Code on wages act 2019

The Code on Salaries Bill 2019, commonly known as the Wage Code, consolidates elements from four labour laws governing salaries and bonuses while ensuring that payments are paid on time for Indian workers. After several adjustments and amendments in the Indian Parliament, the new bill will take effect on April 1st, 2021.

In an accounting year, an employee may get a bonus of up to 20% of his yearly salary. Employers must pay all dues to employees under the law. If the employer fails to do so, the business, firm, proprietor, or owner of the facility is liable for payment.

Definition of ‘Employers’ and ‘Workers’

Employee (Section 2k)

Section 2k defines workers as those who labour for wages in skilled, semi-skilled, unskilled, operational, or manual roles, including managers, supervisors, and administrative personnel. The word refers to those who have been officially recognised as employees by their respective governments. However, it excludes apprentices under the Apprentices Act of 1961 and Union Armed Forces members.

Worker (Section 2z)

Worker definition refers to someone hired in any industry to perform manual, unskilled, skilled, technical, operational, clerical, or supervisory labour for pay or reward. This Code applies to individuals who have been dismissed, discharged, retrenched, or terminated as a result of an industrial dispute, including "working journalists" and "sales promotion employees."

Understanding the Code on Wages, 2019

In 2015, the Indian government began contemplating a plan to condense the country's 44 labour laws into four codes in order to rationalise labour regulations and increase ease of doing business. The remaining three are the Occupational Safety, Health, and Working Conditions Code, the Industrial Relations Code, and the Social Security Code.

The Code on Wages Bill, in turn, will encompass four laws:

1. Minimum Wages Act (MWA)\

2. Payment of Wages Act (PWA

3. Payment of Bonus Act (PBA)

4. Equal Remuneration Act.(ERA)

The Code is made up of 69 (sixty-nine) parts organised into nine (nine) chapters. The bill was passed by the Rajya Sabha on August 2, 2019. President Ram Nath Kovind gave his assent to the law on August 8. The bill is a sequence of various labour reforms implemented by the Government of India.

The government had indicated that the regulations would go into effect or be adopted on April 1, 2021, however because to the ongoing COVID-19 epidemic, states have been unable to develop guidelines for all of them. As a result, no preliminary implementation date for the codes has been published.

Key Features of the Code on Wages Bill

The Code on Wages Bill, 2019 has the following features:

Changes Brought By Code of Wages Bill 2019

According to Labour Minister Santosh Kumar Gangwara, the new law would help around 50 crore workers across the country.

In addition, further updates will be available:

• According to the measure, a council of trade unions, companies, and state governments would establish a minimum wage for workers across the country.

• Employees' provident fund (PF), gratuity components, and take-home pay would all be impacted. The new definition of salaries limits allowances to 50% of total remuneration.

• According to the new code, basic pay will account for 50% or more of total remuneration. Most workers' remuneration structures will alter as the non-allowance share is often less than 50%.

• Provident funds (PF), which are based on basic income, will rise, lowering take-home pay.

• Increased payments from provident funds will result in a bigger post-retirement payout.

• Companies' costs will also climb as the payment to PF and gratuity increases.

Prohibition of Discrimination Based on Gender

• Gender equality is a core principle of our Constitution. The Constitution ensures equal treatment under the law and prohibits discrimination based on religion, caste, or gender.

• The Equal Remuneration Act of 1976 prevents firms from discriminating against workers based on gender, including wage payments and recruiting. The Code, which replaces the Equal Remuneration Act of 1976, prohibits salary discrimination based on gender.

• The Equal Remuneration Act of 1976 aimed to safeguard women, but the Code now prohibits gender discrimination in salaries.

• Sections 3 and 4 of the Code prohibit discrimination based on gender.

Rules Applicable to the 2019 Code of Wages

Code of Wages (Central) Rules, 2020 (Draft)

The Central Government's draft rules include the following major points:

• Calculate the Minimum Wage: The pay estimate is based on the demands of a typical working family of four, with each member requiring 2700 calories per day and 66 metres of fabric per year to meet expenditures such as housing rent, fuel, electricity, children's education, and medical care.

• Geographic Categorization: To calculate the minimum wage, geographical areas are separated into three categories: metropolitan, non-metropolitan, and rural.

• Employee Skills Categorization: To determine wages, employees' vocations are divided into four categories: unskilled, semi-skilled, skilled, and highly skilled.

• Working Hours: A typical working day consists of 8 hours of labour and one or more rest breaks totaling no more than one hour.

• Night shifts: Employees working night shifts that last beyond midnight are entitled to a 24-hour rest day beginning at the end of their shift.

• Wage deductions: If an employer deducts pay for an employee's absence, they must notify the Inspector-cum-Facilitator of the jurisdiction within 10 days.

Code of Wages (Central Advisory Board) Rules, 2021

In exercising its responsibilities under the Code on Wages, 2019, the Central Government established the Code on Wages (Central Advisory Board) Rules, 2021. The primary goal of establishing a Central Advisory Board is to advise the Central and State Governments on the fixing and modification of minimum wage rates, as well as other Code-related issues.

The Central Advisory Board Rules specify the following:

• The Central Advisory Board's constitution

• Certain job functions that the Central Advisory Board is required to perform

• The quorum for conducting Central Advisory Board meetings

• Disqualifications from membership in the Central Advisory Board

• How the Central Advisory Board makes business decisions.

Conclusion

The Code on Wages, 2019, often known as the Wage Code, is an Act of the Parliament of India that consolidates the provisions of four labour laws governing wage and bonus payments and makes the rules for minimum wages and timely salary payment universal for all workers in India. It cannot be denied that simplifying labour laws and promoting e-governance would make conducting business easier, attract international investors, and provide more chances, while the measures for regulating floor wages for minimum wage will greatly help our labour-intensive economy. However, because the four repealed laws were originally passed to address distinct situations at different times in time, it may be difficult to combine these laws while keeping the intent of the legislation in mind.