THE CODE ON WAGES ,2019, THE RULES, 2020 FRAMED THERE UNDER &  ITS ACQUIESCENCE THEREOF

The Second National Commission on Labour reform has submitted its report in June’2002 , had recommended that existing labour laws should be broadly amalgamated the following groups , namely : (a) Industrial Relations;

(b) Social Security;

(d) Safety; and 

(e) Welfare and working conditions. 

In order to rationalize , simplify , streamline and amalgamate into four following categories ( Codes): 

1. The Code on Wages, 2019 
2. The Code on Social Security ,2020 
3. The Industrial Relations Code ,2020 
4. The Occupational Safety, Health and Working Conditions Code,2020 

Labour and Employment domain has seen enactment of some new legislations post the independence and there were some amendments in the existing legislations too. But no major reformation happened in the Labour Laws field. Fortunately, one such thing is being attempted now. Of course, even now, it is happening only in the central sphere. 

The existing 29 central legislations in the field are now getting compressed into just four labour codes, of course, without compromising on the essence of it. These codes, when implemented, would take in its purview the workers in the unorganized sectors too. The concept of minimum wages will now be applicable to all types of industries. The scope of the codes is thus getting widened. Permission for Fixed Term Employment, increase in threshold limit for applicability of Standing Orders Act, Factories Act, Contract Labour Act, current Chapter VB under ID Act, etc. should work in favour of the Managements. Allowing the industries to submit applications or returns, to maintain statutory registers, to remit statutory contributions and to make payments ( of salary, bonus, etc. ) to the workers electronically should ideally ease the otherwise complicated procedure. Some of the key terms are expected to have uniform definition in all the four codes. The quantum of penalty is substantially increased in order to lay emphasis on ‘compliance’. The sessions are arranged to discuss the key changes that are likely to be brought about by the codes and the possible implications

THE CODE ON WAGES, 2019

The Code on Wages ,2019 is an amalgamation of the four Central Labour Laws relating to “Wages & Bonus” i.e.
(a) The Payment of Wages Act,1936 ;
(b) The Minimum Wages Act,1948
(c) The Equal Remuneration Act,1976

(d) The Payment of Bonus Act,1965

APPLICABILITY :

This Code will apply to the whole of India, to all employees and workers, without providing a threshold limit of employees/workers. However , as per Section 41 (2) of the Code, 2019 , the payment of Bonus will apply only for those establishments, having 20 or more persons with certain exemption clause. 

THIS CODE IS HAVING 9 CHAPTERS AND 69 SECTION WHICH CAN  BE CALSSIFIED AS UNDER :  

• Chapter-I : Section 01 to 04 : Preliminary guide-lines in respect of  applicability , definitions & Section 3 & 4 are connected to the Equal  Remuneration; 

• Chapter-II : Section 05 to 14 : Minimum Wages; 

• Chapter-III : Section 15 to 25 : Payment of Wages;

• Chapter-IV : Section 26 to 41 : Payment of Bonus; 

• Chapter-V : Section 42 : Formation of Advisory Board;

• Chapter-VI : Section 43 to 50 : Payment of Dues, Claim;

• Chapter-VII : Section 51 : Inspector Cum Facilitators;

• Chapter-VIII : Section 52 to 56 : Offence & Penalties;

• Chapter-IX : Section 57 to 69 : Miscellaneous 

Important Definitions: Section 2 (a) to (z) 

Section 2 (y) "wages" means 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, —

(i) basic pay;

(ii) dearness allowance; and

(iii) retaining allowance, if any,

but does not include––

(a) any bonus payable under any law for the time being in force, which does not form part of the remuneration payable under the terms of employment; 

(b) the value of any house-accommodation, or of the supply of light, water, medical attendance or other amenity or of any service excluded from the computation of wages by a general or special order of the appropriate Government;

(c) any contribution paid by the employer to any pension or provident fund and the interest which may have accrued thereon;

(d) any conveyance allowance or the value of any travelling concession;

(e) any sum paid to the employed person to defray special expenses entailed on him by the nature of his employment;

(f) house rent allowance;

(g) remuneration payable under any award or settlement between the parties or order of a court or Tribunal;

(h) any overtime allowance;

(i) any commission payable to the employee;

(j) any gratuity payable on the termination of employment;

(k) any retrenchment compensation or other retirement benefit payable to the employee or any ex gratia payment made to him on the termination of employment:

Provided that, for calculating the wages under this clause, if payments made by the employer to the employee under clauses (a) to (i) exceeds one-half, or such other per cent. as may be notified by the Central Government, of the all remuneration calculated under this clause, the amount which exceeds such one-half, or the per cent. so notified, shall be deemed as remuneration and shall be accordingly added in wages under this clause: Provided further that for the purpose of equal wages to all genders and for the purpose of payment of wages, the emoluments specified in clauses (d), (f), (g) and (h) shall be taken for computation of wage.

