Understanding the Code on Wages 2019: A Comprehensive Guide

Introduction

Labour law is the set or the body of various laws, rules and regulations that govern as well as protect the rights of the employers or the workers within an organization. It is the set of laws that is primarily concerned with three parties namely, the employers, the employees and their respective unions. Labour law is a multifaceted law that covers various aspects of the tenure of the employment of respective workers within a workplace. Labour laws in India are widely recognized as the industrial law. Labour is a subject in the Concurrent List of the Constitution of India, the laws related to it can be framed and enforced by both the Central as well as State Government. There are various statutes framed by the respective governments that safeguard the rights and interests of the workers in the organization.

As being discussed earlier, the primary aim of labour law is to protect the rights of the workers or employees. For this purpose, we can comprehend that there are number of factors which leads to the exploitation of the workers on a daily basis. One of the primary factors that give rise to conflicts between the employees and the employers is the wages. Wages mean every type of financial pay that is given to the workers in the exchange of the services provided by him. The payment of wages may be computed on an hourly or daily rate (wage labour), as a predetermined amount for each job completed (task wage or piece rate), or based on an easily quantifiable amount of work accomplished.

It has been mostly seen throughout the time, that the employers are being exploited in various forms when the wages are being concerned. Some of them are not given even a single penny for the work done, some of them were forced to do overtime without any additional payment or some of them were entitled to get very less wages in exchange of hours of manual work. It has also been seen that many workers were subjected to discrimination on the basis of race, colour and gender, when it comes to the entitlement of the wages.

For solving every form of inequality and injustice done to the workers within an industrial unit in relation to the wages imparted, the Central Government has come up with the statutes that were primarily concerned with the issues that are mentioned above. The statutes that were enacted for resolving the issues related to wages were:

• Minimum Wages Act, 1948
• Payment of Wages Act, 1936
• Payment of Bonus Act, 1965
• Equal Remuneration Act, 1976

The Code on Wages, 2019

The Indian Government has made the decision in 2015 to simplify the existing labour rules and regulations and to make conducting the business and resolving the issues easier by combining the forty-four different labour laws into four codes.

The Code on Wages Bill was initially introduced to the Lok Sabha on August 10, 2017, by the Minister of State for Labour and Employment, Mr. Santosh Gangwar. Subsequently, on August 21, 2017, it was forwarded to the Parliamentary Standing Committee for detailed examination and overview. This Committee presented its findings on December 18, 2018, along with the suggestion of twenty-four amendments, out of which seventeen were forwarded and integrated into the revised Bill. However, because of the 16th Lok Sabha’s dissolution in advance of the 2019 general elections, this version of the Bill was unable to move further. On July 23, 2019, the Code on Wages Bill, 2019, was brought back to the Legislative House. In support of the Bill’s passing, Mr. Gangwar stated that comprehensive talks had been held with businesses, trade unions, and state governments; which included the tripartite discussions on March 10, 2015, and April 13, 2015. The Bill was adopted by the Lok Sabha on July 30, 2019, and the Rajya Sabha subsequently ratified it on August 2, 2019. On August 8, 2019, President Ram Nath Kovind formally approved the Bill, and it was subsequently published in The Gazette of India on the very same day.  Also, in her 2019 Union Budget address, the Finance Minister Smt. Nirmala Sitharaman has declared that these new codes would ensure that process of registration and filing of returns will get standardised and streamlined. As the terminology pertaining to labour laws are likely to become more uniform, it is anticipated that disagreements would decrease.

The Code on Wages Bill, 2019 was the first Code that was proposed in the Legislative House amongst the other three codes namely: –

• Industrial Relations Code
• Social Security Code
• Occupational Safety, Health and Working Conditions Code

The newly adapted Code on Wages ,2019 is the consolidation of the pre-existing statutes that were governing the issues related to wages in an industrial unit. The Code consists of sixty-nine sections which are divided into nine chapters.

Reasons behind the enactment of Code on Wages, 2019

There seemed a need to adopt a uniform code related to wages in order to protect the rights of the employers as well as employees in the best possible manner. Many other prominent reasons for the same are as follows:

• The existing laws on the wages are found to be outdated as they were formed while considering the conditions of the industries, prevailing at that time.There was found a need for the laws that were in compliance with the modern industrial conditions.
• There were several laws that were concerned about the wages given to the workers. The statutes in large number often created ambiguity. There was a need for laws that were simple in its application and that can be easily understood by the people in the industrial units.
• The old laws were offering less promotional chances, increments and benefits to the workers. In order to keep the workers motivated, there was a need for laws that are in the favour of the workers.
• The labour laws related to wages were non- uniform and there often arose situations where it became quite ambiguous to find out that which act should be applied in the situations. Therefore, there was a need to enact a code that must comprise of every statute that was related to wages.
• It has also been observed that there was influence from various political, social and economic factors in order to adapt a comprehensive and unambiguous code that should deal with the wages given to the workers.

