Code on Wages, 2019

It is a combination of the following mentioned below acts:

The Employees’ Compensation Act, 1923
The Employees’ State Insurance Act, 1948
The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959
The Maternity Benefit Act, 1961
The Payment of Gratuity Act, 1972
The Cine Workers Welfare Fund Act, 1981
The Building and Other Construction Workers Welfare Cess Act, 1996
The Unorganized Workers’ Social Security Act,2008

Objective

The Minimum Wages Act, Payment of Wages Act, Payment of Bonus Act, and Equal Remuneration Act are the four main labour laws pertaining to wages that the Code on Wages, 2019 aims to combine and streamline. Through a single governance structure, it seeks to strengthen gender equality, guarantee timely and equitable payment, protect uniform wages, and lessen the burden of compliance.

Applicability

The Code on Wages, 2019 is applicable to all employees and all establishments across the country, covering both the organized and unorganized sectors. It applies to all industries, trades, businesses, and services, irrespective of workforce size. Unlike earlier laws that limited minimum wages to scheduled employments, the Code extends minimum wages, floor wage, and timely wage payment provisions to every employee. The bonus provisions apply to employees within the notified wage ceiling, and the Code covers both the public and private sectors across India.

Exceptions

Government may exempt certain establishments / employee classes in public interest. Some units may get temporary procedural relaxations.

Key Impacts:

Single Law for Wages those four earlier laws on wages, bonus and equal remuneration are merged into one code, reducing multiple compliances.
Uniform Definition of Wages is single definition of “wages” applies for all purposes. Allowances cannot exceed 50% of total pay; if they do, the extra amount will be added back to wages.
Wider Coverage of The Code applies to almost all employees, regardless of wage level or type of establishment.
State will set their own minimum wages and revise them in once in 5 years, must be above the minimum wages of central level that is national floor wages.
All the dues should be paid within 2 days of resignation, termination or removal. All the payments should be done on the set timeline of wages.
Equal Pay Provision to Strengthens the rule of equal pay for equal work across genders and ensures non-discrimination in recruitment and wages.
Bonus Rules Included that Bonus provisions are brought under the Code, simplifying compliance.
Simplified Records and Returns Common formats for registers and returns are introduced, with emphasis on electronic maintenance.
Inspector-cum-Facilitator that A new inspection system with advisory support and online/randomized inspections replaces the old model.
Higher Penalties to Fines for non-compliance are increased, and repeated violations attract stricter action.

Penalty and Compliance

. If Pay wages on time and not below minimum wage.
Failure to pay wages or minimum wages can attract a fine up to ₹1 lakh and imprisonment up to 3 months.
Delay in wage payment or incorrect wage records may result in a fine up to ₹50,000.
Repeat offences within five years can lead to imprisonment up to 3 months and/or higher fines up to ₹2 lakh
Obstructing inspection or providing false information can result in fines up to ₹1 lakh.
Maintain registers & wage slips and allow inspection.
Equal pay for equal work, only lawful deductions.
Pay wages on time and not below minimum wage.