Major Changes Introduced By The Code On Wages, 2019

Major Changes introduced by the Code on Wages, 2019 The Code on Wages, 2019 consists of IX chapters. While the applicability, coverage, definitions an provisions for equal remuneration are listed in Chapter I, provisions relating to minimum wages are listed in Chapter II, Chapter III contains provisions relating to payment of wages, Chapter IV deals with payment of bonus, Chapter V contains provisions relating to constitution of Advisory Board, Chapter VI deals with the manner of raising claims on wages, provisions relating to appointment of an Inspector-cum-Facilitator are set out in Chapter VII, Chapter VIII lists out the offences and penalties and lastly Chapter IX deals with miscellaneous provisions. S.No Old Statutes Code on Wages 1. The Equal Remuneration Act, 1976 recognised The Wage Code (“WC”) allowed a third only male and female employees in respect of category of gender, i.e. Transgenders to also which discrimination was prohibited. be protected from discrimination in matters of payment of remuneration for carrying out same or similar work. 2. Minimum Wages Act, 1948 (“MWA”) was only The WC extends its coverage to all applicable to the scheduled employments set employments, irrespective of whether they out therein. are in the organized or the unorganized sector. 3. Payment of Wages Act, 1936 (“PWA”) was The WC covers all employees irrespective of applicable to employees earning not more than their monthly salary. INR 24,000 (Indian Rupees Twenty-Four Thousand only) per month. 4. PWA was only applicable to 'industrial or other WC uses the term 'establishment' which establishments'. The statute defined 'industrial means 'any place where any industry, trade, or other establishment' to mean business, manufacture or occupation is establishments relating to motor transport or carried on', thus extending the application air transport services, dock, wharf, jetty, inland of the chapter on payment of wages to vessel, mine, quarry, oilfield, plantation, commercial establishments as well. production or manufacture of articles for their use / transport / sale, construction / development / maintenance of buildings etc., and any other establishment which the appropriate government may, having regard to the nature thereof and other relevant circumstances, specify. This means that for the PWA to be applicable to shops and establishments, the appropriate government must issue a notification to that effect. 5. Payment of Bonus Act, 1965 was only Under the WC, it is up to the discretion of applicable to workers earning wages up to INR the appropriate government to prescribe 21,000 (Indian Rupees Twenty-One Thousand the wage ceiling for eligibility of payment of only) per month. bonus. 6. Under the MWA, the respective state As per the WC, the Central Government shall governments were responsible for fixing and fix a 'floor wage' taking account the notifying the basic rate of wages for the minimum living standards of a worker. workers employed in the scheduled However, the Central Government may establishments. prescribe different floor wages for different geographical areas. The respective state governments may fix a different minimum

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The criteria for fixing the minimum wage rate is not elaborated under the MWA.

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The former labour laws authorized labour ‘inspectors’ to carry out inquiry and investigation into alleged contraventions of the stipulated provisions.

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In the former laws there was no provision for compounding of offences.

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Under the former laws, the maximum fine imposed by the labour authorities for the contravention of the relevant provisions was from INR 500 (Indian Rupees Five Hundred

wage for areas falling under their jurisdiction, provided such wage should at least match the Floor Wage. WC has provided certain guidelines to the appropriate governments for the purpose of fixing / revising the minimum wage rate, which include the skill required, the arduousness of the work assigned to the worker, the cost of living of the worker, and the geographical location of the place of work. The WC introduces the concept of ‘inspector-cum-facilitator’ who shall not only carry out inspections, but also provide employers and workers with information on how to improve their compliance with the law. While the inspector-cum-facilitator retains the labour inspector’s power to examine the workplace, search and seize copies of relevant documents, the WC, also states that before initiation of prosecution for any non-compliance, the inspector-cumfacilitator would provide an opportunity to the employer to comply with the provisions of the WC. The WC has introduced a provision for compounding of offences which states that, any offence punishable under the Code, not being an offence punishable with imprisonment only, or with imprisonment and also with fine, may, on an application of the accused person, either before or after the institution of any prosecution, be compounded by a Gazetted Officer, as the appropriate Government may, by notification, specify, for a sum of 50 (fifty) per cent. of the maximum fine provided for such offence, in the manner as may be prescribed. However, such an opportunity is unavailable to an employer for the second time or thereafter within a period of 5 (five) years from the date of either: (i) commission of a similar offence which was earlier compounded; or (ii) commission of a similar offence for which such person was earlier convicted. The WC states that for any failure to pay the sums due to the employee, the employer shall be punishable with fine which may extend to INR 50,000 (Indian Rupees Fifty

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only) to INR 20,000 (Indian Rupees Twenty Thousand only), while for any failure to Thousand only). comply with other provisions of the WC, the employer shall be punishable with fine which may extend to INR 20,000 (Indian Rupees Twenty Thousand only). Under the former labour laws the limitation The WC increased the period of limitation to period for filing of claims in relation to payment 3 (three) years. of any sums due was between 6 (six) months to 2 (two) years.