Labour Law

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HIMACHAL PRADESH NATIONAL LAW UNIVERSITY, SHIMLA
ACADEMIC YEAR: 2022 – 23
DISCIPLINE: LABOUR LAWS
TOPIC: OVERVIEW OF THE NEW WAGE CODE
SUBMITTED BY: SUBMITTED TO:
NAVISHA VERMA MRS. RUCHI GUPTA
5TH YEAR (10TH SEMESTER) ASSISTANT PROFESSOR OF LAW
BA.LL.B. (HONS.)
1020181960
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ACKNOWLEDGMENT
Every project big or small is successful largely due to the effort of many people who have
always helped from behind for every successful work. This project has been completed not
only by my efforts but several others who have timely helped me at every step I moved
forward. I would like to thank Mrs. Ruchi Gupta for giving me the opportunity to work on
this topic. It is great privilege to study this research topic under her guidance. I am also
extremely grateful to institution, for the confidence bestowed in me and entrusting me of
management principles. My completion of this assignment could not have been possible
without this. I would also like to thank all the faculty members of Himachal Pradesh National
Law University, for their critical advice and guidance without which this project would not
have been possible.
Date: May 25, 2023 Name: Navisha Verma

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CONTENTS
Introduction ................................................................................................................................ 4
Aim and Objective of the Code ................................................................................................. 5
Salient Features of the Code ...................................................................................................... 5
Structure ..................................................................................................................................... 7
Coverage and Applicability ....................................................................................................... 7
Key Definitions .......................................................................................................................... 8
The Distinction between 'Employee' and 'Worker' ................................................................ 8
Uniform Definition of Wages ................................................................................................ 9
Fixing the Minimum Wage ...................................................................................................... 10
Payment of Wages ................................................................................................................... 11
Mode of Payment of Wages ................................................................................................. 12
Fixation of Wage Period ...................................................................................................... 12
Prohibition of Discrimination on the Ground of Gender ......................................................... 14
Payment of Bonus .................................................................................................................... 15
Eligibility for Payment of Bonus ......................................................................................... 15
Rates of Bonus ..................................................................................................................... 15
Production or Productivity Bonus ........................................................................................ 16
Cooling Off Period for Payment of Bonus ........................................................................... 16
Provision Preventing Sexual Harassment ............................................................................ 18
Inspector-Cum-Facilitator ........................................................................................................ 18
Advisory Boards ...................................................................................................................... 19
Central Advisory Board ....................................................................................................... 19
State Advisory Board ........................................................................................................... 19
Compliances under the Code ................................................................................................... 20
Time-Bound Resolution of Claims .......................................................................................... 21
Offences and Penalties ............................................................................................................. 21
Draft Code on Wages (Central) Rules, 2020 ........................................................................... 22
Conclusion ............................................................................................................................... 23
Bibliography ............................................................................................................................ 23
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INTRODUCTION
In India, the law relating to employees/workmen has always been a complex subject due to
various factors whether due to its archaic laws, multiplicity of laws/regulatory authorities,
Central vs. States legislation and so on. One of the key factors to remember is that labour
laws are part of the concurrent list and accordingly both the Central and the State
governments can legislate wherever they feel need for the same. However, instead of
bringing clarity, this has created confusion due to overlapping and multiplication. Central
Government has passed more than fifty laws till date pertaining to labour and related aspects
while various State governments have also passed more than one hundred and fifty laws on
similar or the same subject. Secondly, not only the State and Central laws clash on the same
subject and create confusion but even in Central laws also, a single subject has been placed
under multiple laws. Lastly, some of these laws are too old, archaic and not in line with
current economic and industrial requirement. Therefore, consolidation and codification of the
entire set of labour laws is the urgent need of India and its manufacturing industry in order to
scale up further and put its footprint in global manufacturing base.1
In view of the aforementioned concerns, the Union Government had appointed the Second
National Commission on Labour Laws (NCL), which submitted its report in June 2002. The
said Commission had recommended that the existing Labour laws should be broadly
amalgamated into the following groups:
1. Industrial relations
2. Wages
3. Social Security
4. Occupational Safety, Health and Working Conditions
Acting on the recommendations of NCL, Central Government with a view to facilitate ease of
doing business, generate employment and safeguarding interest of workers and employers,
took the initiative to enact four (4) Labour Codes by simplifying, amalgamating and
rationalising the relevant provisions of the existing Central Labour Laws. The four Labour
Codes are as under:
1. The Code on Wages, 2019
1
Handbook on The Code of Wages, 2019, THE INSTITUTE OF COMPANY SECRETARIES OF INDIA (Nov, 2020),
available at https://www.icsi.edu/media/webmodules/Handbook_on_Code_on_Wages_7122020.pdf
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2. The Industrial Relations Code, 2020

