The Code of Wages 2019 is an Act that was introduced by the parliament of India in the year 2019 and it came into existence from 08.08.2019.This newly introduced act consolidates/combines four imperative labour laws i.e, The Minimum Wages Act, Payment of Wages Act, Equal Remuneration Act and The Payment of Bonus Act. This Act came into picture in order to simplify and bring under a single roof some of the important provisions of the the four repealed labour acts. Apart from this, this new act has also brought in some of the new provisions to make sure that the interests of the employees/employers upon which this act is applicable can be protected.

To understand that how much this act differs from the repealed acts,it is vital to look at the major changes/provisions that this act has embodied in itself in comparison to the earlier acts.

So now let’s dissect the provisions of this act in light of the four repealed acts one by one.

(A) Code of Wages Vis a Vis repealed Equal Remuneration Act:

> The Code of Wages Act has done away with the discrimination on the basis of gender in matters relating to wages with regard to same work or work of a similar nature, which used to be there in the Equal Remuneration Act. Now there is no discrimination on the basis of gender as it expands to all the employees instead of Man Vs.Woman.

(B) Code of Wages Vis a Vis repealed Minimum Wages Act:

> The Code of Wages Act is applicable on all the employees including organized and unorganized sector employees and is not restricted only to the employees of the Scheduled employments as was the case in the repealed Minimum Wages Act.

> This new Code for the first time introduced the concept of “Floor Wages” which was not in practice earlier.This concept means that the Central government will set the national floor rate for wages after taking into account the minimum living standards of workers varying across geographical areas; where existing minimum wages are higher than the floor wages, the same shall be retained. State governments will fix the minimum wages for their region which cannot be lower than the national floor rate for wages.

> Another Change that this new Code has brought in is in relation with the time limit for filling the claims for the dues to be paid to the employees.The time limit under this Code has been extended to 3 years from 6 months in the previous act of Minimum Wages.

(C) Code of Wages Vis a Vis repealed Payment of Wages Act:

> The Code of Wages Act is applicable or protects all the employees without any wage limit including the supervisors and the managers and is not to restricted only to those employees drawing salary less than 24,000 as was the case in the repealed Payment of wages Act.

> The time limit under this Code for filling the claims for the dues to be paid to the employees has been extended to 3 years from 1 year in the previous act of Payment of Wages.

> This new Code grants two days limit to an employer to pay full & final salary to the worker as it used to be in the repealed Payment of Wages Act on account of dismissal or retrenchment of an employee.

(D) Code of Wages Vis a Vis repealed Payment of Bonus Act:

> This new Code is on the same lines in comparison to the revoked Payment of Bonus Act in respect of its applicability,as this new Code is applicable on an establishment employing 20 or more persons as was the case in the repealed act.

> The Code of Wages has come up with a new clause that would dis entitle an employee from receiving the bonus.This clause is of conviction of an employee for sexual harassment.Earlier the repealed act of Payment of Bonus included dismissal from service on the grounds of fraud,riotous or violent behavior while on the premises of the establishment; or theft, misappropriation or sabotage of any property of the establishment as the reason for disqualification from getting the bonus.

> The time limit under this Code for filling the claims for the dues to be paid to the employees has been extended to 3 years from 1 year in the previous act of Payment of Bonus.

Now after understanding some of the major changes that this act has brought in as compared to the earlier acts,its time that we should also understand that, what are those provisions which are common or new in this new Code for all the revoked acts.Lets have a close look at it.

♦ This Code for the first time has taken up and defined the term “Contract Labour” which was nowhere present in any of the previous acts.This Code states that “contract labour” means a worker who shall be deemed to be employed in or in connection with the work of an establishment when he is hired in or in connection with such work by or through a contractor, with or without the knowledge of the principal employer and includes inter-State migrant worker but does not include a worker (other than part-time employee) who –

is regularly employed by the contractor for any activity of his establishment and his employment is governed by mutually accepted standards of the conditions of employment (including engagement on permanent basis),and  gets periodical increment in the pay, social security coverage and other welfare benefits in accordance with the law for the time being in force in such employment;

♦ The definition of the term“Wages”,this new Code has narrowed down the allowances/benefits that were incorporated in the repealed Acts of Payment of Wages and Minimum Wages Act,now the term Wages is a mixture of (i) basic pay; (ii) dearness allowance; and (iii) retaining allowance but excludes many earlier allowances.But if allowance is more than 50% of remuneration then amount in excess of 50 % of allowances will be deemed as wages.

♦ This new Code has, in order to bring some uniformity given a standard definition of a worker as earlier different acts defined worker in a different sense but now after coming into force of this act,the term “worker” means any person (except an apprentice as defined under clause (aa) of section 2 of the Apprentices Act, 1961) employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, whether the terms of employment be express or implied,but does not include (a) any such person who is employed mainly in a managerial or administrative capacity; or (b) who is employed in a supervisory capacity drawing wage of exceeding fifteen thousand rupees per month or an amount as may be notified by the Central Government from time to time.

♦ In respect to Penalties as well this present Code has brought in drastic change in order to ensure that employers don’t breach the provisions of the act and pay hefty fines or even undergo imprisonment in case of failure to abide by the provisions of the act as now there is more rigorous penal provisions like penalty has been increased from 50,000 in the earlier acts to Rs. 1 Lakh with imprisonment up to 3 months in cases of repeat offence.

♦ This Code has also modified the ways of conducting the inspection by the inspectors or the concerned authorities in a sense that earlier more or less it was the physical inspection that used to take place but now after coming into force of this new code methods of inspection has changed like introduction of Web based electronic inspections and their jurisdiction has been broadened to help employer for better compliance formation.

♦ This Code has also widened the definition of the term employer by making a bit of an addition in the earlier term used in the repealed acts but at the same time keeping the structure of the definition as it is.The new definition states that “Employer”means a person who employs, whether directly or through any person, or on his behalf or on behalf of any person, one or more employees in his establishment and where the establishment is carried on by any department of the Central Government or the State Government, the authority specified, by the head of such department, in this behalf or where no authority, is so specified the head of the department and in relation to an establishment carried on by a local authority, the chief executive of that authority.


In the end in order to summarize this whole new Code,it can be said that this Code is of immense importance from the point of view of giving an uniform effect to the four major labour laws of this nation. Moreover this Code has brought in the much needed reforms in the labour sector as the labour sector despite being the backbone of our nation is the most vulnerable, deprived, exploited and weakest sector of our nation.This Code tries to strike a balance between the employees and the employers by keeping in consideration the rights and obligations of both the parties and with that this Code aims at achieving the best possible results not only for the parties who are involved in this Code but also for the nation as a whole in the form of better infrastructure, more job opportunities, an improved and vibrant economy, enhanced standards of living etc..This Code would also give new meanings to the generations old labour laws and would lay the platform for inculcating various other changes in the other labour laws by acting as a guiding force in the times to come.Only thing that is required for all this to happen is,proper implementation of the provisions of this Code in its structured way.

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Qualification: LL.B / Advocate
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Location: New Delhi , New Delhi, IN
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One Comment

  1. Ajay says:

    Its a wonderful article with necessary information. I wanted to know is this recent information which is being highlighted as “Four Labor Codes” done recently this month

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