THE CODE

ON
WAGES
The Payment
of Wages Act,
1936
The Code on Wages, 2019
• On Aug 8, 2019 , the Wage Code received Presidential assent
• Its main objective is to consolidate and amend the existing laws related to
wages and bonus payments and to transform old and obsolete laws into
more accountable and transparent ones
• It is aligned with government’s labour reforms to merge 44 existing labour
laws into four broader categories for easier compliance. Such four
categories include wages, social security, industrial safety and welfare, and
industrial relations. 
• The Code on Wages will give respectable life to 50 crore unorganized
sector workers by ensuring minimum wages along with timely payment of
wages to all the employees and workers
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Features of the Code

• The Wage Code is one of the first of four labour codes which
amalgamates the four labour laws: The Payment of Wages Act 1936, the
Minimum Wages Act 1948, the Payment of Bonus Act 1965 and the Equal
Remuneration Act 1976 into a single piece legislation. 
• It universalizes right to minimum wages and timely payment of wages to
all the employees regardless of wage ceiling, employment sector. 
• It prohibits gender discrimination on wage-related matters and
employment conditions
• Definitions of wages, employee, employer, contract labour expanded

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Unified definition of wages

• The definition of wages now has three parts to it- an inclusion part,
specified exclusions and conditions which limit the quantum of
exclusions.
• The definition includes basic pay, dearness allowance and retaining
allowance.
• It specifically excludes components such as statutory bonus, value of
house accommodation and utilities, employer contribution to PF/ pension,
conveyance allowance/ travelling concession, sum paid to defray special
work expenses, HRA, remuneration payable under settlement, overtime
allowance, commission, gratuity, retrenchment compensation.
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Unified definition of wages …contd

• The specified exclusions, however may not exceed 50 percent of all

remuneration, and in the event of exceeding, such excess amount
shall be deemed as remuneration and will be considered as "wages".
This is aimed at ensuring that companies do not adopt compensation
structures which result in wages being reduced below 50 percent of
the total remuneration.

• A tripartite committee comprising representatives of trade unions,

employers and the state government would fix floor wages for
workers throughout the country.
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The Payment of Wages Act, 1936
v/s
The Code on Wages, 2019

Understanding the new law, and comparing

it with the old one…
 Provision Payment of Wages Act, Code on Wages, 2019
1936
Applicability Applies to employees drawing Applies to all employees, without any
less than 24000 for filing claims wage limit
Definition of Restricted to employees drawing Excludes worker in supervisory
worker up to 24000 capacity drawing exceeding 15000 but
defines employee also covering all
categories including supervisory &
managerial
Final 2 days limit to pay F&F to worker Added the condition of resignation
The Payment Payment
Time Limit
in case of dismissal or
retrenchment; NA for resignations
of Wages Act, Claims Time One year Extended to 3 years
1936 Limit
Inspection Physical inspection by inspectors; Renamed as facilitators; Territory
v/s compliance/enforcement oriented expanded; Web based electronic
within defined jurisdiction inspections introduced; Help employer
The Code on for better compliance information
Wages, 2019 Penal
Provisions
Fine varies from 500 to 20000
&/or imprisonment up to one year
More rigorous; Penalty increased –
from 50000 to one lakh; imprisonment
up to 3 months
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Some other features of Wage Code
(w.r.t. Payment of Wages Act)

• Provides that all wages shall be paid in current coin or currency notes or by cheque
or by crediting the wages in the bank account of the employee or through
electronic mode (Exception made in respect of certain specific industrial or other
establishment as notified by the appropriate government wherein the wages shall
be paid only by cheque or by crediting the wages in bank account).
• Different wage period will be fixed for different establishments for eg. daily or
weekly or fortnightly or monthly basis. Time limit is prescribed depending upon the
wage period is fixed within which the payment of wages has to be made.
• Permits deduction of employees’ wages on certain grounds including fines,
absence from duty etc. provided the total deductions authorised cannot exceed 50
percent of the employees’ the wages.
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THANK
YOU!
References

• https://economictimes.indiatimes.com/small-biz/legal/the-code-on-wages-2019-
understanding-the-key-changes-to-wages-remuneration-and-
bonus/articleshow/72913106.cms
• https://www.roedl.com/insights/employment-law-india-update-code-of-wages-2019
• https://www.epw.in/engage/article/protection-workers-wages-india-labour-wage-
code
• https://www.businessmanager.in/highlights-of-code-on-wages-2019.php
• https://pib.gov.in/newsite/PrintRelease.aspx?relid=192386
• https://www.thehindubusinessline.com/economy/central-government-notifies-
code-of-wages-2019/article29234044.ece
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