The Code on Wages 2019 (the ‘Code’) was passed by the parliament in the monsoon session of parliament 2019 and received presidential assent on 8 August 2019. The provisions of the Code, however, are yet to come into force. The Code is the first in the series of four labour codes that the government proposes to enact to simplify 32 central labour laws to bring them in sync with the emerging economic situation and facilitate easier compliance by establishments. The Code amalgamates and replaces four central labour enactments related to wages, namely, (i) the Payment of Wages Act, 1936 (ii) the Minimum Wages Act, 1948 (iii) the Payment of Bonus Act, 1965, and (iv) the Equal Remuneration Act, 1976 into a single, unified code. This is expected to remove the multiplicity of definitions and authorities. The Code also introduces the use of technology and thereby brings in transparency in its enforcement across all employments where industry, trade, business or manufacture is carried out.
Unlike the existing laws (which the Code on Wages will replace), the Code applies to all employees across all industries, except possibly in relation to payment of bonus.
In keeping with the objectives of rationalisation, simplification and consolidation, the Code has brought several significant changes such as uniformity in the definition of wages; the concept of a “floor wage” to be fixed by the Central Government; expansion of the definition of Central Government in relation to establishments for which it will prescribe the minimum wages; vigilance by an “ inspector cum facilitator” as opposed to only policing compliance; higher penalties; consolidation of registers and returns, amongst others.
The Code has not only aligned itself in some respects with the recent laws by including conviction for sexual harassment as a ground for disqualification for bonus, but it is also futuristic in terms of introducing the term ‘gender’ when prohibiting discrimination in matters of equal remuneration.
The impact on organisations will be to consider revision of the salary structure and statutory bonus, inclusion of all employees and aligning registers, records and policies with the new format once the Code is notified.
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