THE CODE ON WAGES, 2019 (A Bill - Introduced in the Loksabha)

(Clause by Clause) 

Notes on Clauses - MEMORANDUM REGARDING DELEGATED LEGISLATION

STATEMENT OF OBJECTS AND REASONS

The Second National Commission on Labour, which submitted its report in June, 2002, had recommended that the existing set of labour laws should be broadly amalgamated into the following groups, namely:-

(a) industrial relations;

(b) wages;

(c) social security;

(d) safety; and

(e) welfare and working conditions.

2. In pursuance of the recommendations of the said Commission and the deliberations made in the tripartite meeting comprising of the Government, employers' and industry representatives, it has been decided to bring the proposed legislation. The proposed legislation intends to amalgamate, simplify and rationalise the relevant provisions of the following four central labour enactments relating to wages, namely:-

(a) the Payment of Wages Act, 1936;

(b) the Minimum Wages Act, 1948;

(c) the Payment of Bonus Act, 1965; and

(d) the Equal Remuneration Act, 1976.

3. The amalgamation of the said laws will facilitate the implementation and also remove the multiplicity of definitions and authorities without compromising on the basic concepts of welfare and benefits to workers. The proposed legislation would bring the use of technology in its enforcement. All these measures would bring transparency and accountability which would lead to more effective enforcement. Widening the scope of minimum wages to all workers would be a big step for equity. The facilitation for ease of compliance of labour laws will promote in setting up of more enterprises thus catalyzing the creation of employment opportunities.

4. The salient features of the Code on Wages, 2019, inter alia, are as follows:-

(a) it provides for all essential elements relating to wages, equal remuneration, its payment and bonus;

(b) the provisions relating to wages shall be applicable to all employments covering both organised as well as un-organised sectors;

(c) the power to fix minimum wages continues to be vested in the Central Government as well the State Government in their respective sphere;

(d) it enables the appropriate Government to determine the factors by which the minimum wages shall be fixed for different category of employees. The factors shall be determined taking into account the skills required, the arduousness of the work assigned, geographical location of the workplace and other aspects which the appropriate Government considers necessary;

(e) the provisions relating to timely payment of wages and authorised deductions from wages, which are presently applicable only in respect of employees drawing wages of twenty-four thousand rupees per month, shall be made applicable to all employees irrespective of wage ceiling. The appropriate Government may extend the coverage of such provisions to the Government establishments also;

(f) it provides that the wages to employees may also be paid by cheque or through digital or electronic mode or by crediting it in the bank account of the employee. However, the appropriate Government may specify the industrial or other establishment, where the wages are to be paid only by cheque or through digital or electronic mode or by crediting the wages in the bank account of the employee;

(g) it provides for floor wage for different geographical areas so as to ensure that no State Government fixes the minimum wage below the floor wage notified for that area by the Central Government;

(h) in order to remove the arbitrariness and malpractices in inspection, it empowers the appropriate Government to appoint Inspectors-cum-Facilitators in the place of Inspectors, who would supply information and advice the employers and workers;

(i) it empowers the appropriate Government to determine the ceiling of wage limit for the purpose of eligibility of bonus and calculation of bonus;

(j) in the place of number of authorities at multiple levels, it empowers the appropriate Government to appoint one or more authorities to hear and decide the claims under the proposed legislation;

(k) it enables the appropriate Government to establish an appellate authority to hear appeals for speedy, cheaper and efficient redressal of grievances and settlement of claims;

(l) it provides for graded penalty for different types of contraventions of the provisions of the proposed legislation;

(m) it provides that the Inspector-cum-Facilitator shall give an opportunity to the employer before initiation of prosecution proceedings in cases of contravention, so as to comply with the provisions of the proposed legislation. However, in case of repetition of the contravention within a period of five years such opportunity shall not be provided;

(n) it provides for the appointment of officers not below the rank of Under Secretary to the Government of India or an officer of equivalent level in the State Government to dispose of cases punishable only with fine up to fifty thousand rupees, so as to reduce the burden on subordinate judiciary;

(o) it provides for compounding of those offences which are not punishable with imprisonment;

(p) it provides that where a claim has been filed for non-payment of remuneration or bonus or less payment of wages or bonus or on account of making deduction not authorised by the proposed legislation, the burden shall be on the employer to prove that the said dues have been paid to the employee;

(q) it enables the appropriate Government to constitute Advisory Boards at Central and State level to advice the Central Government and the State Governments, respectively, on matters relating to wages, women employment, etc.;

(r) the period of limitation for filing of claims by a worker has been enhanced to three years, as against the existing time period varying from six months to two years, to provide a worker more time to settle his claims.

5. The Code on Wages, 2017, on similar lines, was introduced and referred to the Department-related Parliamentary Standing Committee on Labour, which submitted its forty-third Report on 18th December, 2018. However, before the said Bill could be passed in the said House, it lapsed on dissolution of the Sixteenth Lok Sabha. Hence, the Code on Wages, 2019.

6. The Notes on Clauses explain in detail the various provisions contained in the Bill.

7. The Bill seeks to achieve the above objectives.

 

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THE CODE ON WAGES, 2019 (A Bill - Introduced in the Loksabha)

Notes on Clauses - MEMORANDUM REGARDING DELEGATED LEGISLATION

 

Minimum wage reform expands coverage and timely electronic payment with inspector facilitation and strengthened employer burden of proof. The Code on Wages, 2019 consolidates laws on wages, minimum wages, bonus and equal remuneration for organised and unorganised sectors; preserves Central and State powers to fix minimum wages while enabling appropriate Governments to set classification factors and a central floor wage; extends timely payment and authorised deduction protections to all employees; permits electronic payment; restructures enforcement through Inspectors-cum-Facilitators, designated authorities and appellate bodies; provides graded penalties, compounding, employer burden of proof for unpaid wages or bonus claims, and a three-year limitation for worker claims.