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Code On Wages Bill 2017 - As Introduced In Lok Sabha On 10-Aug-2017

The Code on Wages, 2017 - A Bill to consolidate and amend the laws relating to wages and bonus and matters connected therewith or incidental thereto. A copy of the Bill as introduced in Lok Sabha on 10th August, 2017 is available here for perusal - link.

The salient features of the Code on Wages, 2017, inter alia, are as follows:––

(a) it provides for all essential elements relating to wages, equal remuneration, its payment and bonus;

(b) the provisions relating to wages shall be applicable to all employments covering both organised as well as un-organised sectors;

(c) the power to fix minimum wages continues to be vested in the Central Government as well the State Government in their respective spheres;

(d) it enables the appropriate Government to determine the factors by which the minimum wages shall be fixed for different category of employees. The factors shall be determined taking into account the skills required, the arduousness of the work assigned, geographical location of the workplace and other aspects which the appropriate Government considers necessary;

(e) the provisions relating to timely payment of wages and authorised deductions from wages,which are presently applicable only in respect of employees drawing wages upto eighteen thousand rupees per month, shall be made applicable to all employees irrespective of wage ceiling. The appropriate Government may extend the coverage of such provisions to the Government establishments also;

(f) it provides that the wages to employees mayalso be paid by cheque or through digital or electronic mode or by crediting it in the bank account of the employee. However, the appropriate Government may specify the industrial or other establishment, where the wages are to be paid only by cheque or through digital or electronic mode or by crediting the wages in the bank account of the employee;

(g) it provides for national minimum wage for different geographical areas so as to ensure that no State Government fixes the minimum wage below the national minimum wage, notified for that area by the Central Government;

(h) in order to remove the arbitrariness and malpractices in inspection, it empowers the appropriate Government to appoint Facilitators in the place of Inspectors, who would supply information and advice the employers and workers concerning the most effective means of complying with the provisions of the proposed legislation. It has also been provided that the inspections are carried out through a transparent/ web based inspection scheme;

(i) it empowers the appropriate Government to determine the ceiling of wage limit for the purpose of eligibility of bonus and calculation of bonus, by notification, which will make it easier to revise ceilings;

(j) in the place of number of authorities at multiple levels, it empowers the appropriate Government to appoint one or more authorities to hear and decide the claims under the provisions of the proposed legislation;

(k) it enables the appropriate Government to appoint an appellate authority to hear appeals so as to ensure speedy, cheaper and efficient redressal of grievances and settlement of claims;

(l) it provides for graded penalty for different types of contraventions of the provisions of the proposed legislation;

(m) it provides that the Facilitator shall give an opportunity to the employer before initiation of prosecution proceedings in cases of contravention, so as to comply with the provisions of the proposed legislation. However, in case of repetition of the contravention within a period of five years such opportunity shall not be provided;

(n) it provides for compounding of those offences which are not punishable with imprisonment;

(o) it provides that where a claim has been filed for non-payment of remuneration or bonus or less payment of wages or bonus or on account of making deduction not authorised by the proposed legislation, the burden shall be on the employer to prove that the said dues have been paid to the employee;

(p) it enables the appropriate Government to constitute Advisory Boards at Central and State levels to advice the Central Government and the State Governments, respectively, on matters relating to wages, women employment, etc.;

(q) the period of limitation for filing of claims by a worker has been enhanced to 3 years as against existing time period varying from 6 months to 2 years, to provide a worker more time to settle his claims.


A Brief on the introduction of Code on Wages, 2017

1. The Second National Commission on Labour, which submitted its report in June, 2002 had recommended that the existing set of labour laws should be broadly amalgamated into the following groups, namely:––
(a) industrial relations;
(b) wages;
(c) social security;
(d) safety; and
(e) welfare and working conditions.
2. In pursuance of the recommendations of the said Commission and the deliberations made in the tripartite meeting comprising of the Government, employers’ and industry representatives, it has been decided to bring the proposed legislation, namely, the Code on Wages, 2017. The proposed legislation intends to amalgamate, simplify and rationalise the relevant provisions of the following four central labour enactments relating to wages, namely:––
(a) the Payment of Wages Act, 1936;
(b) the Minimum Wages Act, 1948;
(c) the Payment of Bonus Act, 1965; and
(d) the Equal Remuneration Act, 1976.
3. The amalgamation of the said laws will facilitate the implementation and also remove the multiplicity of definitions and authorities without compromising on the basic concepts of welfare and benefits to workers. The proposed legislation would bring the use of technology in its enforcement. All these measures would bring transparency and accountability which would lead to more effective enforcement. Widening the scope of minimum wages to all workers would be a big step for equity. The facilitation for ease of compliance of labour laws will promote in setting up of more enterprises thus catalysing the creation of employment opportunities.

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