Bhumesh
The Code on Wages Bill, 2017 – An analysis
Bhumesh Verma 30 May 2018

The Code on Wages Bill, 2017 – An analysis

Introduction

Labour laws in India are vast and expansive. Sometimes, a term has different meanings and interpretations under different legislation. For example, even a basic yet most important term ‘wages’ is defined differently in many labour enactments.

This has led to immense confusion in the applicability of labour laws. Labour law experts have time and again emphasised the need to ensure uniformity in labour laws. The Government, in pursuance of such recommendations, introduced the Code on Wages Bill, 2017 (“Code on Wages”) in August, 2017 in the Lok Sabha.

This Bill proposes to consolidate four existing laws namely, Payment of Wages Act, Payment of Bonus Act, Minimum Wages Act and Equal Remuneration Act. We have discussed and analysed the key features of the Code on Wages in the present article.

Key Features of the Code on Wages

Changes to Minimum Wages

Ø Minimum Wages now to be applicable to all types of employment: Under the extant minimum wage legislation, certain employments are notified as scheduled employments and only the persons employed in such employment are entitled to minimum wages. This leads to exclusion of a large amount of workforce, especially those employed in the unorganised sector.

 

The Code on Wages would dispense away with the system of applying minimum wages only to scheduled employments and would bring all employment within the ambit of minimum wages.

 

Hence, under the Code on Wages, persons employed in all kinds of employments including the unorganised sector would be entitled to a minimum wage.

Ø National Minimum Wage:The Code on Wages has proposed the formulation of a National Minimum Wage by the Centre. Unlike its nomenclature, a National Minimum Wage does not mean a uniform minimum wage across the country.

A National Minimum Wage would be a baseline wage fixed by the centre. It may be different for different regions. States would be compelled to fix their respective minimum wages, either equal to or above such National Minimum Wage.

Ø A fixed time period of five years has been set for wage revision. Earlier, the state governments were free to revise the minimum wages at any point of time, as long as it did not exceed a period of five years.

Provisions relating to Equal Remuneration

The Code on Wages would also subsume the Equal Remuneration Act, 1976. While it mandates no discrimination in payment of wages, the provisions pertaining to no discrimination at the time of recruitment are absent from the Code.

The maximum penalty under the Code on Wages has been fixed as three    months imprisonment and a fine up to INR 1 Lakh.

Analysis of the Code on Wages

While the intent to proposing a uniform code which would deal with payment of wages, minimum wages, bonus and equal remuneration all by itself is a laudable move, there are still certain creases which need to be straightened before this Code can be implemented.

Firstly, the proposal of introducing a national minimum wage which may vary regionally can cause confusion among the stakeholders. It is better, if the centre releases guidelines for a base minimum wage and the States follow the same, rather than introducing the concept of a national minimum wage.

Secondly, fixing the time period for revision of wages as five years may not be the best thing to do. Earlier system provided the State governments with flexibility to revise their minimum wages. The only condition imposed was to do so within a time span of five years. Such flexibility should remain under the new system as well.

Thirdly, the Code on Wages is silent with respect to provisions prohibiting gender discrimination at the time of recruitment. This is an essential provision which cannot be omitted from the Code on Wages.

Having discussed only some of the existing loopholes in the Code on Wages Bill, it is pertinent to state that, despite such flaws, the Code on Wages would go a long way in creating more definitiveness in the Indian labour law jurisprudence and infuse more confidence in all quarters.

Bhumesh Verma

Soumya Shekhar

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