3. The Code on Social Security, 2020
4. The Occupational Safety, Health and Working Conditions Code, 2020
The Code on Wages, 2019 („Code‟) is the first of the lot to get the legislative approval and
subsequently, the assent of the President of India. However, it awaits the notification of its
effective date.
AIM AND OBJECTIVE OF THE CODE
The enactment of the Code represents a significant overhaul of India‟s labour laws in relation
to wages and bonus. The Code emphasizes on compliance as it increases the cost of non-
compliance.
The primary objective of the code is to amend and consolidate the following laws relating to
wages, bonus and matters connected therewith or incidental thereto, into one integrated code
in accordance with Section 69 of the Code:2
o The Payment of Wages Act, 1936

o The Minimum Wages Act, 1948
o The Payment of Bonus Act, 1965
o The Equal Remuneration Act, 1976
Since all four legislations govern various aspects of the same subject, i.e. wages, the
Government's objective is to combine and cover all four under one statute, the Wage Code.
The Wage Code is thus the first step towards implementation, enforcement, and
harmonisation of the country's labour laws.
SALIENT FEATURES OF THE CODE
The Code ensures minimum wages along with timely payment of wages to all the employees
and workers. Many unorganized sector workers like agricultural workers, painters, persons
working in restaurants and dhabas, chowkidars, etc. who were out of the ambit of minimum
wages will get legislative protection of minimum wages. The Code will prove to be a
2
Lakshmikumaran & Sridharan, Code on Wages, 2019 - An overview, LEXOLOGY (Oct 2, 2020), available at
https://www.lexology.com/library/detail.aspx?g=79ea3e17-a1bb-446a-bb9d-65916c93efed
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milestone and give respectable life to 50 crore unorganized sector workers. Salient features of
the Code are as under:
o The Code universalizes the provisions of minimum wages and timely payment of
wages to all employees irrespective of the sector and wage ceiling. The provisions of
both the Minimum Wages Act, 1948 and the Payment of Wages Act, 1936 were
applicable to workers below a particular wage ceiling working in Scheduled
Employments only. This 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. This would ensure that every worker gets minimum wage
which will also be accompanied by increase in the purchasing power of the worker
thereby giving fillip to growth in the economy. 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.
o There were 12 definitions of wages in the different Labour Laws leading to litigation
besides difficulty in its implementation. The definition has been simplified and is
expected to reduce litigation and will entail at lesser cost of compliance for an
employer. An establishment will also be benefited as the number of registers, returns,
forms, etc., not only can be electronically filed and maintained, but it is envisaged that
through rules, not more than one template will be prescribed.
o Through the Code, the methodology to fix the minimum wages has been simplified
and rationalised by doing away with type of employment as one of the criteria for
fixation of minimum wage.
o Many changes have been introduced in the inspection regime including web based
randomised computerised inspection scheme, jurisdiction-free inspections, calling of
information electronically for inspection, composition of fines, etc. All these changes
will be conducive for enforcement of labour laws with transparency and
accountability.
o There were instances that due to smaller limitation period, the claims of the workers
could not be raised. To protect the interest of the workers, the limitation period has
been raised to 3 years and made uniform for filing claims for minimum wages, bonus,
equal remuneration, etc. as against the existing varying period between 6 months to 2
years.
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STRUCTURE
The Code is divided into separate chapters dealing with minimum wages, payment of wages,
and provisions relating to the bonus.
COVERAGE AND APPLICABILITY
The Code extends to the whole of India. The Code will apply to employees, both in the
organised and the un-organised sector. It universalizes right to minimum wages and timely
payment of wages to all the employees regardless of wage ceiling, employment sector. At
present, Payment of Wages Act, 1936 was only applicable to factories, certain specified
establishments, and to employees who drew monthly wages up to INR 24,000 and the
Minimum Wages Act, 1948 extended only to certain type of employment included in the
Schedule of the said Act.
The Code does not have any specific section to explain the application of the Code. It applies
to all establishments, employees, and employers unless exempted specifically in the
provisions of the Code.
The Code extends:
1. To all establishments where any trade, industry or manufacturing process is carried