Objectives of enacting the Code on Wages,2019

The Legislature while drafting the new codes on labour law, has the objective of promoting peace and harmony within the industrial unit without putting anyone’s rights and interests at stake. The Code on wages,2019 was drafted and adopted primarily with the aim or objective of protecting the peace and harmony of the industrial unit while keeping the rights of the workers and the employees in full consideration. There are many various objectives that were kept in the mind while framing or drafting the new code related to wages. Some of them are:

• The main objective of the new code is to consolidate the existing four acts related to wages in a simplified manner so that it can be well- accepted by every employee and employer.
• This code seeks to remove the distinction between the schedules and non- scheduled employment that has been made in the Minimum Wages Act,1948. The code aims to universalize the laws relating to the wages offered to the workers.
• The code also aims at removing the confusions and conflicts that have arisen related to the definitions of the same terminology that were given in the several statutes.
• The framers of the Code seek to modify and make the wages laws as per the industrial units of the modern times to make it more relevant by adapting the
• The Code intends to advance labour welfare, equality, and the sustainability of businesses in order to spur economic expansion and developmentof job openings in an industrial unit.
• The universal applicability of this Code pertaining the matters of wages is also one of the key objectives.
• The Code aims to make the process of setting minimum salaries for various industries and geographical areas more efficient. It is anticipated that workers would benefit themselves from this rationalization process by receiving fair remuneration that accounts for other economic issues such as living expenses.
• The New Wage Code attempts to make wage, minimum wage, and payment regulations applicable to all the employees in all areas of the economy, unlike the previous laws that were limited to certain industries or employee groups. This inclusiveness guarantees that all workers have the right to fair compensation and benefits, regardless of the industry to which they belong.

Chief Characteristics or Features of the Code on Wages, 2019

• The most prominent feature of this code is its universal applicability. The Code has included the employees of both organised and unorganised sectors in its ambit. This makes it a comprehensive law on the matters pertaining to wages.
• It provides a clear, comprehensive and uniform definition of wages and remuneration. The term “wages” is defined as having three components: an inclusion section, a list of exclusions, and restrictions that set a cap on the number of exclusions.
• The Code provides for equal remuneration. It stipulates that an employee’s gender cannot be used as a basis for discrimination when it comes to pay them for the same or comparable job that they accomplish.
• The Code allows the Central Government to establish a national minimum wage standard that may change depending on the geographical regions. This guarantees a minimum wage norm for workers throughout the nation, accounting for regional differences in living conditions and cost of living.
• Claims arising under the Code shall be heard by one or more authorities appointed by the appropriate Government. Depending on the circumstances surrounding the allegations, the authority will try to make a decision within three months. Within ninety days of the order’s date, anybody who feels wronged by the authority’s decision may file an appeal with an appellate authority. It is important to remember that previous labour laws had different statutes of limitations for bringing claims. Nevertheless, the Code sets a three-year statute of limitations from the day the claim arises for submitting claims.
• Depending on the kind of offence, different penalties have different maximum amounts under this Code. The Code stipulates that the maximum punishment is three months as imprisonment and/or a fine of up to Rs.1,00,000.
• The Code specifies that if an employee works above their regular working hours, they are entitled to extra compensation. This provides rules for overtime pay. It provides that at least twice the regular salary rate is to be paid for overtime.
• The conditions under which an employer may deduct money from an employee’s pay check are outlined in the Code on Wages. These deductions may be made for a variety of reasons, such as penalties, nonattendance, accommodations supplied by the employer, or the payback of loans made to the employee. It is required that the total amount withheld from the worker’s compensation not be more than half of what they are paid.
• The appropriate governmental body may designate a person as an Inspector-cum-Facilitator under the Code on Wages. Moreover, the government is free to create an inspection program that may include features for digital information input and online inspections. The Inspector is tasked with a number of important responsibilities as a public servant, including conducting workplace inspections and advising companies on how to follow the rules outlined in the Code. This position’s goal is to guarantee adherence to the Code by combining regulatory supervision with consulting services.

Judicial Comments on the Code on Wages, 2019

Since the adoption of the Code on Wages ,2019, the Judiciary is also benefitted in many ways. It has lessened the burden of the Judiciary by consolidating several statutes into a single comprehensive Code. The Indian Courts have many times, in its judgements, commentaries and digests have mentioned the prominence of this Code.

In the case of “Creative Garments Ltd. versus Kashiram Verma”, the Supreme Court of India has laid down that the Code on Wages, 2019 aims at simplifying and strengthening the labour laws and the protection that is given to the workers in an industry.

The apex court in the case of “Sanjit Roy v. State of Rajasthan”, has laid down the prominence of entitlement of at least the minimum wage to the workers for the services they provide.

In the case of “Edward Mills Co. Ltd., Beawar v. State of Ajmer”, the apex court has laid down that minimum pay and floor salary are required in order to avoid the exploitation of the employee and the Code talks about them.

Conclusion

The Code on Wages, 2019, which attempts to update, combine, and simplify thw regulations related to wages throughout the country, marks a significant change in the terrain of labour laws in India. This important step unites four main outdated legislation into a single legal framework, improving openness, compliance with regulations, and convenience of company operations at the same time as protecting and advancing the treatment of employees fairly.

REFERENCES

• https://vvgnli.gov.in/sites/default/files/Code%20on%20Wages%202019.pdf
• https://blog.darwinbox.com/code-on-wages
• https://blog.ipleaders.in/need-know-code-wages-2019/#Understanding_the_Code_on_Wages_2019
• http://www.hrindya.com/the-history-of-labour-code-2019-the-code-on-wages-2019/