The Wage Code was originally drafted in 2017 to amalgamate and rationalize laws concerning wages and bonus. Its Preamble states its aim to:
amend and consolidate the laws concerning wages and bonus and matters connected therewith or incidental thereto.

The Code on Wages Bill, 2019 was passed by the Lok Sabha on 30 July 2019 and by the Rajya Sabha on 02 August 2019.The Code on Wages Bill, 2017 was introduced before the last Lok Sabha on 10 August 2017 and was mentioned Parliamentary committee, which submitted its report on 18 December 2018. Out of 24 recommendations made by the committee, 17 were accepted by the govt.

The Code intends to amalgamate, simplify and rationalise the relevant provisions of the subsequent four central labour enactments concerning wages, namely:

1. The Payment of Wages Act, 1936
2. The Minimum Wages Act, 1948
3. The Payment of Bonus Act, 1965
4. The Equal Remuneration Act, 1976

Once the President of India gives his assent, the Code shall be effective from the date of publication within the Official Gazette.

Introduction
After years of trying, the central government has made a fresh bid to universalise provision of minimum wages to all or any or any workers, both in organised and unorganised sector, through the Code of Wages, 2019[1]. The last attempt was made in 2017 when a bill for the aim was introduced within the Lok Sabha and mentioned a Parliamentary committee but couldn't be passed.

The Bill amalgamates four labour laws concerning wages and bonus and related matters - the Payment of Wages Act of 1936, Minimum Wages Act of 1948, Payment of Bonus Act of 1965 and Equal Remuneration Act of 1976 - into one code and provides for a national minimum wages for all workers.

It provides for all essential elements related to wages, equal remuneration, its timely payment and bonus. The wage would accompany basic rate of wage, cost of living allowance and thus the cash value of concessions etc. and take into account skills, arduousness of labour, geographical locations and other aspects to repair it. Both the central and state governments will fix minimum wages in their respective sphere.

The provision concerning timely payment and authorised deductions (applicable thus far for workers drawing Rs 24,000 per month) are getting to be applicable to all employees no matter wage ceiling, including those within the govt establishments.

To remove arbitrariness and malpractices, there would be Inspectors-cum-Facilitators in place of Inspectors. The Parliamentary panel had objected to replacing Inspector with Facilitator on rock bottom that the latter seemed to suggest dilution of the implementation mechanism and hence the hyphenated arrangement.

The bill also provides for the appointment of 1 or more authorities, instead of multiple ones at this , to form a choice claims and an appellate authority for quick , cheaper and efficient redressal of grievances.

In case of claims concerning non-payment or less payment of wages or bonus or unauthorised deductions, the burden of proof would get on the employer. the quantity of limitation for filing claims has been extended to three years (from six months to 2 years).

The Bill also provides for revising minimum wages every five years and emphasises on the use of technology for enforcement, in conjunction with payment of wages by cheque or through digital modes.

Highlights of the Bill

• The bill[2] aims to rework the old and obsolete labour laws into more accountable and transparent ones and seeks to pave the way for the introduction of minimum wages and labour reforms within the country.
   
• It regulates the wages and bonus payments altogether employments where any industry, trade, business, or manufacturing is being administered.
   
• The bill subsumes the subsequent four labour laws:
  
  • The Payment of Wages Act, 1936
  • The Minimum Wages Act, 1948
  • The Payment of Bonus Act, 1965
  • The Equal Remuneration Act, 1976.
    
    
• It universalizes the provisions of wage s and timely payment of wages to all or any employees regardless of the world and wage ceiling and seeks to make sure Right to Sustenance for each worker and intends to extend the legislative protection of minimum wage.
   
• It has been ensured within the bill that employees getting monthly salary shall get the salary by 7th of next month, those performing on a weekly basis shall get the salary on the Judgment Day of the week and daily wagers should catch on on an equivalent day.
   
