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Current Status: The bill received the accent of the President on and was published as “Code of Wages,2019” in the Official Gazette on 8th August 2019. It shall come into force on such date as the Central Government may, by notification in the Official Gazette appoint and different dates may be appointed for different provisions of this Code.

Effect on Previous Legislatures: The code of wages once enforced will replace the following existing laws:

1. Payment of Wages Act, 1936

2. Minimum Wages Act, 1948

3. Payment of Bonus Act, 1965

4. Equal Remuneration Act, 1976.

Coverage: The code will be applicable to all the employees. The state government will be authorized to make decisions for all the employments other than those wherein the Central Government make laws like railways, oil fields and mines, and other.

Floor Wage Rate: The code states that the Central Government may fix a floor wage for the employees working in different geographical areas, after taking into account the living standards of the labours in respective area. However, the government should also consult this with the state government and the Advisory Board constituted under the code.

Minimum Wages: The minimum wages decided by the central or state government should be higher than the floor wage determined by central government. These should be revised at an interval of not more than five years. In case the minimum wages at the time of enactment of this code is higher than the floor rate determined by the central government, the state governments cannot reduce the minimum wages. Payment of wages less than the minimum wages is prohibited under the code.

Overtime: The work done by any worker in addition to the normal working hours will be counted as overtime hours. The wage rate payment of overtime hours must not be less than 2 times the normal hour’s wage rate.

Deductions from the wages: As per Section 18(2) of the Code the deductions from the wages of an employee shall be made in accordance with the provisions of this Code and may be made only for the purposes listed under the section. However, these deductions should not exceed 50% of the employee’s total wage. 

Payment of Wages: The wages under this code are to be paid in coins or currency notes or by cheque or by a credit to the bank account or through any other electronic mode.  The wages can be paid either daily, weekly, fortnightly or monthly.

Gender discrimination: The code strictly prohibits discrimination on the basis of gender in the matters related to recruitment and wages of the employees for the same work or work of similar nature.[1]

Bonus Determination: The code requires employers to pay a bonus to its employees whose wages are below such monthly amount as may be notified by the state or central government and who has put in at least thirty days work in an accounting year. The annual minimum bonus shall be (i) 8.33% of his wages, or (ii) Rs 100, whichever is higher.  In addition to this, the employer shall also distribute a part of the gross profits amongst the employees, in proportion to the annual wages of an employee.  An employee can receive a maximum bonus of 20% of his annual wages.

Constitution of Advisory Boards: The central and state government shall constitute an advisory board at central and state level including, employers, employees, women members and government representatives. The board will advise the respective government regarding various issues related to wages and bonus.

Offences: The provisions regarding offences committed by an employer are also specifically defined under the code. The penalty varies from one offence to another, maximum penalty being imprisonment for 3 months along with a fine of up to one lakh rupees.

Limitation on the filing of claims: The time limit imposed on the filing of claims limitation by Limitation act used to reduce the claims of the workers and were not in favour of the workers. The code with an objective of protecting the interests of the workers increases the limitation period to 3 years and making it uniform for claims related to every part of the code.

Miscellaneous: The code has introduced new inspection regimes, like, web-based randomised computerised inspection scheme, jurisdiction-free inspections, etc. All the changes will help in the enforcement of transparent and accountable labour laws.

It can be said that the introduced code on wages is a historical step to ensure statutory protection for minimum and timely payment of wages to crores of workers of the country along with promoting ease of doing business and ease of living.

[1] “Work of similar nature” is defined as the work which requires same effort, experience, skills and responsibility.

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One Comment

  1. Pravin Prjapati says:

    Sir, is there any law, when employee want to not deduct PF contribution, they are not liable PL/CL/SL from company. if yes any notification or any reason whatsoever is there.

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April 2024