Code On Wages 2019
Code On Wages 2019
Authority/Manger/MD having
ultimate control of any other
establishments
Occupier/Manager of a
factory under Factory Act,
Contractor
1948
Wages
Doesn’t Include
Includes
a) Bonus; b) PF contribution; c)
a) Basic Pay Conveyance allowance; d) House rent
b) Dearness allowance allowance; e) Overtime allowance; f)
c) Retaining Allowance Any commission; g) Gratuity; h)
Retrenchment Compensation
Code on Wages: Some Important Definitions
Appropriate
Government
● Extended legal coverage of both floor wage and minimum rates of wages
to all employees numbering about 224.7 million (or 48 per cent of the total
468.8 million workforce) as per PLFS 2018-19
○ Will benefit additionally 76.4 million wage earners
○ New beneficiaries will be primarily vulnerable groups within the labour market –
rural, women, illiterate & below middle level of education, causal workers, ST &
OBCs, agricultural and construction labourers, and workers in tiny and micro
enterprises
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Wage code 2019: Key Reform Measures
● Introduced the concept of statutory ‘wage
floor’ to be fixed on the basis of minimum
living standard of a worker by central
government in consultation with state
governments & CAB on wages ;
● Floor wage can be a single floor for the entire
country or different floor wages for different
geographical areas &
● Minimum rate of wages to be fixed by central
and state governments shall be either equal
to or above the ‘wage floor’ & can’t be
reduced to the level of floor, if such wages
are already higher. 9
Wage code 2019: Key Reform Measures
● Once the initial ‘floor wage’ is set and subsequently minimum wages are set
above the floor– average wage levels are expected to go up ensuring that
economic growth translates into less poverty and inequality – under
assumption of full implementation (Belser & Rani, 2011);
○ Will bring down level of wage inequality by 10% points – from 0.499 to 0.398 (Gini
co-efficient)
○ Gender wage gap will be compressed by – 6% points among regular & 18% points
among casual workers
○ Will reduce the probability of low paid worker being poor by 8% to 9 % with low
fiscal cost
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Wage code 2019
Key Reform Measures
● Outlines an uniform statutory criteria for initial setting and subsequent
revision of minimum wage rates ordinarily in every five years – ensure wage
fixation on time as per fixed norms devoid of any arbitrariness as witnessed
presently;
● Provides for timely adjustment of minimum wages with respect to inflation in
every six months – 1st April and 1st October – to protect real wages of the
employees;
● Simplified and rationalized the existing complex minimum wage structure –
○ Reduce the number of minimum wage rates in India from the existing 1,915 rates across
states) to a minimum of 3 to a maximum of 12 rates per state ;
○ through increased awareness of fewer minimum wage rates - expected to improve
enforcement, compliance and effective application of minimum wage system in the
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country.
Wage code 2019: Key Reform Measures
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Wage code 2019: Key Reform Measures
● Universalised timely payment of wages to all employees All employees shall be paid wages by the
& in all establishments irrespective of wage ceiling – employer as per time limit fixed for each
significant development in terms of wage protection of all wage period
employees and enable them to receive their wages on time;
● Promotes digitization in wage payments – through bank
Wage Time Limit for payment of
account & electronic mode
Period wages
● Every employer shall issue wage slips to the employees
Daily basis at the end of the shift
● In case of removal or dismissal; or retrenchment or
resigination, or became unemployed due to closure, wages
shall be paid within two working days ; Weekly on the last working day of the
basis week
● Puts responsibility of payment of all dues & burden of
proof on the employer in case of claims relating to non- Fortnightly before the end of the second
payment of dues basis day after the end of the
fortnight
● Limitation period for filing claim before authority increased
to 3 years as against 6 month to 2 years Monthly before the expiry of the
basis seventh day of the succeeding
● Fast track claim adjudication process month 13
Payment of Wages
● There shall be no deductions from the wages of the employee, except those as
are authorised under this Code
● Permissible deductions under the Code – an employee’s wages may be
deducted on certain grounds including: (i) fines, (ii) absence from duty, (iii)
accommodation given by the employer, (iv) recovery of advances/loans given to
the employee, (v) income tax or other statutory levy among others.
● Total amount of deductions shall not exceed 50% of employee’s total wage in
any wage period.
● If the deductions exceeds 50%, the excess amount may be recovered
Wage code 2019
Key Reform Measures: Promotes Gender Equality
In matters related to wages, recruitment of employees and
conditions of work by the same employer in respect of same
work or work of similar nature done by any employees.
• In addition, employer will distribute a part of the gross profits amongst the
employees. This will be distributed in proportion to the annual wages of
an employee.
• An employee can receive a maximum bonus of 20% of his annual wages
in an accounting year.
Responsibility for payment of dues & burden of proof
● Every employer shall be responsible to pay all dues under the code
to every employee;
○ Where employer fails to make such payment – company, firm, proprietor, owner
of the establishment shall be responsible to pay.
● Every employer shall display a notice on the notice board – at a prominent place
containing abstract of Code, category-wise wage rates, wage period, day or date
and time of payment of wages, & name & address of Inspector-cum-Facilitator;
and
1. First offence: Pays to any employee less Punishable with fine which may extend to fifty thousand
than the amount due under the this Code rupees
2 Repeat offence: similar to 1 above within Punishable with imprisonment for a term which may
five years from the date of the commission extend to three months or with fine which may extend to
of the first or subsequent offence one lakh rupees, or both;
3 First offence: Contravenes any other Punishable with fine which may extend to twenty
provision of this Code or any rule made or thousand rupees;
order made or issued thereunder
4. Repeat offence: similar to 3 above within Punishable with imprisonment for a term which may
five years from the date of the commission extend to one month or with fine which may extend to
of the first or subsequent offence forty thousand rupees, or both.
5 Offences of non-maintenance or improper Punishable with fine which may extend to ten thousand
maintenance of records in the establishment rupees
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Integrated approach to strengthen wage policy