The Code on Wages, 2019 marks a landmark shift in India's labour law landscape. It consolidates four major legislations, the Payment of Wages Act, 1936, the Minimum Wages Act, 1948, the Payment of Bonus Act, 1965, and the Equal Remuneration Act, 1976, nto a single, streamlined code. This legal reform is part of the broader objective of simplifying, modernising, and ensuring compliance within India's labour framework. The Code on Wages aims to provide a universal framework for wage regulation and ensures better coverage, enforcement, and transparency.

This blog explores the structural and legal transformation introduced by the Code on Wages, 2019, comparing it with the pre-existing fragmented laws. It dives into three core sub-themes: Minimum Wage, Timely Payment, and Equal Remuneration, highlighting their practical implications, enforcement mechanisms, and real-life relevance.

1. Structural and Legal Accuracy: The Shift from Fragmented Laws to Unified Code

   1. The Old Legal Framework: Prior to the Code, India had multiple wage-related legislations, each catering to specific aspects of wage regulation:
      • Minimum Wages Act, 1948 governed the fixation of minimum rates for certain employments only.
      • Payment of Wages Act, 1936 ensured regular payment of wages but applied only to employees earning below a certain threshold.
      • Payment of Bonus Act, 1965 mandated annual bonus payments to eligible employees.
      • Equal Remuneration Act, 1976 addressed wage discrimination based on gender.
      This fragmented approach led to overlapping jurisdictions, compliance burdens, and loopholes in worker protection.
   2. The Code on Wages, 2019: The new code brings coherence by applying wage standards to all employees, irrespective of sector or income ceiling. Key definitions like "wages," "employee," and "employer" have been unified. For instance, "wages" now include basic pay and dearness allowance but exclude bonuses, HRA, and gratuity. The central and state governments are both empowered to notify minimum wages across sectors.
      The Code enhances legal accuracy by removing ambiguities, enabling effective dispute resolution, and ensuring better clarity in enforcement mechanisms.
       

2. Minimum Wage: Universalisation and Fair Compensation

   1. Old Law vs. New Code: Under the Minimum Wages Act, 1948, only scheduled employments were covered. This left out a large portion of informal workers from the minimum wage protection. States notified different rates, creating inconsistencies and underpayments.
      The Code on Wages, 2019 introduces the concept of a national floor wage to prevent states from fixing rates below a prescribed minimum. It covers all employees across organised and unorganised sectors, aiming to ensure equitable pay.
   2. Real-Life Implication: Consider the case of daily wage construction workers in Bihar who were paid as low as Rs. 150 per day. With the implementation of the Code, the minimum wage for unskilled workers in the state was revised to over Rs. 300 per day, significantly improving their living standards.
   3. Practical Enforcement Challenges: While the code lays a strong legal foundation, implementation still depends on state-level notifications. Some states have delayed revising wages, and lack of awareness among workers limits the impact. Digitisation of wage records and empowerment of labour inspectors are needed for better compliance.
       

3. Timely Payment: Ensuring Wage Security

   1. Old Law vs. New Code: The Payment of Wages Act, 1936 only applied to employees earning less than Rs. 24,000/month, and there were often delays in wage disbursement. Employers found loopholes, citing unclear timelines.
      The Code on Wages, 2019 mandates that wages must be paid on time:
      • Daily wage earners: paid at the end of the shift
      • Weekly workers: paid on the last working day of the week
      • Monthly wage earners: paid before the 7th of the next month
   2. Real-Life Example: In 2021, a garment factory in Tamil Nadu was taken to task when it delayed wages for over three months, violating the Code. The local labour commissioner initiated proceedings, and the workers received their due wages with compensation for delay. The Code's stricter enforcement enabled faster resolution.
   3. Digitisation and Payroll Compliance: The Code encourages electronic payments and maintenance of digital records, reducing payment disputes and ensuring transparency. Employers are now increasingly using payroll management software to meet compliance deadlines.
       

4. Equal Remuneration: Gender Justice in the Workplace

   1. Old Law vs. New Code: The Equal Remuneration Act, 1976 aimed to prevent discrimination based on gender but was poorly enforced and limited to specific roles. Gender wage gaps persisted, especially in agriculture, domestic work, and manufacturing.
      The Code on Wages, 2019 reinforces the principle of "equal pay for equal work" and expands its scope. It prohibits wage discrimination on grounds of gender for employees performing similar nature of work.
   2. Real-Life Impact: In 2022, a multinational electronics company in Karnataka was found paying female assembly-line workers 20% less than their male counterparts. Following a complaint under the new Code, the employer was required to rectify the wage structure and compensate the affected employees.
   3. Empowerment through Awareness: Awareness campaigns by NGOs and legal aid clinics have empowered more women to file complaints. Labour departments have been tasked with conducting gender audits in workplaces.
       

5. Practical Application: Benefits, Challenges, and the Way Forward

   1. Benefits:
      • Uniformity in wage laws
      • Increased coverage of workers, especially in the informal sector
      • Simplified compliance for employers
      • Clarity in wage definitions reduces litigation
   2. Challenges:
      • Varying interpretations of "similar nature of work"
      • Resistance from industries citing increased labour costs
      • Delayed state notifications and lack of skilled enforcement officers
      • Technology gaps in small enterprises for digital compliance
   3. Suggestions for Effective Implementation:
      • Setting up help desks for worker grievances
      • Mandatory training for HR and payroll departments on compliance
      • Real-time wage monitoring systems at the state level
      • Collaboration with civil society to spread awareness

Conclusion
The Code on Wages, 2019 represents a transformative step towards modernising India's labour law system. It replaces fragmented statutes with a uniform and inclusive framework that promotes equity, transparency, and accountability. By addressing the fundamental rights of fair pay, timely disbursement, and non-discrimination, the Code aims to uplift the working class and create a just employment ecosystem.

However, the real test lies in its execution. Without timely state action, employer cooperation, and worker awareness, even the most progressive laws can falter. The focus must now shift to capacity building, efficient grievance redressal, and digital empowerment to make the Code not just a legal document, but a lived reality for millions of workers across India.

References:

1. The Code on Wages, 2019 (No. 29 of 2019), Ministry of Labour and Employment, Government of India.
2. The Minimum Wages Act, 1948.
3. The Payment of Wages Act, 1936.
4. The Equal Remuneration Act, 1976.
5. The Payment of Bonus Act, 1965.
6. Annual Report 2021-22, Ministry of Labour and Employment.
7. Economic Survey of India, 2021–22 – Government of India.
8. News Reports from The Hindu, Business Standard, and Times of India on wage disputes and enforcement.
9. Reports by PRS Legislative Research on Labour Codes.
10. International Labour Organization (ILO) briefings on wage policies and gender parity in India.