, Burden of Proof lies on Principal Employer
whenever a claim is made related to wages/bonus .
• Now Overtime will be payable proportionately, right
after the end of regular working hours. 35
 CODE on WAGES- Section 50

50.(1) Every employer of an establishment to which this Code applies shall maintain a register
containing the details with regard to persons employed, muster roll, wages and such other details in
such manner as may be prescribed.

(2) Every employer shall display a notice on the notice board at a prominent place of the
establishment containing the abstract of this Code, category-wise wage rates of employees, wage
period, day or date and time of payment of wages, and the name and address of the Inspector-cum-
Facilitator having jurisdiction.

(3) Every employer shall issue wage slips to the employees in such form and manner as may be
prescribed.

(4) The provisions of sub-sections (1) to (3) shall not apply in respect of the employer to the
extent he employs not more than 5 persons for agriculture or domestic purpose: Provided
that such employer, when demanded, shall produce before the Inspector cum- Facilitator, the
reasonable proof of the payment of wages to the persons so employed.

Explanation.—For the purposes of this sub-section, the expression "domestic purpose" means the
purpose exclusively relating to the home or family affairs of the employer and does not include any
affair relating to any establishment, industry, trade, business, manufacture or occupation. 36
 Mr. X is a high ranking marketing executive at A4 Ltd.
(a paper manufacturing company)

He has been given a company accommodation with sprawling

garden area.

As he travels most of the days for work, he has

engaged 2 full time domestic helpers to help him
with household chores like cleaning and cooking.

Mr. X loves gardening and has many fruit trees planted.

Throughout the year, during various fruit ripening
seasons, Mr. X engages additional 5-6 domestic
helpers to pluck fruits and make them into pickles, jams,
etc. to distribute among his friends and family.
Q1. Do these domestic helpers come under the purview of Code on
Wages?
Q2. If Yes, who will be liable to pay them? The Mr X, who have
engaged them or the owner of A4 Ltd.?
Q3. If liability falls on the Mr X, will he be subject to maintain
documents under section 50 of the Code on Wages?
Q4. Will any offence or penalties be imposed on the Mr X engaging
them, in case there has been found any anomaly? If No, then Why?
Q5. Who will be the authority to which complaint will be registered?
 Draft Rules
Code on wages
 Draft Rules

The minimum rate of wages shall be fixed on the day basis

keeping in view the following criteria* , namely:-
i. the standard working class family which includes a
spouse and 2 children apart from the earning worker; an
equivalent of 3 adult consumption units;
ii. a net intake of 2700 calories /day per consumption unit;
iii. 66 meters cloth per year per standard working class
family;

40
 Draft Rules

iv. housing rent expenditure to constitute 10 % of food

and clothing expenditure;
v. fuel, electricity and other miscellaneous items of
expenditure to constitute 20 % of minimum wage; and
vi. expenditure for children education, medical
requirement, recreation and expenditure on
contingencies to constitute 25 % of minimum wages;

41
The BMS wants the government to tweak the
current formula to consider six units as a family
as opposed to the current three.

42
 Draft Rules

• Central Government shall divide the concern geographical

area into three categories, that is to say the metropolitan
area, non-metropolitan area and the rural area.
• Introduction of a technical committee for classification of
occupation or national skills qualification frame work or
other similar frame work for the time being formulated to
identify occupations.
• The number of hours which shall constitute a normal
working day, shall be 9 hours.
• The working day of an employee, inclusive of the intervals
of rest, shall not spread over more than 12 hours on any
day. 43
 Draft Rules

• An employee shall be granted-

– (a) for rest day wages calculated at the rate applicable to the
next preceding day; and
– (b) where he works on the rest day and has been given a
substituted rest day, then, he shall be paid wages for the rest
day on which he worked, at the rate applicable to the next
preceding day:
Provided that where-
• (i) the minimum rate of wages of the employee as notified under the
Code has been worked out by dividing the minimum monthly rate of
wages by twenty- six; then, no wages for the rest day shall be payable;
• ‘next preceding day’ means the last day on which the employee has
worked, which precedes the rest day.

44
 Draft Rules

• In case of unavoidable circumstances of work,

– (i) the spread over shall not exceed 16 hours and
– (ii) the actual hours of work excluding the intervals of
rest and the periods of inaction shall not exceed 9
hours.
• Minimum living standards taking into account an
equivalent of 3 adult consumption units including
worker of the family comprising of food, clothing,
housing and any other factors considered appropriate
by the Central Government from time to time for fixing
floor wages which may be revised not exceeding 5 years.
45
Other Codes in the Pipeline

Code on Social Security

and Welfare

Code on Industrial
Relations

Code on Occupational
safety, Health, & Working
Conditions
46
Code on Social Code on Industrial Code on Occupational
Security and Relations safety, Health, &
Welfare Working Conditions
1. The Employees’ Compensation Act, 1923
2. The Maternity Benefit Act, 1961
3. The Payment of Gratuity Act, 1972
4. The Unorganized Workers ’ Social Security Act, 2008(Act No. 33 of 2008);
5. The Iron Ore Mines, Manganese Ore Mines and Chrome Or Mines Labour Welfare(Cess)
Act, 1976(Act No. 55 of 1976);
6. The Iron Ore Mines, Manganese Ore Mines and Chrome Or e Mines Labour Welfare Fund
Act, 1976(Act No. 61 of 1976)
7. The Beedi Workers Welfare Cess Act ,1976(Act No. 56 of 1976)
8. The Beedi Workers Welfare Fund Act ,1976( Act No. 62 of 1976);
9. The Cine Workers Welfare Fund Act ,1981( Act No. 33 of 1981);
10. The Building and Other Construction Workers Cess Act, 1996
11. *Chapters IV and V of the Building and Other Construction Worker’s (Regulation of
Employment and Condition of Service)(BOCW) Act, 1996.
*Note - BOCW Act alread y included in Occupation al Safety, Health & Working Conditions
(OSH) Code.
47
The Code is at pre- legislative stage.
Code on Social Code on Industrial Code on Occupational
Security and Relations safety, Health, &
Welfare Working Conditions

1. The Trade Union Act, 1926

2. The Industrial Employment ( Standing Order’s) Act,
1946
3. The Industrial Disputes Act, 1947
The Code is at post-legislative stage

48
Code on Social Code on Industrial Code on Occupational
Security and Relations safety, Health, &
Welfare Working Conditions
1. The Factories Act, 1948
2. The Plantation Labour Act, 1951
3. The Mines Act, 1952
4. The Dock Workers (Safety, Health and Welfare) Act, 1986
5. The Building and Other Constructions Workers ’ ( Regulation of Employment and
Conditions of Service) Act, 1996
6. The Contract Labour ( Regulation andAbolition) Act, 1970 (except chapter III and IV)
7. The Inter - State Migrant Workmen(Regulation of Employment and Conditions of Ser
vice) Act, 1979
8. The Working Journalists and Other News Papers Employees (Conditions of Serv ice)and
Miscellaneous Provisions Act, 1955.
9. The Working Journalists (Fixation of Rates of Wages) Act, 1958.
10. The Motor Transport Workers Act, 1961.
11. The Sales Promotion Employees(Conditions of Service) Act, 1976
12. The Cine Workers and Cinema Theatre Workers (Regulation of Employment) Act,1981
13. The Beedi and Cigar Workers (Conditions of Employment) A ct, 1966
The Code is at pre- legislative stage 49
Thank you

50