THE CODE ON WAGES, 2019

After waiting for long time finally “THE CODE ON WAGES, 2019” got approval of President of India and published in official Gazette of India. India Labour laws are almost 40-50-year-old. When these laws were passed it was era of manual working where an employee had to wait for a year to get his Provident Fund receipt to know his balance. Now a day most of the services have been digitized. Information’s are available on self-help portals. Books & registers have been converted into electronic mode. Taxes are being deposited through e-transfers and returns too are being filled electronically. In these circumstances scope of maintaining different type of registers under different law has become very difficult task. Many Acts had become so irrelevant that their provisions were not known to Govt. Officers. I remember I had marked two tweets to Prime minister of India in Oct 2014 to club the provisions of multiple statutes in single Act. After the gaps of 6 years when we saw momentum in this regard then felt little relief. Now this new code on wages 2019 is going to replace following 4 Act- 1- Payment of Wages Act, 1936 2- Minimum Wages Act 1948 3- Payment of Bonus Act 1965 4- Equal Remuneration Act 1976 One point needs immediate attention is definition of wages. Now salary/wages has two parts. 1) inclusion part 2) specified exclusions. Salary includes basic pay, dearness allowance and retaining allowance. Exclusions are statutory bonus, value of house accommodation and utilities (light, water, medical etc.), employer contribution to provident fund/ pension, conveyance allowance/ travelling concession, sum paid to defray special work expenses, house rent allowance, remuneration payable under settlement, overtime allowance, commission, gratuity, retrenchment compensation. Main effecting provision is limit on exclusion portion. Now exclusions portion may not exceed 50 percent of all remuneration. If it exceeds then excess amount shall be deemed as remuneration and will be added in wages. It may require to change in salary structure. Basic salary may need to be increased and there will be corresponding increase in employers contribution in PF and Gratuity Fund. It may result into lower take home salary to employees. The aggregation of various codes under one umbrella will have some effect on number of companies. Lets see few key changes as below- Contractor is included in the definition of ‘employer’. Therefore, it is contractor who will be responsible for payment of minimum wages, bonus, etc., for the persons engaged by him and the liability will not pass on to the Principal employer. • As per the Equal Remuneration Act, only the women employees can claim equal wages against discrimination, if any. But, as per this Code, all genders (Male or female or transgender) may claim equal wages in case they perform the same and similar kind of work. Currently, the Minimum Wages declared by Central Government has no statutory force. Through this code, it is to be complied. • The employees employed in the position of Supervisory, Managerial & Administrative capacities are not considered as employees as per the existing Minimum Wages Act whereas, the code intents to include them also. • Currently, the payment of wages Act will not apply to a person who is drawing monthly wages of more than Rs. 24000/- . Now, the ceiling is removed in the Code. • Wage Code provides power to both the Central and State Governments for making Rules. Currently, only the Equal Remuneration Act has the term ‘Worker’ mentioned. • The wages shall be settled within 2 working days even for the employees who resign from their service. The minimum wages for various employments are getting revised upward constantly. Employees drawing a monthly salary of up to Rs 24000/- have now been brought under the scope of the Payment of Wages Act. The salary ceiling for the eligibility for bonus has been revised to Rs 21000/- and for calculation, it has been increased to Rs 7000/- ( or the applicable minimum rates of wages whichever is higher ). The increase in the minimum wages; increase in the number of persons coming in to the purview of the bonus Act and increase in the ceiling for bonus calculation have all, in turn, increased the financial burden of the employers.