on.
2. To all type of employees (irrespective of their wage limit), skilled, semi-skilled,
unskilled, supervisory, managerial across all sectors.
3. To all type of employers who engage employees for their trade, industry or
manufacturing activities.
Under this Code, the Central Government will make wage-related decisions for employments
in the railway, mines, and oil fields, among others, whereas the State Government will make
decisions for all the other sectors3. The definition of 'employee'4 now includes contractors as
3
The Code on Wages, 2019, § 2(d), No. 29 of 2019 (India)
4
The Code on Wages, 2019, § 2(k), No. 29 of 2019 (India)
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well, which will ensure that even contractors are entitled to be paid minimum wages as per
the Code.5
The Code prohibits gender discrimination in matters related to wages and recruitment of
employees for the same work or work of similar nature, except in cases where employment of
women in such work places is prohibited/restricted under the laws.6 'Work of similar nature'
is defined as 'work for which the skill, effort, experience and responsibility required are the
same'.
KEY DEFINITIONS
THE DISTINCTION BETWEEN 'EMPLOYEE' AND 'WORKER'
The Wage Code provides separate definitions of „worker‟ and „employee‟. The definition of
„employee‟ is broader than that of „worker‟.
The term 'worker'7 refers to any person except an apprentice employed in any industry to do
any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or
reward, whether the terms of employment be express or implied and also includes working
journalists and sales promotion employees, but excludes persons who is employed mainly in a
managerial or administrative capacity; or person who is employed in a supervisory capacity
drawing a monthly wage exceeding INR 15,000 or such amount as may be notified by the
Central Government from time to time, who is Apprentice under the Apprentices Act, 1961,
who is subject to the Air Force Act, 1950, the Army Act, 1950, and the Navy Act, 1957, or is
employed in the police service or as an officer or other employee of a prison.
An 'Employee'8 under the Wage Code is any person employed other than apprentice on
wages by an establishment to do any skilled, semi-skilled or unskilled, manual, operational,
supervisory, managerial, administrative, technical or clerical work for hire or reward, whether
the terms of employment be express or implied. It also includes a person declared to be an
employee by the appropriate Government. The definition excludes any member of the Armed
Forces of the Union.
5
Praveen Raju, India: Code On Wages, 2019, MONDAQ (Sept 16, 2022), available at
https://www.mondaq.com/india/employee-benefits--compensation/1230782/code-on-wages-2019
6
The Code on Wages, 2019, § 3, No. 29 of 2019 (India)
7
The Code on Wages, 2019, § 2(z), No. 29 of 2019 (India)
8
The Code on Wages, 2019, § 2(k), No. 29 of 2019 (India)
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There are however, inconsistencies with respect to the wages of 'employees' and 'workers'
under the Code. For example, under the Section 6(6) of the Code, for the fixation of
minimum rates of wages, only 'workers' are mentioned and not 'employees'.
UNIFORM DEFINITION OF WAGES
The definition of „wages‟ slightly varied across the Payment of Wages Act, 1936, the
Minimum Wages Act, 1948 and the Payment of Bonus Act, 1965 and this has resulted in
numerous litigations. Therefore, the Wage Code seeks to provide a single uniform definition
of „wages‟ for the purposes of computation and payment of wages to the employees. This will
enable employers to take a consistent and uniform approach and avoid multiple
interpretations.
The definition of 'wages' has been included within the Code to include all remuneration that
can be expressed in terms of money, including salaries, allowances, etc. As per Section 2(y)
of the Code, the term wages means all remuneration whether by way of salaries, allowances
or otherwise, expressed in terms of money or capable of being so expressed which would, if
the terms of employment, express or implied, were fulfilled, be payable to a person employed
in respect of his employment or of work done in such employment. It includes the following:
i. basic pay;
ii. dearness allowance; and
iii. retaining allowance, if any
The definition excludes the following from its purview:
i. any bonus payable under any law for the time being in force, which does not form
part of the remuneration payable under the terms of employment.
ii. the value of any house-accommodation, or of the supply of light, water, medical
attendance or other amenity or of any service excluded from the computation of
wages by a general or special order of the appropriate Government;
iii. any contribution paid by the employer to any pension or provident fund, and the
interest which may have accrued thereon;
iv. any conveyance allowance or the value of any travelling concession;
v. any sum paid to the employed person to defray special expenses entailed on him by
the nature of his employment;
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vi. house rent allowance;