Explanation. ––Where an employee is given in lieu of the whole or part of the wages payable to him, any remuneration in kind by his employer, the value of such remuneration in kind which does not exceed fifteen per cent. of the total wages payable to him, shall be deemed to form part of the wages of such employee;

IMPORTANT : The wages should be more than 51% of the gross wages. Thereby, the  employer may fix at least 51% as basic wages + DA & rest 49% can be fixed other  components as enumerated in exclusion clause of 2(y) of b, d, e, f & i of the Code,2019.  However , no bifurcation of the minimum wages , either notify by the Central Government or  the State Goverbment , should be done for reducing the further statutory benefits of the  employees. 

Section 2 (z) "worker" means any person (except an apprentice as  defined under clause (aa) of section 2 of the Apprentices Act, 1961)  employed in any industry to do any manual, unskilled, skilled, technical,  operational, clerical or supervisory work for hire or reward, whether the  terms of employment be express or implied, and includes— 

(i) working journalists as defined in clause (f) of section 2 of the Working  Journalists and other Newspaper Employees (Conditions of Service) and  Miscellaneous Provisions Act, 1955; and 

(ii) sales promotion employees as defined in clause (d) of section 2 of the  Sales Promotion Employees (Conditions of Service) Act, 1976, and for the  purposes of any proceeding under this Code in relation to an industrial  dispute, includes any such person who has been dismissed, discharged or  retrenched or otherwise terminated in connection with, or as a consequence  of, that dispute, or whose dismissal, discharge or retrenchment has led to  that dispute, 

but does not include any such person  

(a) who is subject to the Air Force Act, 1950, or the Army Act, 1950, or  the Navy Act,1957; or 

(b) who is employed in the police service or as an officer or other  employee of a prison; or 

(c) who is employed mainly in a managerial or administrative capacity;  or 

(d) who is employed in a supervisory capacity drawing wage of  exceeding eighteen thousand rupees per month or an amount as  may be notified by the Central Government from time to time: 

Worker: Designations , Nomenclature & Salary limit are not real  test of the worker definition or any consequence and also drawing 

wages above Rs. 15000/- pm will not take any person outside the  ambit of term “worker”. 

The true test is the nature of duties and not the designation.  A pilot drawing Rs. 2,00,000/- per month will be a ‘worker’ but a  ‘Foreman’ performing supervisory functions and drawing Rs.  20000/- will be outside the scope of ‘worker’. 

Glaxosmithklin case 2007(3) SCT 822; S.K. Maini Case 1994(3)  SCT 312; Burma Shell Oil case 1971 AIR (SC) 922 (F.B. SC);  Sandoz (I) Ltd case 1994 AIR (SC) 2608 (C.B.) SC]. Sanjeev  Kumar Gupta Vs. PO Labour Court , 2001 LLR 378 ( P& H HC),  Manganese Ore (India ) Ltd. Vs. UOI , 2001 LLR 1135 ( Bom. HC ). 

(e) An employee though designated as Account Officer but doing  job of clerical nature , will be workman (worker) 2003 LLR  595 ( Mad. HC)  

Section 2(k) 'Employee' means any person (other than an apprentice  engaged under the Apprentices Act, 1961), employed on wages by an  establishment to do any skilled, semi-skilled or unskilled, manual,  operational, supervisory, managerial, administrative, technical or clerical  work for hire or reward, whether the terms of employment be express or  implied, and also includes a person declared to be an employee by the  appropriate Government , but does not include any member of the Armed  Forces of the Union;.  

 IMPORTANT 

All employees including Supervisors / Managers may also get protection for  “Non-payment of Wages or Less Payment of Wages” or illegal deduction of  wages” from their salary which were not available in the existing Acts to  these categories of employees i.e. Managers/ Supervisors etc. However , the  Central Government is having power to decide the salary limit. 

