Code on Wages 2019

By : Neha Dhyani

Updated : Jun 2, 2022, 5:56

In 2015, the Indian government began contemplating a plan to condense India's 44 labour regulations into four codes (i.e. Code on Wages 2019) to simplify labour regulations and make conducting business more accessible. The Occupational Safety, Health, and Workers Rights Code, the Labor Relations Code, and the Social Security Code are the other three.

Mr Santosh Gangwar, Minister of Labor, launched the Code on Wages 2019 in the Lok Sabha on July 23, 2019. On August 2, 2019, the Rajya Sabha passed the bill. On August 8, President Ram Nath Kovind signed the measure into law. The law represents the culmination of the Indian government's extensive labour reforms.

The Reason Behind the Introduction of the New Code on Wages 2019?

Because the Indian labour market preys on employees' surplus availability, they cannot demand reasonable minimum salaries and continue to live in insecure situations. Labour laws in India are on the concurrent list and are exceedingly complex. There was a need for change by addressing concerns such as numerous definitions of wages, low pay, etc.

It will also result in the economy becoming more formalized.

An adequate minimum wage policy that focuses on the most vulnerable wage workers can boost aggregate demand and strengthen the middle class, resulting in a period of sustained and equitable growth.

Code on Wages 2019 - Labour Laws

  • The new pay legislation eliminates many wage definitions, potentially lowering litigation and compliance costs for companies.
  • The new law ties the minimum wage across the nation to the employee's abilities and works location.
  • It aims to make the provisions of minimum wages and prompt wage distribution applicable to all employees, regardless of sector or wage cap.
  • It aims to guarantee every worker's "Right to Sustenance" and aspires to strengthen minimum wage legislation.

It encompasses the four labour laws listed below:

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

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The Code on Wages 2019 Bill's Most Important Features

The Code on Wages Bill, 2019, has the following features:

  • The Code on Wages 2019 now ensures that the timely compensation of wages is applied uniformly when prior regulations like the Payment of Wages Act and the Minimum Wages Act imposed limits, regardless of pay caps and different economic sectors.
  • The concept of 'wages' differed significantly between the PWA, MWA, and PBA, resulting in several lawsuits.
  • The term 'employee' has a broader scope than 'worker.'
  • The Code on Wages 2019 bans businesses from discriminating based on gender regarding salaries or recruiting for the same or similar types of employment.
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Concerns With New Code on Wages 2019

  • Starvation Wages: It has been claimed that the new pay legislation will increase the income capability and buying power of informal employees, hence raising starvation wages.
  • Wages are deducted Clause: The new legislation allows for arbitrary wage deductions (up to 50% of monthly salary) depending on performance, damage or loss, advances, and other factors.
  • Inspection Framework: The laws are vague about the "labour inspection system's" governance and institutional structure. The guidelines offer an undefined ad hoc procedure known as an "inspection system."
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FAQs on Code on Wages 2019

Q.1. What is the Code on Wages 2019?

The Code on Wages 2019 is an Act of the Indian Parliament that centralizes the requirements of four labour laws regulating wage and incentive payments and renders universal the rules for min wage and punctual wage distribution for all Indian workers.

Q.2. Which acts are covered under the Code on Wages 2019?

The Minimum Wages Act, Payment of Wages Act, Payment of Bonus Act, and Equal Remuneration Act will all be included in the Code on Wages 2019. All four Acts would be abolished after their enactment.

Q.3. When was the Code on Wages 2019 passed?

On August 2, 2019, Rajya Sabha passed the Code on Wages Bill. On August 8, President Ram Nath Kovind signed the measure into law. The law represents the culmination of the Indian government's extensive labour relations.

Q.4. What are the incentive regulations mentioned in Code on Wages 2019?

A yearly bonus will be paid to all employees whose earnings do not exceed a certain monthly level set by the federal or state governments. The prize will equal either 8.33 per cent of his salary or Rs 100, whichever is greater. Furthermore, the employer will share a portion of the gross earnings with the employees. An employee's annual salary will provide this. A bonus of up to 20% of an employee's yearly salary is possible. These are the incentive regulations mentioned in Code on Wages 2019.