vii. remuneration payable under any award or settlement between the parties or order of a
court or Tribunal;
viii. any overtime allowance;
ix. any commission payable to the employee;
x. any gratuity payable on the termination of employment;
xi. any retrenchment compensation or other retirement benefit payable to the employee
or any ex gratia payment made to him on the termination of employment.
A significant introduction under the Wage Code is that in the event the quantum of the
exclusions (except gratuity, retrenchment, ex gratia, and retiral benefits) is exceeding more
than half or such other notified percentage (“Exclusion Limit”) of the remuneration paid to
the employee, then the amount in excess of Exclusion Limit will be treated as wages.9
Proviso appended to this section states that for calculating the wages under this clause, if
payments made by the employer to the employee under clauses (a) to (i) of Section 2(y)
exceeds one-half, or such other per cent. as may be notified by the Central Government, of
the all remuneration calculated under this clause, the amount which exceeds such one-half, or
the per cent. so notified, shall be deemed as remuneration and shall be accordingly added in
wages under this clause.
Explanation to this clause further provides that where an employee is given in lieu of the
whole or part of the wages payable to him, any remuneration in kind by his employer, the
value of such remuneration in kind which does not exceed 15% of the total wages payable to
him, shall be deemed to form part of the wages of such employee.
FIXING THE MINIMUM WAGE
Section 2(s) of the Code defines “minimum wage” to mean the wage as fixed under Section 6
of the Code.
The erstwhile Minimum Wages Act, 1948 prescribed minimum wages only in relation to
scheduled employments. The Code proposes to do away with the concept of bringing specific
jobs under the Act, and mandates that minimum wages be paid for all types of employment –
9
The Code on Wages, 2019, § 2(y), No. 29 of 2019 (India)
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irrespective of whether they are in the organised or the unorganised sector. The Code links
minimum wage across the country to the skills of the employee and the place of employment.
Under the Code, the minimum wage has been universalised for all employees and
consequently those who were earlier out of the ambit of minimum wages will be covered
under the protection of minimum wages as granted under the Code.
The procedure for determination of minimum wages by the appropriate Government is in line
with the provisions of the Minimum Wages Act, 1948.
Section 5 of the Code prohibits employers from paying wages lesser than the prescribed
minimum wage. Minimum wages will be notified by the Central and State Governments in
accordance with Section 6 of the Code. These minimum wages shall be determined taking
into account the skills of workers, geographical areas, hours of work or piece of work,
arduousness of work such as temperature, humidity, hazardous occupations, or processes etc.
The Code uniformly applies to all employees across an organisation.
The minimum wages will be revised and reviewed by the Central or State Governments at
intervals of not more than 5 years.10
CONCEPT OF FLOOR WAGES
The Code has introduced a new concept of „floor wage‟. As per Section 9 of the Code, the
Central Government will fix a floor wage, considering the living standards of workers as well
as the geographical areas. Based on the floor wage rate, the appropriate Government (Central
or State) can fix the minimum wage rates. The minimum wages prescribed by the appropriate
government cannot be lesser than the floor wage. In case the existing minimum wages fixed
by the appropriate government are higher than the floor wage, they cannot reduce the
minimum wages.
The provision further provides that the central government may, before fixing the floor wage,
obtain the advice of the Central Advisory Board constituted under sub-section (1) of section
42 of the Code and consult State Governments in the manner provided by the code.
PAYMENT OF WAGES
10
The Code on Wages, 2019, § 8(4), No. 29 of 2019 (India)
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The erstwhile Payment of Wages Act, 1936 was applicable only to employees drawing wages
below Rs.24, 000 per month. However, the Code makes no mention of any such threshold
and the payments of wages provisions in the Code are applicable to all employees across the
board.
Accordingly, the Code has raised the responsibility of an employer to ensure proper wage
structuring and timely payment of such wages to all its employees.
Settlement period for monthly wages has been specified as on the 7th day of the succeeding
month11, as against 10th day of the succeeding month. Where the employees are employed in
the establishment through Contractor, then the Company/Firm shall pay to the Contractor
before the date of payment of wages (before 7th day) so that the payment of wages to the
employees of contractor shall be made positively as per section 17.
In case the employee is removed, dismissed, retrenched, resigns or becomes unemployed due
to closure of an establishment, the wages are required to be paid within two working days.12
The Payment of Wages Act, 1936 did not provide for any specific timelines for resignation
cases.
Section 15 to 25 of the Code deals with the provisions for Payment of Wages.
MODE OF PAYMENT OF WAGES
A new clause on payment of wages has been introduced by the way of Section 15 of the
Code, which allows payment to be made in current coin, currency notes, by cheque, by
crediting the wages in the bank account of the employee or by electronic mode.
As per this provision the appropriate Government may, by notification, specify the industrial
or other establishment, the employer of which shall pay to every person employed in such
industrial or other establishment, the wages only by cheque or by crediting the wages in his
bank account.
FIXATION OF WAGE PERIOD
11
The Code on Wages, 2019, § 17(1)(iv), No. 29 of 2019 (India)
12
The Code on Wages, 2019, § 17(2)(ii), No. 29 of 2019 (India)
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Under the Code, the wage period is now fixed by the employer either as daily or weekly or
fortnightly or monthly, in order to ensure that the wage period does not exceed 1 month by
the virtue of Section 16 of the Code.
TIME LIMIT FOR PAYMENT OF WAGES
The time limit for the payment of wages shall be follows:
S. No. Wage period Payment timelines

