Centre's Code on Wages to subsume 38 existing Labour Acts

06 September 2017

The government is in the process of a major exercise of rationalisation of labor laws by merging the 38 different Labour Acts into four labour codes, namely, Code on Wages, Code on Industrial Relations, Code on Social Security and Code on Occupational Safety, as part of labor law reforms.

The Code on Wages Bill 2017, which was introduced in the Lok Sabha on 10 August 2017, subsumes four existing laws, viz, the Minimum Wages Act, 1948; the Payment of Wages Act, 1936; the Payment of Bonus Act, 1965; and the Equal Remuneration Act, 1976. After the enactment of the Code on Wages, all these four Acts will get repealed.

The codification of the labour laws will remove the multiplicity of definitions and authorities leading to ease of compliance without compromising wage security and social security to the workers, a labour ministry release stated.

At present, the provisions of the Minimum Wages Act and the Payment of Wages Act do not cover substantial number of workers, as the applicability of both these Acts is restricted to the scheduled employments / establishments. The new Code on Wages will ensure minimum wages to one and all and timely payment of wages to all employees irrespective of the sector of employment without any wage ceiling.

The labour ministry has also introduced a concept of statutory National Minimum Wage for different geographical areas. It will ensure that no state government fixes the minimum wage below the National Minimum Wages for that particular area as notified by the central government.

Further, it is proposed that payment of wages be made through cheque or digital / electronic mode in order to promote digitisation as also to extend wage and social security to the worker. The new bill also provides for an Appellate Authority between the Claim Authority and the Judicial Forum, which will lead to speedy, cheaper and efficient redressal of grievances and settlement of claims.

Penalties for different types of violations under this Code have been rationalised with the amount of fines varying as per the gravity of violations and repeat of the offences. Provision of compounding of offences has been made for those which are not punishable by a penalty of imprisonment.

Recently, some news reports have been published regarding the fixation of minimum wage as Rs18,000 per month by the central government. It is clarified that the central government has not fixed or mentioned any amount as ''national minimum wage'' in the Code on Wages Bill 2017. The apprehension that minimum wage of Rs18000 per month has been fixed for all employees is incorrect, false and baseless, the release stated.

The minimum wages will vary from place to place depending upon skill required, arduousness of the work assigned and geographical location, It added.

Further, clause 9 (3) of the Code on Wages Bill 2017 clearly states that the central government, before fixing the national minimum wage, may obtain the advice of the Central Advisory Board, having representatives from employers and employees, thus providing a consultative mechanism before determining the national minimum wage.

The release also clarified that some reports have also been appearing in the media regarding the revised methodology for calculation of minimum wages by enhancing the units from three to six, was purely a demand raised by trade unions in the recent meeting of the Central Advisory Board on Minimum Wages and not part of the Code on Wages Bill.

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