Provision of Payment of Wages — Code on Wages, 2019

· Provision of Payment of Wages — Code on Wages, 2019

- The Code on Wages, 2019 is a labour law enacted by the Government of India to regulate wages and ensure the timely payment of wages to employees.

- Main Objectives

• To ensure minimum wages for workers.
• To guarantee timely payment of wages.
• To provide equal remuneration for men and women.
• To simplify and consolidate labour laws relating to wages.

- The Code applies to employees in both the organised and unorganised sectors, unlike the earlier laws, which had more limited/specific coverage.

- Minimum wages: - Provision – Chapter II, Section 5-14

- Section 5 — Payment of Minimum Wages

An employer cannot pay wages lower than the minimum wages fixed by the appropriate Government.

- Section 6 — Fixation of Minimum Wages

1. The appropriate Government fixes the minimum rates of wages payable to employees.

2. Minimum wages may be fixed for:

• a. Time Work-Wages are based on the time worked.
• b. Piece Work-Wages are based on the number of units produced.

3. Where a worker is employed on piece-rate work, the appropriate Government must fix a minimum time rate to ensure that the worker earns at least the minimum wage applicable to time work.

4. Rates may be fixed on:

• Hourly basis
• Daily basis
• Monthly basis

5. Where wages are fixed by the hour, day or month, the manner of calculating the wages shall be as prescribed.

6. Factors considered while fixing minimum wages - The Government mainly considers: Skill level of the worker, Unskilled, Semi-skilled, Skilled, highly skilled, Geographical area, Nature of work, Hazardous work, difficult work, Underground work, etc.

7. The appropriate Government should review the number of minimum wage rates and keep them as low as possible for simplicity and uniformity.

- Section 7 - Components of Minimum Wages

The appropriate Government may fix minimum wages in the following forms:

• 1. Basic wage + Cost of Living Allowance
  Minimum Wage = Basic Rate + Cost of Living Allowance
  The cost-of-living allowance (Dearness Allowance) is adjusted according to changes in the cost of living/inflation.
• 2. Basic wage + Cost of Living Allowance + Concession
  Minimum wages may include:
  Basic wage + Cost of Living Allowance + Cash value of concessions for essential commodities supplied at concessional rates.
• 3. Consolidated Minimum Wage
  The Government may fix a single consolidated minimum wage consisting of:
  Basic wage + DA + Cash value of concessions

Cost of Living Allowance

The cost-of-living allowance is:

• Calculated by an authority appointed by the Government.
• Calculated periodically according to the directions of the Government.
• Based on the Cost-of-Living Index Number.

- Section 8- Procedure for Fixing and Revising Minimum Wages

The appropriate Government may follow two methods:

1. Committee Method

The Government may appoint committees to:

• Conduct enquiries.
• Study the relevant factors.
• Recommend minimum wage rates.

Composition of Committee - The committee may include: Employer representatives, Employee representatives and Independent persons

2. Notification Method

Under this method, the Government:

• Publishes its proposal in the Official Gazette.
• Invites suggestions and objections from the public.
• Allows a prescribed period for making representations.
• Considers the representations received.
• Fixes or revises minimum wages by notification.

Where the notification method is used, the Government must consult the Advisory Board.

The revised rates generally come into force after the prescribed period from the date of notification.

Review of Minimum Wages -Minimum wages must be reviewed or revised at least once every five years.

- Section 9 — Power of Central Government to Fix Floor Wage

Meaning of Floor Wage - A floor wage is the minimum base level of wages fixed by the Central Government, below which the minimum wage fixed by the appropriate Government cannot fall.

• 1. The Central Government fixes the floor wage by considering the minimum living standards of workers and other prescribed factors.
      Different floor wages may be fixed for different geographical areas.
  The minimum wage fixed by the appropriate Government cannot be lower than the floor wage.
• 2. If a State has already fixed a minimum wage higher than the floor wage, it cannot reduce it merely because the floor wage is lower.
• 3. Before fixing the floor wage, the Central Government may obtain advice from the Central Advisory Board and consult the State Governments.

- Section 10 — Wages of Employee Working Less Than Normal Working Day

If an employee works for less than the normal working day, the employee is generally entitled to receive wages as if the employee had worked for the full normal working day.

Exception

The employee may not be entitled to the full day's wages where:

• The failure to work the full day is due to the employee's unwillingness, and not due to the employer; or
• Any other prescribed circumstance applies.

- Section 11 — Wages for Two or More Classes of Work

Where an employee performs two or more classes/types of work for which different minimum wage rates are fixed: The employer must pay wages according to the minimum rate applicable to each type of work, considering the time spent on each type of work.

- Section 12 — Minimum Time Rate Wages for Piece Work

Where an employee is employed on piece-rate work, but only a minimum time rate has been fixed by the Government: The employer must ensure that the employee receives at least the minimum wage applicable to the time rate.

- Section 13 — Fixing Hours of Work for Normal Working Day

1)When minimum wages are fixed, the appropriate Government has the power to regulate working hours. It may:

• a) Fix the normal working day.
• b) Provide for a weekly day of rest.
• c) Provide for payment for work performed on the rest day.

2)Special Classes of Employees
Different rules may apply, subject to prescribed conditions and modifications, to employees working in:

• a) Emergencies- Situations that could not reasonably be foreseen or prevented.
• b) Preparatory or complementary work-Work that must necessarily be performed outside normal working hours.
• c) Intermittent employment-Employment where there are frequent periods of inactivity.
• d) Technically continuous work-Work which, for technical reasons, must be completed before the duty can end.
• e) Work dependent on natural forces-Work dependent on irregular natural forces.

3) Employment is considered intermittent where:

• -The employee is on duty, but
• -There are periods during which the employee is not required to perform active work, and
• -The Government officially declares the employment to be intermittent.

- Section 14 — Wages for Overtime Work

Where an employee whose minimum rate of wages has been fixed works for more than the number of hours constituting a normal working day: The employer must pay the employee overtime wages for the excess hours worked.

The overtime rate is not less than twice the normal rate of wages.