1) Daily basis At the end of the shift
2) Weekly basis On the last working day of

the week that is to say before
the weekly holiday.
3) Fortnightly basis Before the end of the second
day after the end of fortnight
4) Monthly basis Before the expiry of the
seventh day of the
succeeding month
The time limit for payment of wages has also been prescribed. In a case where an employee is
removed, dismissed, retrenched, resigns, or becomes unemployed due to closure of an
establishment, the wages shall be paid within 2 working days of such removal, retrenchment,
or resignation. This definition now also includes 'resignation' which is an important
consideration for the employer to keep in mind.13
Section 18 of the Code also places a restriction on deductions from the wages of employee
other than those authorised under the Code.
The appropriate government may fix the number of hours that constitute a normal working
day. In case the employees work in excess hours of a normal working day, they will be
entitled to overtime wage, which must be at least twice the normal rate of wages.14
13
14
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Under the Code, an employee's wage may be deducted on certain grounds including: (i) fines;
(ii) absence from duty; (iii) accommodation given by the employer; or (iv) recovery of
advances given to the employee, among others.15 These deductions shall not exceed 50% of
the employee's total wage.16 In case the deductions exceed 50%, the excess can be recovered,
as provided in the rules formulated under the Wage Code.17 In case the deductions made by
the employer are not deposited with the trust or in a Government fund, the employee cannot
be held responsible for such default of the employer.18
PROHIBITION OF DISCRIMINATION ON THE GROUND OF

GENDER
The Equal Remuneration Act, 1976 prohibits employers from discriminating in wage
payments as well as recruitment of workers on the basis of gender. The Code subsumes the
Equal Remuneration Act, 1976, and contains specific provisions which prohibit gender
discrimination in matters related to wages.
While the Equal Remuneration Act, 1976 was containing protective provisions in favor of
women, the Code has taken a gender-neutral approach by prohibiting discrimination on the
ground of gender in matters relating to wages.
Section 3 and 4 of the Code deals with the prohibition of discrimination on the ground of
gender.
Section 3 prohibits discrimination on the ground of gender providing that there shall be no
discrimination in an establishment or any unit thereof among employees on the ground of
gender in matters relating to wages by the same employer, in respect of the same work or
work of a similar nature done by any employee.
No employer shall-
(i) for the purposes of complying with the provisions of sub-section (1) of Section 3,
reduce the rate of wages of any employee; and
15
16
17
18
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(ii) make any discrimination on the ground of sex while recruiting any employee for
the same work or work of similar nature and in the conditions of employment,
except where the employment of women in such work is prohibited or restricted
by or under any law for the time being in force.
Section 4 deals with decision as to disputes with regard to same or similar nature of
work and provides that where there is any dispute as to whether a work is of same or similar
nature, the dispute shall be decided by such authority as may be notified by the appropriate
Government.
PAYMENT OF BONUS
The Payment of Bonus Act, 1965 was applicable only to employees earning less than
Rs.21,000 per month. The Code stipulates that employees earning below the salary threshold
to be notified by the State government, will be eligible for payment of bonus.
Similar to the provisions of the Payment of Bonus Act, 1965, the chapter relating to bonus
payments under the Code shall apply to only those establishments employing at least 20
employees on any day in that accounting year.19
Chapter IV of Code of Wages deals with Payment of Bonus. Section 26 to 41 deals with the
provisions relating to payment of bonus.
ELIGIBILITY FOR PAYMENT OF BONUS
According to Section 26 of the Code all employees whose wages do not exceed a specific
monthly amount (to be notified by the Central or State government) will be entitled to an
annual bonus. Further, employee has to put at least thirty days work in an accounting year to
become eligible for bonus.
RATES OF BONUS
Bonus will be paid out of allocable surplus (calculated in respect of any accounting year, after
deductions for depreciation, direct taxes or such other sums prescribed by Central
Government from gross profits for that year), which is at least:20
19
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(i) 8.33% of wages; or