• The provisions of the bill will apply to all or any the workers:
  
  • At present, the provisions of both the Minimum Wages Act and Payment of Wages Act apply on workers below a specific wage ceiling working in Scheduled Employments only.
  • 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 after the bill becomes an Act.
     
• The Central Government is empowered to repair the ground wages by taking under consideration the living standards of workers. it's going to set different floor wages for various geographical areas.
   
• The minimum wages decided by the central or state governments must be above the ground wage.
   
• According to the bill, wages include salary, allowance, or the other component expressed in monetary terms. This doesn't include bonus payable to employees or any traveling allowance, among others.
   
• Minimum Wage [3]:
  International Labour Organisation defines it as the minimum amount of remuneration that an employer is required to pay wage earners for the work performed during a given period, which can't be reduced by labor contract or a private contract. Or, the wage includes the bare needs of life like food, shelter, and clothing.
   
• Living Wage:
  it's the wage needed to supply the minimum income necessary to buy basic needs supported the value of living during a specific community. additionally to reveal needs, a 'living wage' includes education, health, insurance, etc.
   
• Fair Wage:
  A 'fair wage' may be a mean between 'living wage' and 'minimum wage'.
   
• It simplifies the methodology to repair wage by doing away with the type of employment together criterion. The wage fixation would primarily be supported geography and skills.
   
• In order to make sure transparency and accountability, the bill seeks to reform the inspection regime by introducing web based random computerised inspection scheme, jurisdiction-free inspections, calling of data electronically, the composition of fines, etc.
   
• To streamline the claims of workers, the limitation period for filing claims for minimum wages, bonus, equal remuneration has been raised to three years.
   
• It prohibits gender discrimination in matters associated with wages and recruitment of employees for an equivalent work or work of comparable nature.
   
• A simplified definition of wage The new wage code will remove the multiplicity of wage definitions, which may significantly reduce litigation also as compliance cost for employers. Currently, 12 different labor laws defined wages differently resulting in litigation additionally to difficulty in its implementation.
   
• Uniformity in coverage and payment The Bill allows provisions of minimum wages, also as timely payment of wages, to hide all employees in both the organized also as unorganized sectors. The unorganized sector, generally , includes labor-intensive industries and little businesses employing but 10 workers in total.
   
• Currently, the provisions of the Minimum Wages Act, 1948 and therefore the Payment of Wages Act, 1936 apply to workers employed in certain sorts of jobs and below a specific wage ceiling only.
   
• Fewer factors to work out wage . The Bill links wage across the country to the talents of the worker and therefore the place of employment. Currently, laws fix minimum wages supported multiple factors, starting from the extent of skill set to the sort of employment
   
• State wages to be above the national floor rates. The Bill says that the federal will set the national floor rates for wages, also as wage in certain sectors (such as railways and mining). The government will fix the minimum wages for his or her regions, which can't be less than the national floor wage set by the federal . However, the federal may set different national minimum wages for various parts of the country.
   
• The Bill also specifies that the minimum wages must be revised every five years, and therefore the overtime rate must be set at twice the quality wage rate across the country.

Analyzing the impact of key provisions of the Wage Code

The Wage Code consolidates four laws on the payment of wages and bonus viz. the Payment of Wages Act, 1936 (PW Act), the Minimum Wages Act, 1948 ('MW Act'), the Payment of Bonus Act, 1965 ('PB Act') and therefore the Equal Remuneration Act, 1976. These laws stand repealed on the Wage Code's enactment.

The Wage Code essentially consolidates the aforementioned laws, with some additions and departures. While this consolidation aids enforcement, implementation and harmonization, the last word effectiveness of the Wage Code can only be tested within the days to return.

In this context[4], it's important to know the changes caused by the Wage Code in terms of definitions, additions and deletions. it's important to notice that the Wage Code now applies to all or any employees (except possibly for payment of bonus). This has been done by eliminating the eligibility threshold existing under the Payment of Wages Act, 1936 ('PW Act'). The Wage Code has also done away with 'scheduled employment', implying that minimum wages must be paid across all industries.

