Code on Wages, 2019
The Code on Wages, 2019 amalgamates four existing wage-related labour laws into a single comprehensive code. It universalises the provisions of minimum wages and timely payment of wages to all employees, irrespective of the sector or wage ceiling. The code introduces a national floor wage and removes the distinction between scheduled and non-scheduled employments, ensuring uniform wage protection for all workers.
Key Changes
- Universal minimum wage coverage for all establishments and all workers, removing the scheduled employment distinction
- Introduction of a national floor wage by the Central Government below which no state can fix minimum wages
- Single definition of "wages" across all four labour codes, with wages capped at 50% of total remuneration for computing contributions
- Consolidation of four laws: Payment of Wages Act, Minimum Wages Act, Payment of Bonus Act, and Equal Remuneration Act
- Mandatory annual revision of minimum wages by the appropriate government, considering standard of living
- Dispute resolution mechanism with limitation period of 3 years for filing claims
- Enhanced penalty provisions including imprisonment up to 3 months and fines up to Rs. 1 lakh for repeated offences
Employer Impact
- Obligation to pay minimum wages to all employees irrespective of employment category or scheduled status
- Wages must be paid only by cheque, bank transfer, or electronic mode; cash payment discouraged
- Deductions from wages limited to 50% of total wages in any wage period
- Revised bonus calculation now based on minimum wages fixed by government
- Need to update payroll systems for unified wage definition where allowances must not exceed 50% of total CTC
- Increased compliance costs for smaller enterprises previously exempt under wage ceiling provisions
- Records must be maintained for a minimum of 3 years including wage slips and muster rolls in electronic format
Employee Impact
- Guaranteed minimum wages for all workers including those in unorganised sectors
- Coverage extended to workers previously excluded by wage ceilings (e.g. managerial employees)
- Timely payment - wages must be paid within 7 days for monthly payroll, within last day for daily wage workers
- Protection of equal remuneration for men and women for same or similar work
- Bonus payable to all employees drawing wages up to Rs. 21,000 per month
- Simplified claims process through quasi-judicial bodies for wage disputes
- Full and final settlement to be paid within 2 working days from the date of cessation of employment
- Stricter rules on overtime payment at twice the normal rate of wages
Consolidated Laws
- Payment of Wages Act, 1936
- Minimum Wages Act, 1948
- Payment of Bonus Act, 1965
- Equal Remuneration Act, 1976
Other Labour Codes
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