(ii) Rs. 100, whichever is higher.
Bonus payable shall be equal to 60% of the allocable surplus in the case of banking
companies, and 67% of the allocable surplus in the case of other establishments of the
available surplus and the available surplus shall be the amount calculated in accordance with
section 33 of the Code.21
An employee can receive a maximum bonus of 20% of his annual wages, in a financial
year.22
The Code also lays down the calculation of set on and set off for the allocable surplus post
the 5th accounting year in which the employer sells the goods produced or manufactured or
services provided.23 All departments or undertakings or branches of an establishment shall be
treated as part of the same establishment for the purposes of computation of bonus under the
Code.24
The bonus shall be proportionately reduced in the event the employee has not worked for all
working days in an accounting year, by adjusting the minimum bonus if such bonus is higher
than 8.33% of the salary or wage of the days such employee has worked in that accounting
year.25
PRODUCTION OR PRODUCTIVITY BONUS
Any demand for bonus in excess of the bonus, either on the basis of production or
productivity in an accounting year for which the bonus is payable shall be determined by an
agreement or settlement between the employer and the employees, subject to the condition
that the total bonus including the annual minimum bonus shall not exceed twenty per cent of
the wages earned by the employee in the accounting year.26
COOLING OFF PERIOD FOR PAYMENT OF BONUS
20
21
22
23
The Code on Wages, 2019, § 26(4) and 36, No. 29 of 2019 (India)
24
25
26
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In the first five accounting years following the accounting year in which the employer sells
the goods produced or manufactured by him or renders services, as the case may be, from
such establishment, bonus shall be payable only in respect of the accounting year in which
the employer derives profit from such establishment and such bonus shall be calculated in
accordance with the provisions of this Code in relation to that year, but without applying the
provisions of section 36 related to set on and set off. 27
For the sixth and seventh accounting years following the accounting year in which the
employer sells the goods produced or manufactured by him or renders services, as the case
may be, from such establishment, the provisions of section 36 shall apply subject to the
following modifications given under the Section 26(7) of the Code.28
From the eighth accounting year following the accounting year in which the employer sells
the goods produced or manufactured by him or renders services, as the case may be, from
such establishment, the provisions of section 36 shall apply in relation to such establishment
as they apply in relation to any other establishment.29
Explanation 1 appended to clause (8) of Section 26 states that an employer shall not be
deemed to have derived profit in any accounting year, unless-
a) he has made provision for depreciation of that year to which he is entitled under the
Income-tax Act or, as the case may be, under the agricultural income tax law; and
b) the arrears of such depreciation and losses incurred by him in respect of the
establishment for the previous accounting years have been fully set off against his
profits.
Explanation 2 appended to clause (8) of Section 26 sale of the goods produced or

manufactured during the course of the trial running of any factory or of the prospecting stage
of any mine or an oil-field shall not be taken into consideration and where any question arises
with regard to such production or manufacture, the appropriate Government may, after giving
the parties a reasonable opportunity of representing the case, decide upon the issue.
27
28
29
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The provisions relating to set on and set off shall, so far as may be, apply to new departments
or undertakings or branches set up by existing establishments.30
PROVISION PREVENTING SEXUAL HARASSMENT
As a step forward, the disqualification for conviction of sexual harassment is now an

additional provision, which did not exist under the repealed laws.31 As per Section 29 of the
Code an employee shall be disqualified from receiving bonus under this Code, if he is
dismissed from service for conviction for sexual harassment. All eligible employees will need
to be paid bonus within 8 months from the close of an accounting year.32
INSPECTOR-CUM-FACILITATOR
Chapter VII of the Code provides for the appointment of an Inspector-cum-Facilitator to

carry out inspections of employers and employees for better compliance. Additionally,
Inspector-cum-Facilitator appointed under Section 51 of the code shall be deemed to be
public servant within the meaning of section 21 of the Indian Penal Code.
In the erstwhile legal regime relating to wages, inspectors are appointed to carry out (i)
surprise checks, and (ii) examine persons and require them to give information, among other
powers. The office of „inspector‟ under the previous regime has been replaced with an
„Inspector-cum Facilitator‟, who has additional duties of guiding and advising employers and
employees on effective implementation of the Code. Employer can seek help of
Inspectorcum-Facilitator to ensure compliance under the Code.
Under the new wages code he will reserve the right to examine any person on the
establishment premises and seize, search, or take copies of wages, as he/she may consider
necessary if the employer has committed an offence. The inspection shall be conducted based
on a scheme decided by the appropriate government.33
The Inspector-cum-Facilitator can only initiate an action under the Code, after giving the
employer an opportunity to comply with the provisions of the Code. If during the time period,
the employer complies with the written instructions of the Inspector-cum-Facilitator, he/she
30
31
32
33
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cannot proceed against the employer. This will ensure that the employer has a right to be
heard. However, in case of repetition of offence within 5 years of the first violation, such
opportunity will not be provided.
Keeping in line with the digitisation initiatives of the Government, the Code now allows
inspection electronically and calling of information relating to the inspection via a web-based
platform.
ADVISORY BOARDS
Section 42 of the Code deals with provisions relating to functions of Central and State
Advisory Board. The Central and State governments will constitute advisory boards.
CENTRAL ADVISORY BOARD
The Central Government shall constitute the Central Advisory Board which shall consist of
persons to be nominated by the Central Government consisting of:34
a) representing employers;
b) representing employees which shall be equal in number of the members specified in
clause (a);
c) independent persons, not exceeding one-third of the total members of the Board; and
d) 5 representatives of such State Governments as may be nominated by the Central
Government.
One-third of the members shall be women and a member specified in clause (c) above shall
be appointed by the Central Government as the Chairperson of the Board.35
The Central Advisory Board shall advise the Central Government on reference of issues
mentioned in Section 42(3) and on such advice, the Central Government may issue directions
to the State Government as it deems fit in respect of matters relating to issues referred to the
Board.36
STATE ADVISORY BOARD
34
35
36
P a g e | 20
Every State Government shall constitute a State Advisory Board for advising the State
Government on the issues mentioned in Section 42(4). The State Advisory Board may
constitute one or more committees or subcommittees to look into issues like fixation or
revision of minimum wages and increasing employment opportunities for women, etc.
The State Advisory Board and each of the committees and subcommittees thereof shall
consist of persons:37
a) representing employers;
b) representing employees which shall be equal in number of the members specified in
clause (a); and (c) independent persons, not exceeding one-third of the total members
of the Board or committee or sub-committee, as the case may be.
One-third of the members shall be women and one among the members specified in clause
(c) above shall be:38
a) appointed by the State Government as the Chairperson of the Board;

