India's New Code on Wages

What is the objective of Code on Wages Act?

The Code on Wages seeks to regulate wage and bonus payments in all employments where any industry, trade, business, or manufacturing is carried out. 

The Code replaces the following four laws:

1. the Payment of Wages Act, 1936;
2. the Minimum Wages Act, 1948;
3. the Payment of Bonus Act, 1965; and,
4. the Equal Remuneration Act, 1976. 

Does this code cover all the employees or a particular segment of employees (private/ public sector employees)?

The code applies to all the employees and workers across country. The central government will make wage-related decisions for employments such as railways, mines, and oil fields, among others and state governments will make decisions for all other employments.

Around 62% of the workforce in India is made up of casual workers who need a right to minimum wage.

Earlier national minimum wage was not legally binding. However, in the Code on Wages, the minimum wages in the states and the Centre can’t be below the floor rate.

What would be the impact of this code on employees?

The code aims to transform the old and obsolete labor laws, and ensures minimum and timely payment of wages to all employees and workers. Many unorganised sector workers like agricultural workers, painters, who were outside the ambit of minimum wages, have got legislative protection of minimum wages.

Besides, the code ensures that employees getting a monthly salary are paid by the 7th of the following month.

It is an important step which would ensure minimum wage and timely payment of wage to approximately 50 million workers in the country along with promoting ease of living and ease of doing business.

What are the penalties for violating any provision of the code?

The code specifies penalties for offences committed by an employer, such as (i) paying less than the due wages, or (ii) for contravening any provision of the code. Penalties vary depending on the nature of offence, with the maximum penalty being imprisonment for three months along with a fine of up to INR 100,000.