Definition of Wage under Wage Code 2019

[Nash Industries I Pvt Ltd]

The definition of wage under the New labour codes is different from the present labour laws.

As per section 2(88) of the Social Security Code (the definition is the same in all the codes)

Wage 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, to be payable to a person employed in respect of his employment or of work done in such employment , and includes,-

....

but does not include-

..............

Provided that for calculating the wages under this clause,if payments made by the employer to the employee under sub clauses (a) to (i) exceeds one half, or such other per cent as may be notified by the Central Govt, of all the remuneration calculated under this clause, the amount whcih exceeds one half , or the other percent, so notified, shall be deemed as remuneration and shall be accordingly added in wages under this clause

The query is whether the variable pay is to be considered as wages as per the definition to compute the 50% or not.

Request experts view.

Regards

s ramaswamy

[DR.MARIAPPAN GOVINDARAJAN]

The wage does not include the items mentioned in Clause 2(88) (a) to (k). If such payments under exclusive items exceeds 50% or the percentage notified by the Government, then such excess income over the said percentage is to be treated as wages.

For example - Consider the wages of an employee is ₹ 500000/- as per calculation under clause 2(88). If the exclusive items such as bonus, house rent allowance etc., paid in a year is ₹ 300000/-. Then the excess of 50% of wages ₹ 50,000/- (50% of 500000 is ₹ 250000/-; The amount paid under exclusive item is ₹ 300000/-. Then excess amount more than 50% of wages is ₹ 50,000/-

AI Summary

Wage definition threshold: variable pay may be recharacterised as wages if excluded payments exceed prescribed percentage. Whether variable pay is excluded from wages turns on the statutory exclusion list and a threshold rule: excluded payments are not wages unless aggregate payments under those exclusions exceed one half, or another percentage notified by the Central Government, of total remuneration; any amount exceeding that prescribed threshold is to be treated as remuneration and added to wages.