b) appointed by the State Advisory Board as the Chairperson of the committee or sub-
committee, as the case may be.
COMPLIANCES UNDER THE CODE
As per Section 50 of the Code every employer will need to comply with the following:
 Maintain a register containing the details with regard to persons employed, muster
roll, wages and such other details in such manner as may be prescribed.
 Every employer shall display a notice on the notice board at a prominent place of the
establishment.
The notice should category-wise wage rates of employees, wage period, day or date
and time of payment of wages, and the name and address of the Inspector-cum-
Facilitator having jurisdiction.
 Issue wage slips to the employees in such form and manner as may be prescribed.
The aforementioned compliance related obligations shall not apply to in respect of the
employer to the extent he employs not more than five persons for agriculture or domestic
37
38
P a g e | 21
purpose. Proviso to Section 50(4) states that such employer, when demanded, shall produce
before the Inspector cum-Facilitator, the reasonable proof of the payment of wages to the
persons so employed.
TIME-BOUND RESOLUTION OF CLAIMS
The Wage Code prescribed a limitation period of three years for filing of claims by an
employee as against the timelines prescribed under the existing enactments. 39 The dispute of
fixation of bonus or eligibility for payment of bonus be deemed to be considered as an
‟industrial disputes‟. 40 An employee or any registered trade union registered of which the
employee is a member; or the Inspector-cum-Facilitator can file an application for claims
under the Wage Code before the notified authority. 41 The authority shall decide the claim
within a period of three months.42 Appeals are to be filed within a period of ninety days43,
which the appellate authority will endeavour to dispose of them in three months.44 Claims are
to be recovered as arrears of land revenue and remit the same to the authority for payment to
the concerned employee.45
OFFENCES AND PENALTIES
The Code provides for a graded penalty system for contraventions under the provisions of the
Code.
Unlike the provisions under the Minimum Wages Act, 1948 and the Payment of Bonus Act,
1965 which provide for punishment of imprisonment up to six months, the penal
consequences under the Code are relatively lenient and only entail punishment with fine.
However, the Code penalises a second conviction within a span of five years from the first
conviction with imprisonment. The quantum of fines for contraventions under the Code has
seen a significant increase. Additionally, it is to be noted that the offences of non-
maintenance or improper maintenance of records and registers in the establishment are
punishable only with a fine.
39
40
41
42
43
44
45
P a g e | 22
Under the Code, the Inspector-cum-Facilitator is required to afford an opportunity to the

employer before initiating prosecution proceedings in cases of first contraventions. This
facility will benefit contraventions which are non-intentional or due to genuine lack of
information on the part of the employer. Exhaustive procedures in relation to compounding of
offences have been provided under the Code.
Penalties for non-compliances have now been substantially enhanced, which may foster a
compliance culture by acting as a deterrent. Additionally, providing for compounding of
offences may lead to greater enforcement. Finally, the Code clearly prescribes the burden of
proof in case of claims of non-payment or deficient payment of wages or bonus to be on the
employer.
Section 52 to 56 of the Code deals with the provisions relating to offences and penalties.
The Code specifies the following penalties for offences committed by the employer 46, such as
(i) paying less than the due wages; or (ii) contravening any provision of the Code. Penalties
vary depending on the nature of the offence, with the maximum penalty being imprisonment
for 3 months along with a fine of up to INR 1,00,000. The compensation payable for any
default in payment of wages, minimum wages, bonus, etc. could be up to 10 times the claim
amount as may be determined by the relevant authority.
In case of a subsequent offence, within 5 years from the first offence, the penalty will be
imprisonment for 1 month or a fine up to INR 40,000 or both. If the offence is committed by
a company, then every person who at the time of the commission of the offence was the in-
charge and responsible for the conduct of the company, will be responsible and deemed to be
guilty.
DRAFT CODE ON WAGES (CENTRAL) RULES, 2020
In exercise of the powers conferred under section 67 of the Code on Wages, 2019 read with
section 24 of the General Clauses Act, 1897 Central Government has notified the draft Code
on Wages (Central) Rules, 2020. Code on Wages (Central) Rules, 2020 contains Fifty Eight
Rules and divided into Nine Chapters. It contains provisions for manner of calculating the
minimum rate of wages47, Norms for fixation of minimum rate of wages48, Time Interval for
46
47
Draft Code on Wages (Central) Rules, 2020, § 3
P a g e | 23
revision of dearness allowance49, Manner of fixing floor wage50, Constitution of Central

