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The Tax Publishers Labour Laws--Code on Wages Striking Features of Code on Wages, 2019 Pragya Bhandari The learned author, in this write up, delineates the salient features of the path breaking reforms in labour legislations by Code on Wages, 2019 relating to wages and bonus and matter connected therewith or incidental thereto. 1. Prologue The enactment of the four Labour Codes i.e., the Code on Wages, 2019, the Occupational Safety, Health and Working Conditions Code, 2020, the Code on Social Security, 2020 and the Industrial Relations Code, 2020 have ushered in the reforms for the labour regulations in the country. In order to rationalize labour laws and improve ease of doing business, these four Labour Codes will subsume labour legislations regulating various facets of labour governance.The first, of the four codes proposed by the government, the Code on Wages, was passed by Parliament on 8-8-2019. The Code on Wages, 2019 (hereinafter referred as the Code) repeals and replaces four labour legislations namely, the Minimum Wages Act, 1948, Payment of Wages Act, 1936, Payment of Bonus Act, 1965 and Equal Remuneration Act, 1976. The Code encompasses nine chapters with sixty nine sections. 2. Applicability The Code applies to all establishments, employees and employers as defined unless specifically exempt in the code. Prior to the Code, the provisions of both Minimum Wages Act, 1948 and Payment of Wages Act, 1936 apply to workers below a particular wage ceiling working in scheduled employments only. Concept of scheduled employment had been done away with. Section 3 lays down that no discrimination would be done among employees on the ground of gender in the matter of wages for same work or similar nature. 3. Uniform definition of term wages There were twelve definitions of wages in different labour laws leading to litigation besides difficulty in implementation. The Code provides a single uniform definition which is wide one with specific exclusions as applicable to minimum wages, payment of wages and payment of bonus. The term wages is defined under section 2(y) to mean all remuneration that can be expressed in monetary terms and lists down some specific exclusions. In this context, the Code incorporated a unique concept, according to which certain excluded components may be construed as wages if the aggregate value of such exclusions exceeds the prescribed threshold. The Code prescribes that if the sum-total of the excluded components (apart from gratuity and retrenchment compensation) exceeds fifty percentage or such other percentage notified by the Central Government of the total remuneration, then that portion of the amount exceeding such fifty percentage or such other percentage notified by the Central Government is also to be calculated as 'wages' under the Code. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

Labour Laws--Code on Wages

Striking Features of Code on Wages, 2019

Pragya Bhandari

The learned author, in this write up, delineates the salient features of the path breaking reforms in labour legislations by Code on Wages, 2019 relating to wages and bonus and matter connected therewith or incidental thereto.

1. Prologue

The enactment of the four Labour Codes i.e., the Code on Wages, 2019, the Occupational Safety, Health and Working Conditions Code, 2020, the Code on Social Security, 2020 and the Industrial Relations Code, 2020 have ushered in the reforms for the labour regulations in the country. In order to rationalize labour laws and improve ease of doing business, these four Labour Codes will subsume labour legislations regulating various facets of labour governance.The first, of the four codes proposed by the government, the Code on Wages, was passed by Parliament on 8-8-2019.

The Code on Wages, 2019 (hereinafter referred as the Code) repeals and replaces four labour legislations namely, the Minimum Wages Act, 1948, Payment of Wages Act, 1936, Payment of Bonus Act, 1965 and Equal Remuneration Act, 1976. The Code encompasses nine chapters with sixty nine sections.

2. Applicability

The Code applies to all establishments, employees and employers as defined unless specifically exempt in the code. Prior to the Code, the provisions of both Minimum Wages Act, 1948 and Payment of Wages Act, 1936 apply to workers below a particular wage ceiling working in scheduled employments only. Concept of scheduled employment had been done away with.

Section 3 lays down that no discrimination would be done among employees on the ground of gender in the matter of wages for same work or similar nature.

3. Uniform definition of term wages

There were twelve definitions of wages in different labour laws leading to litigation besides difficulty in implementation. The Code provides a single uniform definition which is wide one with specific exclusions as applicable to minimum wages, payment of wages and payment of bonus. The term wages is defined under section 2(y) to mean all remuneration that can be expressed in monetary terms and lists down some specific exclusions. In this context, the Code incorporated a unique concept, according to which certain excluded components may be construed as wages if the aggregate value of such exclusions exceeds the prescribed threshold.

The Code prescribes that if the sum-total of the excluded components (apart from gratuity and retrenchment compensation) exceeds fifty percentage or such other percentage notified by the Central Government of the total remuneration, then that portion of the amount exceeding such fifty percentage or such other percentage notified by the Central Government is also to be calculated as 'wages' under the Code.