Labour Code on Wages Bill

  • Labour Code on Wages Bill will ensure a minimum wage across all sectors by integrating existing labour related laws.
  • The Labour Code on Wages Bill consolidates
    • the Minimum Wages Act, 1948,
    • the Payment of Bonus Act, 1965,
    • the Payment of Wages Act, 1936 and
    • the Equal Remuneration Act, 1976.
  • The codification of labour Laws will remove multiplicity of definitions and authorities leading to ease of compliance without compromising wage security and social security to workers.
  • It will apply to establishments where trade, business, manufacturing or occupation is carried out.
  • It will also include government establishments.
Why needed?
  • At present, laws on wages do not cover workers getting monthly wage of more than Rs 18,000.
  • Moreover, these laws are only applicable for scheduled industries or establishments.
  • Even there are about half a dozen definitions of wages in various acts across the Centre and states, which employers have to grapple with.
  • The Second National Commission on Labour has recommended that the existing labour laws should be broadly grouped into four or five labour codes on Wages; Industrial Relations; Social Security & Welfare and Safety and Working Conditions on functional basis.
What is planned?
  • Under the Labour Code on Wages Bill, the Union Labour Ministry is planning to streamline the definition of wages by amalgamating four wage-related statutes.
  • The code empowers the Centre to set a minimum wage across sectors, and states will have to maintain that.
  • However, states will be able to provide higher minimum wage in their jurisdiction than fixed by the Centre since labour is subject in the concurrent list.
  • The Labour Code on Wages Bill also marks the first major initiative of Union Government in amalgamating labour laws for improving the ease of doing business as well as ensuring universal minimum wage to all. 
  • The minimum wage will be applicable on all classes of workers, even workers getting monthly pay of higher than Rs 18,000 will be legally entitled to a minimum wage.
  • The proposed legislation is expected to benefit over 4 crore employees across the country.
Features of the Bill
  • National minimum wage: The code ensures minimum wages to one and all and timely payment of wages to all employees irrespective of the sector of employment without any wage ceiling. It introduces concept of statutory National Minimum Wage for different geographical areas. It will ensure that no state government fixes minimum wage below the National Minimum Wages for that particular area as notified by Union Government. It specifies that central or state governments will revise or review minimum wage every five years.
  • Advisory boards:  The central and state governments will constitute their respective advisory boards to advise respective governments on aspects of fixing minimum wages and increasing employment opportunities for women.  These boards will have representation from employees, employers, and independent persons.  Further, one-third of total members will be women. 
  • Payment of Wages:  The code proposes payment of wages through cheque or digital/electronic mode along with conventional cash payments. It mentions deduction of employee’s wages on certain grounds by not exceeding 50% of employee’s total wage.
  • Redressal of grievances and settlement of claims: It proposes appellate authority between Claim Authority and Judicial Forum for speedy, cheaper and efficient redressal of grievances and settlement of claims
  • Offences: The Code specifies penalties for offences committed by an employer. Such penalties vary depending on nature of offence have been rationalized with the amount of fines varying as per gravity of violations. Moreover it specifies that compounding of offences are not punishable by penalty of imprisonment.



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