Code on Wages Bill

Context

1. Recently, the Lok Sabha passed The Code on Wages Bill, 2019, which aims to transform the old and obsolete labour laws into more accountable and transparent ones.

2. As many as 17 present labour laws are more than 50 years old and some of them belong to the pre-independence era.

3. The four Acts being subsumed in The Code on Wages Bill are

a. The Payment of Wages Act, 1936

b. The Minimum Wages Act of 1948.

c. The Payment of Bonus Act, 1965.

d. The Equal Remuneration Act, 1976.

The salient features of the Code:

1. Wage Universalization

a. The Code on Wage universalizes which has the provisions of minimum wages and timely payment of wages is now applicable all employees irrespective of the sector and wage ceiling.

b. At present, the provisions of both the Minimum Wages Act and Payment of Wages Act apply on workers below a particular wage ceiling working in Scheduled Employments only.

c. The Code would ensure “Right to Sustenance” for every worker and intends to increase the legislative protection of minimum wage from existing about 40% to 100% workforce.

d. This would ensure that every worker gets a minimum wage which will also be accompanied by an increase in the purchasing power of the worker thereby giving a fillip to growth in the economy.

e. Introduction of statutory Floor Wage to be computed based on minimum living conditions will extend qualitative living conditions across the country to about 50 crore workers.

f. It also envisaged that the states to notify payment of wages to the workers through digital mode.

2. Simplification of the definition of Wages

a. There are 12 definitions of wages in the different Labour Laws leading to litigation besides difficulty in its implementation.

b. The definition has been simplified and is expected to reduce litigation and will entail at a lesser cost of compliance for an employer.

3. Standard methodology to fix the minimum wage

a. At present, many of the states have multiple minimum wages. Through Code on Wages, the methodology to fix the minimum wages has been simplified and rationalised by doing away with the type of employment as one of the criteria for fixation of the minimum wage.

b. The minimum wage fixation would primarily be based on geography and skills.

c. It will substantially reduce the number of minimum wages in the country from the existing more than 2000 rates of minimum wages.

4. Other changes

1. New introduction  in the inspection regimes including web-based randomised computerised inspection scheme, jurisdiction-free inspections, calling of information electronically for inspection, the composition of fines etc.

2. All these changes will be conducive for the enforcement of labour laws with transparency and accountability.

3. There were instances that due to the smaller limitation period, the claims of the workers could not be raised.

4. To protect the interest of the workers, the limitation period has been raised to 3 years and made a uniform for filing claims for minimum wages, bonus, equal remuneration etc., as against existing varying period between 6 months to 2 years.

Source: PIB