“Explore the 2019 Code on Wages, its impact on labor laws in India, and its amalgamation of key labor enactments. Learn about minimum wages, penalties, and the Code’s implications on workers’ rights. Evaluate the challenges and areas needing attention for effective implementation. Stay informed on the latest labor reforms.”
The Code on Wages Bill was passed by the parliament in 2019. The most recent attempt was made in 2017, when a bill was presented in the Lok Sabha and mentioned a Parliamentary committee, however, it was futile. Out of the 24 recommendations made by the parliamentary committee, which published its report in December 2018, the government approved 17. The Code intends to amalgamate, simplify and organize the relevant provisions of the subsequent four central labour enactments concerning wages, namely:
1. The Payment of Wages Act, 1936
2. The Minimum Wages Act, 1948
3. The Payment of Bonus Act, 1965
4. The Equal Remuneration Act, 1976
It is important to note that the four statutes mentioned above have been repealed as a result of the 2019 Code on Wages Act taking effect.
The Code also encompasses both the organized as well as unorganized sectors, opening the door for a sizable percentage of the workforce to be protected from any discriminatory practices and ensuring that good pay is paid to all or any. The Bill also calls for a five-year review of the minimum wage and underlines the use of technology for enforcement in addition to checks or digital methods of payment for wages. Additionally, the minimum wages will be set by the state and central governments in their own fields.
Instead of Inspectors, there would be Inspectors-cum-Facilitators to prevent arbitrariness and malpractices. In place of the inspector from the former system, there is now an inspector-cum-facilitator, who also has the responsibility of counselling and assisting employers and employees on how to apply the new system successfully. A web-based inspection scheme and electronic data summons now make inspections possible, which can reduce compliance obligations and be in line with current tendencies towards digitization.
The Code is expected to lessen disputes not just between employers and employees but also between the implementing authorities and therefore the employers. Also, there are some issues that need the government’s urgent attention, such as the wage threshold that will be implemented throughout India in regard to qualification standards for bonus payouts, the various parameters being set for wage computation, the restrictions that will be placed on how highly compensated employees’ salaries can be structured, and the conflicting provisions regarding overtime wages, lest they undo the benefits that the Code had already begun to realize.
The Code bars discrimination based on gender in hiring new employees for comparable or identical jobs and in determining pay. Work of a similar kind is defined as work requiring the same level of expertise, effort, responsibility, and experience.
The Code has increased the severity of penalties for non-compliance, including imprisonment for significant offences if repeated, and the amount of compensation payable in case of any default can reach up to ten times the amount of claim determined by the appropriate body. All offences have been decriminalized as well, with the exception of those that are committed twice within five years. It enables first transgressions to be compounded. A compliance culture might be incorporated with these strategies. The Code permits a person to settle the case without burdensome judicial proceedings by decriminalizing the charges, with the exception of repeat offences, and by enabling the compounding of initial offences. Yet, the code still maintains a great balance by imposing harsher penalties, such as jail for repeatedly committing serious infractions and significant fines such as restitution. These severe penalties will serve as a deterrent to prevent repeat offenders from committing crimes. The code also extends the time restriction for filing claims from [six months to two years] to three years but ignores the administrative and financial burden this has on the employer. It expressly transfers the onus of proving compliance under a claim only to the employer, which is very employee-friendly.
Minimum wages are regarded as an essential spark for advancing the cause of social justice and have existed since prehistoric times prior to the passage of the Minimum Wages Act of 1948. The Committee on Fair Wages of 1948 believed that a living wage standard should provide the worker and his family with not only the bare necessities of life, such as food, clothing, and shelter, but also some comforts, such as funding for their children’s education, insurance, and long-term care. In order to establish a uniform standard by which to measure the minimum fair wage, the committee noticed that the living wage should be the primary objective. Considering India’s economic situation, it was posited that the minimum wage should not only cover the costs of subsistence but also account for the maintenance of workers’ productivity. Accordingly, for this specific purpose, the minimum wage should also cover the costs of education, medical care, and other living expenses. The length of a typical workday can be set by the central or state governments. Employees who work longer than the typical workday are entitled to overtime pay, which must be at least double the regular rate of pay.
There are some concerns over the new legislation. These mainly target the definition of a nine-hour workday, a lack of clarity in the laws regarding the possibility of upgrading workers’ skill categories, and the absence of trade union participation on the pay fixation committee.
Conclusion
India through this code appears to have fulfilled the minimum wage requirements set forth by the International Labour Organization, which guarantees statutory minimum salaries to all categories of wage workers in India. The recommendations also call for a strategy that takes into account the wants and financial circumstances of the workers and their families. The Code calls for setting a floor pay after taking into account the workers’ minimal standards of living as well as their geographic location. A minimum wage system will also be established, with full engagement of the social partners. A thorough examination of the modifications brought about by the Code reveals the need for further clarity in this area, even though it initially appears to be a significant advancement in the Indian labour law system. The code turned out to be just a collection of various laws rather than a reform. The bigger issues of rising unemployment, never-ending litigation, etc. are not likely to be resolved by such a merging of four labour laws and reduction in compliance requirements. For effective implementation, it is crucial that the rules under the proposed three additional codes, in addition to the Wage Code, are consistent with and vice versa the rules under the Code of Wages. To make compliance-related processes simpler, the regulations under the Wage Code and the three proposed codes should take into account the current laws relating to registers, filings, and forms of the Ministry of Labour and Employment. The updated laws should go beyond their existing form and not only represent current practices but also be prepared to handle issues in the future, such as artificial intelligence and growing automation.
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