One standout reform concerns introducing the concept of a 'floor wage', notified by the Central Government, varying across geographical areas. This floor wage functions as a baseline for State-level minimum wages. The Wage Code provides for review/revision of minimum wages at intervals not exceeding five years. Further, the wage period and deadlines for paying wages are specifically prescribed, unlike earlier.

In reference to the law on bonus, the Wage Code changes the eligibility criteria for the payment of bonus and the way it's calculated. Previously, eligibility hinged on a prescribed wage ceiling, which can now be notified by the govt. Further, under the Wage Code, bonus is calculated on the upper of the notified wage ceiling or the wage . However, employees earning wages above the notified wage ceiling might not be entitled to bonus under the Wage Code.

Thus, the Wage Code provides that for eligibility for bonus wages shouldn't exceed the notified wage ceiling, while for calculating bonus, wages may exceed a notified wage limit. This creates avoidable confusion, raising doubts on whether the notified wage ceiling is that the same for eligibility and calculation of bonus, and whether the bonus provisions of the Wage Code are intended to hide all employees or not.

Further, conviction for harassment is now a further disqualification for the payment of bonus. this is often a step within the right direction, which didn't exist under the previous PB Act.
On the connected themes of compliance and enforcement, the Wage Code envisages certain reforms.

The 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. Inspections are now possible through a web-based inspection scheme and electronic summoning of data , which can ease compliance burdens, and be in sync with current trends towards digitalization.

Penalties for non-compliances have now been substantially enhanced, which can foster a compliance culture by acting as a deterrent. Additionally, providing for compounding of offences may cause greater enforcement. Finally, the Code clearly prescribes the burden of proof just in case of claims of non-payment or deficient payment of wages or bonus to get on the employer.

Significance

• Minimum wages are accepted globally to be an important means to both combating poverty and ensuring the vibrancy of any economy.
   
• The International Labour Conference's Global Jobs Pact of 2009[5] has identified that the regular adjustment of wages, in consultation with the social partners will help in reducing inequality, increasing demand and contributing to economic stability.
   
• Similarly, The Economic Survey 2018-19 during a chapter titled 'Redesigning a wage System in India for Inclusive Growth' stressed the importance of building an efficient wage system.
• To streamline the definition of wages as present labour laws contains 12 different definition of wages which is that the major explanation for litigation and inefficiency within the implementation of labour laws.
   
• The definition has been simplified and is predicted to scale back litigation and can entail at a lesser cost of compliance for an employer.
   
• An establishment also will be benefited because the number of registers, returns, forms, etc., not only are often electronically filed and maintained, but it's envisaged that through rules, less than one template are going to be prescribed.

Concerns
Trade unions like Bharatiya Mazdoor Sangh (BMS) and therefore the All India union Congress (AITUC) has raised concerns over:

• The nine-hour working day definition
• A lack of clarity within the rules on scope for up gradation of workers' skill category
• The lack of representation for trade unions within the wage fixation committee.

Way forward: tons will depend upon the ultimate floor wage or wages that the Centre will choose:

• Earlier, in 2015, the Seventh Central Pay Commission had recommended setting the minimum buy government employees at Rs18,000 per month.
   
• An expert committee constituted by the Labour Ministry had in February this year recommended that a need based national wage for India need to be fixed at Rs375 per day (Rs 9,750 per month). Additionally, the committee had mooted payment of a city compensatory allowance averaging up to Rs55 per day for urban workers.
   
• And just last month, the Delhi government[6] set a wage of Rs14,842 per month for unskilled workers after the Supreme Court ruled in favour of the government.

Finally, the last word success of the Code are going to be determined by the extent to which the wage set is both fair and truly implemented so on benefit the many workers within the unorganised sectors of the economy.