 Definitions in short : 

• Accounting year (AY) : April to March  

• Appropriate Government (AP) : For the Central Government  organisation/establishment , AP is the Central Government (CG). For  State’s owned organisation, State Government . 

• Contractor : A person who undertakes to produce a given result for  the establishment except supply of Good ( Supplier /Vendor) shall be  treated contractor. 

• Contractor-Labour: Except part time employee , all labour  employed in or in connection of the establishment will be treated  Contractor Labour including inter–state migrant worker  

• Establishment : means any place where any industry ,trade,  business , manufacture or occupation is carried on and includes  government establishment 

COMPARISION BETWEEN THE CURRENT LAWS AND & THE CODE ON  WAGES 

Provision	Current laws	The Code on Wages,2019
Coverage	• Minimum Wages are  fixed based on  scheduled employment.  • Payment of Wages  Act: Applies to  employees whose  wages do not exceed Rs  24,000 per month.	• Minimum wages will be  applicable to all  establishments without any  limitation of scheduled  establishments  • Payment of Wages will apply  to all employees ,without having wages limit. However  , the Central Government is  having power to fix the rider  of wages limit by issuing  notification.

	• Payment of Bonus  Act: Applies to  employments with 20  or more persons and  for employees whose  wages do not exceed Rs  21,000 per month.	• Bonus will apply to  employees whose wages do  not exceed a monthly  amount notified by Central or  State Governments, means,  the Central Government is  having power to fix the rider  of wages limit for eligibility  and calculation of bonus  thereof.
Revision of   minimum   wages  Fixation of   Minimum   wages	• Minimum Wages  Act: Minimum wages is  being revised by the  Central or State  Governments at least  once every five years.  • Per day / Per Month	• Mandates that minimum  wages to be revised in five year intervals.  • Per hour / per day / per  month
National   minimum   wage	• No such provision.	•The Central Government may  set a national minimum wage  and may set national minimum  wages for states and regions  separately.  •No employer shall pay less  than minimum wages.  • Central Government shall fix  “ Floor Wages “ ( Section 9),  different floor wage which will  be fixed for different   geographical area into three  categories :  (i) Metropolitan -----More than  40 Lakhs   (ii) Non-Metropolitan -----More  than 10 & less 40 Lakhs  (iii) Rural Area …………… Not

		covered to the above   categories   Floor Wages + DA ( April &  October )   • It is also to be noted that the  according to the Code, the  minimum wages decided by  the central or state   governments must be higher  than the floor wage.  •Central or State government  will review the minimum   wage at an interval of not  more than five years.  •Central or State governments  may take into account factors  while fixing the minimum   wage, (i) skill of workers, and  (ii) difficulty of work.
Overtime   wage	• Extra Wages for over  time : works more than  9 hours or 48 hours in  a week ,   (a) In agriculture  sector: one & half   time   (b) In other Sch.   Employment ,   double the ordinary   rate of wages.	•Sets overtime wage at double  the ordinary rate of wages.
Gender   discrimination	• Equal Remuneration  Act: Prohibits gender  discrimination in wage  payment.  • Prohibits gender   discrimination in   recruitment, transfers,  and promotions.  • No provision for   transgender	• No discrimination in the  establishment on the ground  of gender  (Male/Female/transgender)  • No reduction of the rate of  wages on the basis of gender  ( Male/Female/transgender).
Period of  Limitation for	•Period of limitation for  filing claims by worker	• The period of limitation for  filing claims by worker has

filing claims	under Minimum wages  Act,1948 within 6  months and under the  Payment of Wages  Act,1936 within 12  months	been revised upward to 3  years.
Time line for  Payment of  Wages	• Employers who are  having strength more  than 1000 workers, are  required to pay on or  before 10th day of the  following month, & if  strength less than 1000  employees , are  required to pay on or  before 7th day of the  following month.	•Daily wagers : at the end of  the shift ( same day )  • Weekly at the end of week ,  before weekly off-day  • Fortnightly at the second day • Monthly after expiry of 7 days • When employee is   separated/terminated from job  : within 2 days

INSPECTION : Inspector is now designated as “ Inspector cum Facilitator  and inspection will be done on random basis through web-based inspection  system to remove the “Inspector-Raj”.  