Advisory Board51, etc.
CONCLUSION
The Code is a well-intentioned piece of legislation which aims to balance the interests of the
employer and the employee. Though the Code contains substantial portions of the repealed
legislations, it makes a decent attempt to replace their obsolete provisions. The codification
of labour laws shall remove the multiplicity of definitions and authorities. Compliance in the
forms of maintenance of records, registers, returns and display of notices will be substantially
reduced. Thus, Cost of compliance will reduce and hopefully eliminate any litigation
surrounding a complex definition of wage, employee, etc. The provisions of the Code also
inspire confidence in the business community, and further clarity can be realized once the
subordinate legislations and rules under the Code are in place. There would be a challenge of
compliance for corporate having offices in different States and hence it should be ensured
that there is uniformity in the Form Nos. across the States as well. As we all are aware, no
statute or law can be complete in all respects and cannot provide solution to each and every
issue and hence, there will be some challenges in the effective implementation of provisions
of the Code.52
BIBLIOGRAPHY
BOOKS
o Saurabh Munjal & Vaibhav Munjal, Handbook on Labour Wage Code (Eastern Book
Company, 1st ed., 2021)
ONLINE SOURCES
o SCC
o Manupatra
o Indian Institute of Company Secretaries
48
49
50
51
52
Supra note 1.

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HIMACHAL PRADESH NATIONAL LAW UNIVERSITY, SHIMLA

ACADEMIC YEAR: 2022 – 23

DISCIPLINE: LABOUR LAWS

TOPIC: OVERVIEW OF THE NEW WAGE CODE

SUBMITTED BY: SUBMITTED TO:

NAVISHA VERMA MRS. RUCHI GUPTA

5TH YEAR (10TH SEMESTER) ASSISTANT PROFESSOR OF LAW

Date: May 25, 2023 Name: Navisha Verma

1. The Code on Wages, 2019

2. The Industrial Relations Code, 2020

AIM AND OBJECTIVE OF THE CODE

o The Payment of Wages Act, 1936

SALIENT FEATURES OF THE CODE

COVERAGE AND APPLICABILITY

The Code extends:

1. To all establishments where any trade, industry or manufacturing process is carried

THE DISTINCTION BETWEEN 'EMPLOYEE' AND 'WORKER'

UNIFORM DEFINITION OF WAGES

The definition excludes the following from its purview:

vi. house rent allowance;

FIXING THE MINIMUM WAGE

CONCEPT OF FLOOR WAGES

MODE OF PAYMENT OF WAGES

FIXATION OF WAGE PERIOD

TIME LIMIT FOR PAYMENT OF WAGES

The time limit for the payment of wages shall be follows:

S. No. Wage period Payment timelines

2) Weekly basis On the last working day of

PROHIBITION OF DISCRIMINATION ON THE GROUND OF

ELIGIBILITY FOR PAYMENT OF BONUS

(i) 8.33% of wages; or

PRODUCTION OR PRODUCTIVITY BONUS

COOLING OFF PERIOD FOR PAYMENT OF BONUS

Explanation 2 appended to clause (8) of Section 26 sale of the goods produced or

PROVISION PREVENTING SEXUAL HARASSMENT

As a step forward, the disqualification for conviction of sexual harassment is now an

Chapter VII of the Code provides for the appointment of an Inspector-cum-Facilitator to

CENTRAL ADVISORY BOARD

STATE ADVISORY BOARD

a) appointed by the State Government as the Chairperson of the Board;

COMPLIANCES UNDER THE CODE

TIME-BOUND RESOLUTION OF CLAIMS

OFFENCES AND PENALTIES

Under the Code, the Inspector-cum-Facilitator is required to afford an opportunity to the

DRAFT CODE ON WAGES (CENTRAL) RULES, 2020

revision of dearness allowance49, Manner of fixing floor wage50, Constitution of Central

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