The enactment of the Code on Wages, 2019 (Wage Code) may be a long-awaited initiative in rationalizing India's labour laws. this is often significant from the standpoints of greater compliance and facilitating the convenience of doing business. Further, this is often a critical reform in a neighborhood already focused post the recent Economic Survey and Union Budget.
India's regulatory framework governing labour laws is complex.

The proposed creation of 4 Labour Codes (including the Wage Code), streamlining multiple central labour laws on wages and bonus, occupational health and safety, Social Security and industrial relations, respectively, is therefore, a much-needed step towards consolidation and simplification.

Part one among this text highlights and analyses the Wage Code's key features. Part two highlights other changes introduced by the Wage Code, and highlights areas where implementational challenges could also be faced within the days to return.

Research question

How does the code on wages act impact employers, workers and the economy at large?

• The most vital facet of The Code on Wages is it's coverage without regard to wage ceilings, thus, applying to all or any workers. it's expected to profit over 50 crores employees across the country, with its specialise in enhancing minimum wages.
   
• By removing duplicity in definitions, interpretations and state-wise standards, the Code makes the system of payment of wages efficiency, easier and speedier.
   
• Uniform application across sectors along side deadlines on timely payments to workers would scale back excessive labour litigation.
   
• The Code on Wages, like the Code on Industrial Relations treats fixed-term, contract workers at par with regular workers on the payroll, ensuring dignity, equality in wages and reference to all workers.
   
• Workers are benefited from the provisions that allow state governments to repair a better wage than what's established by the central government. Also, if the state's wage is above the nationally determined wage , it can't be lowered to the detriment of workers.
   
• Promoting digital sorts of payment through cheques and online transfer is probably going to increase the advantages of digitisation to lowest levels of workers and offer Social Security , while also making wage regulation and supervision process more efficient for businesses and government.
   
• Gender discrimination within the payment of wages and regionalism that allowed for variance in wages for an equivalent skill in several parts of the country would be reduced.

Conclusion
The Code is an important step towards streamlining labour laws in India. The Code encourages an environment of co-operation between the executive bodies and therefore the employers by emphasizing on compliance instead of imposition of penal action. With the reduction in multitude of regulators, the inspection environment also can be expected to become simpler, with faster resolution of issues in reference to compliance.

The Code also covers both the organized and therefore the unorganized sector, thus paving the way for an outsized proportion of the workforce being afforded protection from any discriminatory practices and for ensuring that a good wage is paid to all or any.

The Code is predicted to not only reduce employer-employee disputes, but also disputes between the implementing agencies and therefore the employers. That said, there are issues that require urgent attention of the govt including in reference to wage threshold that would be imposed across India in respect of qualification norms for bonus payouts, diverse parameters being set for wage computation, restrictions which will be imposed on structuring the salary of highly remunerated employees and conflicting provisions regarding overtime wages, lest it reverses the advantages that the Code had began to realize.

One of the stated objectives of the Code, as reflected in its statement of objects and reasons, is to bring the utilization of technology in its enforcement and to usher in transparency and accountability. tons would therefore, depend upon how the principles and regulations are framed and whether the govt goes the additional mile to make sure consistency and certainty within the implementation of the varied provisions of the Code, including in ensuring that the inspection regime is actually employer-identity agnostic. Any measure that facilitates simple compliance of labour laws will stimulate growth, and can hopefully act as a catalyst in boosting employment in India.

References:

• The official Gazette on the Code Of Wages Act,2019[7]
• Various online articles in the Economic Times, The Hindu, Economy Today,etc.
• International Labour Conference's Global Jobs Pact of 2009

End-Notes:

1. The official Gazette on the Code Of Wages Act, 2019
2. The official Gazette on the Code Of Wages Act,2019
3. The Economic Times
4. The Hindu
5. International Labour Conference's Global Jobs Pact of 2009
6. Labour Ministry of India

Written By: Megha Ravindranath, BBA.LLB (B) - Labour Law II - Alliance School Of Law, Alliance University, Bangalore