CODE ON

WAGES
BILL
The Code on Wages Bill replaces the following
four laws:

 Payment of Wages Act, 1936

 Minimum Wages Act, 1948
 Payment of Bonus Act, 1965
 Equal Remuneration Act, 1976
Key Highlights
 1. Increase in Scope and Applicability
 The Code, once notified, will extend the benefits & make the
requirements prescribed with respect to payment of wages and
minimum wages to all types of establishments irrespective of
their nature of business or activities.
 Benefits under the Code extend to all employees – which
includes people performing skilled, semi-skilled, unskilled,
manual, operational, supervisory, managerial, administrative,
technical or clerical work.
 2. Wage Computation [Clause 2(y)]
 The Code proposes a common definition of the term "wages" as
opposed to the separate definitions of "wages" provided under
each of PWA, MWA and PBA.
 The Code introduces a special methodology for computation of
"wages" and in certain circumstances, various components of
wages that are ordinarily understood to be excluded from the
definition of "wages" will be considered as forming part thereof.
 For instance, components like employer's contribution towards
pension or provident fund, house rent allowance, overtime
allowance, conveyance allowance, commission payable to
employee etc. are not conventionally considered as "wages".
However, the Code provides that in the event payments made to
employees under these identified components exceed 50% of all
remuneration payable as "wages" under the Code, such excess
amount shall be deemed as remuneration and will be considered
as "wages".
 This is a unique provision and is seemingly aimed at
compensation structures where wages are less than 50% of the
total remuneration of the employee. This provision could result in
situations where the "wage" of an employee has to be recalculated.
For e.g., if the aggregate of commission / sales incentive, house
rent allowance and overtime exceeds 50% of the monthly salary
for that particular month, there could be a possibility of re-
computation of "wages".
 In these situations where the "wage" could fluctuate, computation
of bonus under the Code or payment of "wages" for overtime
work, would also fluctuate and get impacted.
 Additionally, this could potentially have a knock-on impact if the
proposed labour code on social security relies on the given
definition of "wages" under this Code; in which case any pay-
outs / contributions (like gratuity, provident fund, retrenchment
compensation) that are linked to "wages" would also fluctuate /
vary.
 3. Overtime [Clause 14]

The Code has amalgamated the applicable overtime rate across board
and prescribes that such rate will not be less than twice the normal
rate of wages.

 4. Floor Wages & Minimum Wages [Clauses 6(6) & 9]

The Code introduces a new concept of "floor wages", which rates will
be fixed by the Central Government taking into account the minimum
living standards of a worker. Once the Code is enacted, the minimum
rates of wages fixed by the State Government cannot be less than floor
wages as determined by the Central Government.
 5. Register [Clause 50]

 The Code consolidates the requirement of multiple registers under

PWA, MWA and PBA and seems to provide for a single register
containing details with regard to persons employed, muster roll,
wages, etc. This may lead to easing out periodical compliances for
employers under Current Laws. However, the form of this register is
yet to be prescribed.

 6. Time limit for payment of wages [Clause 17]

 Under the present PWA, the employer can pay wages to their employees
within 10 days after expiry of the wage–period, in case the
establishment has more than 1000 employees. This will now change.
 The Code makes it mandatory for the employer to pay within 7 days
from expiry of the wage period, irrespective of the size of the
establishment.
 7. Claims & opportunity to cure [Clauses
45(6), 54(3) & 59]
 Claims under the Code will be adjudicated and determined by an
authority appointed by the appropriate Government. An
application for adjudication of claim arising under this Code can
be filed before the relevant authority within a period of three
years from the date on which the claim arises, as against the
existing time period varying from few months to a year under the
Current Laws. This will provide a longer opportunity to
employees to initiate action for their claims.
 8. Offences, penalty & compounding [Clauses 54 &
56
Contravention
Payment of an amount that is less
than the amount due to the
employee under the Code
Non-maintenance or improper
maintenance of records under the
Code
Any other contravention of the
Code.
Penalty
• Rs. 50,000 (first time)
• 3 months imprisonment or a fine
of up to Rs. 1 Lakh or with both
(within 5 years of 1st offence)
up to Rs. 10,000.
• Rs. 20,000 (first contravention)
• 1 month imprisonment or with a
fine of up to Rs. 40,000 or with
both (within 5 years of 1st
offence)
 Other Important Points to be Noted:
Cognizance
0 Of
0 2
Offences
Payment of
Bonus Act 1 Any officer authorized by
COWB or an employee or a
The wage limit up to which reg. Trade Union or any
employees have to be paid inspector/facilitator can file
bonus is yet to be decided by a complaint within 3 years
govt.

Territorial
0 Jurisdiction
0
Inspections 3 Jurisdiction of
Inspector/Facilitator to carry
4 Inspectors/Facilitators is
widened and ensured that
out inspections and provide
an employer has to deal
info to employees and
with single inspector
employers for better
instead of one under each
compliance
law.
Inspection is done on a
scheme basis to be decided by
govt.
THANK YOU!