OFFENCE & PENALITIES: 

• Complaint can be filed by following persons before the court ( Judicial  Magistrate of the First Class ) for taking cognizance :  

• Employee  

• Trade Union  

• Inspector cum Facilitator 

REASONS OF COMPLAINT : 

1.

• Non-payment of due  wages /bonus or less   payment of wages /bonus  • Repetition of similar  offence or subsequent   offence within period of  five years

• Fine up to Rs.50 K  • Fine up to 1 Lakh or 3   months punishment or both

2.	• Contravenes of Code /  Rules	• First violation : Fine Rs. 20  K   • Second violation :   Repetition of similar offence  or subsequent offence   within period of five years -- Rs.40 K or 1 month   punishment or both
3.	• Non-maintenance of   Registers /Records	• Fine : Rs.10 K

• Before filing complaint , show cause Notice is must be issued to the  employer : 

• Above offence is compoundable. 

IMPORTANT : 

• If an employer is charged with an offence under provisions of the  Code,2019 , the employer may bring actual offender for the for  implementing the Code /Rules or officer who is or was responsible to  follow the Code /Rules , then on making documentary evidence before  the court , actual offender will be punished and the employer will be  discharged accordingly. 

The Code on Wages Rules, 2020 : 

The Ministry of Labour and Employment has already drafted the Code on  Wages Rules,2020 but yet to notify the same along with other 4 Labour  Codes.  

THIS CODE IS HAVING 9 CHAPTERS , 58 RULES , 5 SATATUTORY  FORM AND 5 SCHEDULE WHICH CAN BE CALSSIFIED AS UNDER :  

• Chapter-I : Rule 01 to 02 : Preliminary guide-lines in respect of  applicability , definitions  

• Chapter-II : Rule 03 to 10 : Minimum Wages, Revision of DA  ,Shift working and number of working hours.  

• Chapter-III : Rule 11 to 12 : Manner of fixing of Floor Wages;

• Chapter-IV : Rule 13 to 20 : Payment of Wages and its deduction  procedure etc.; 

• Chapter-V : Rule 21 to 27 : Payment of Bonus and its calculation  procedure; ( Schedule A , B & C i.e. Computation of Bonus)

• Chapter-VI : Rule 21 to 45 : Central Advisory Board;

• Chapter-VII : Rule 46 to 48 : Payment of Dues, Claim;

• Chapter-VIII: Rule 49 to 54 : Forms , Registers & Wage Slip

• Chapter-VIII : Rule 55 to 58 : Miscellaneous ( timely payment of  wages and responsibility of the minimum bonus upon the principal  employer).  

STATUTORY COMPLIANCE WITH RESPECT OF MAINTENANCE OF  REGISTERS , BONUS COMPUTATION & DISPLAY OF ABSTRACT ETC. 

 Section 50 & Rule 50 / 51/ 52 

Form –I, ( Register of Attendance , Wages , OT Fine deduction ) Form IV ( Employee Register ) 

Form V ( Wages Slip )  

Form VI ( Application for composition of offence ) ( As & when )  Bonus ( shall be calculated as per Schedule-A , B & C) ( old system)  Section 45 / 49 & Rule 49 & 50  

Form –II ( Application for dues wages/bonus u/s 45 of the Code,2019 )  Form –III ( Appeal u/s 49 of the Code,2019 )  

Schedule E ( connected with category of Unskilled /Semi skilled /Skilled  /Highly Skilled ) 

Display abstract of this code : Display abstract of this code , category wise wage rate, wage period, day or date & time of payment of wages, name & address of Inspector–cum-Facilitator should be done by the  employer at Karamchari Gate/Notice Board.  

UNPAID WAGES / UNPAID BONUS/ UNDISBURSED DUES ( Important )  Rule 46 : In case , nominee 

Non-payment of wages due to death of employees or whereabouts is not known and the employer is unable to pay the nominee, then such unpaid wages after expiry of three months , has to be transferred to the Dy. Chief Labour Commissioner .

Rule 47 : In case , no nominee  

Non-payment of wages due to death of employees or whereabouts is not known and the employer is unable to pay because of no nominee, then such unpaid wages after expiry of six months , has to be transferred to the Dy. Chief Labour Commissioner of the respective zone.

Author - Mr. S K Gupta,Advocate, Supreme Court,Delhi - skpfdelhi@gmail.com