The Consolidated Labour Law: The Code on Wages Act

The Consolidated Labour Law: The Code on Wages Act

The Consolidated Labour Law: The Code on Wages Act

The Code of Wages, 2019 is an Act of the Parliament of India which was introduced in the Lok Sabha on 10th August 2017. It came into effect with its process of combining all of the four labour laws including the related wage and bonus payments too. It is also known as the Wage Code and it makes the provisions for minimum wages and timely payment of the wages common for every worker in India. It was only a bill until it got the President’s assent to make it a law on 8th August 2019. In the introduction of wages code, 2017 there were about 40 state and central laws under which different labour laws were covered, like the resolution of industrial disputes, wage and bonus payments, working situations in factories and many others. As these laws differ in their applicability, merging them would look and offer greater coverage of regulations under the same law covering different industries and aspects of labour.

The Wage Code combines four laws on the payment of wages and bonus, the Payment of Wages Act, 1936 (‘PW Act’), the Minimum Wages Act, 1948 (‘MW Act’), the Payment of Bonus Act, 1965 (‘PB Act’) and the Equal Remuneration Act, 1976. 

Decoding the Code:

The four laws it includes as a whole simply aim at the implementation, success, and harmonization of the effectiveness of the Wage Code. The bill works as the biggest compliance area for companies, factories, and industries. It introduces various additions and deductions int he laws making it crucial to understand and conform to them uniformly. The Bill seeks the inclusion of appropriate terms of the previous law regarding the worker's wages, payment and bonus, equal pay for men and women. The left out codes is to conform and deal with industrial safety and welfare, industrial relations, and social security. 

The Wage Code now applies to all employees (except for payment of bonus). The cause of it is the elimination of the eligibility threshold that exists under the Payment of Wages Act, 1936 (‘PW Act’). The Wage Code has scratched off the ‘scheduled employment’, intending that the minimum wages must be paid across all industries. Concerning the law on bonus, the Wage Code alters the eligibility criteria for the payment of bonus and its calculation process. 

Notified by the Central Government, the concept of a "floor wage" varies on the base of state-level maximum-wages. The Wage Code provides for a review or a revision of minimum wages at intervals without exceeding the period of five years. Moreover, the time limits and wage period for paying wages are now guided clearly. As per the Wage Code, the bonus is calculated on the higher of the notified wage ceiling or the minimum wage. Also, the employees earning the wages higher than the notified wage ceiling may not be qualified for the bonus under the Wage Code. So, the wage code signifies the bonus to not exceed the notified ceiling and as per the calculating of the bonus is considered, the wages may exceed a notified wage limit. To kick off the wrongs in monetary ways now if there is a conviction found for sexual harassment an additional disqualification for the payment of bonus is applied. 

Now with the Wage Code, the “inspector” has been replaced with an “Inspector-cum-Facilitator”, who now helps and guides the employees by advising them on practical and useful implementation. To get compliance burdens a step lower on the level, and be informed of the current trends of digitalization, the inspections are now also possible through the web. 

Compliance for Wage Code

Complying with the Wage Code is just as crucial as it is with other forms of regulations. However, the level of the penalties for non-compliances has been heightened to just swing in with the normal state of being compliant. The offences and penalties for non-compliance are greater and now the Code has declared that the “non-payment” or the “deficient-payment” cases of wages or bonuses are completely on the employer to hold and be burdened with. The labour laws in India are in the state of evolving with additions and deductions. Businesses ought to obtain assistance as per the to labour contracts and employment terms of services to assure their policies are legally compliant.