CODE

ON
WAGE
S
2020
CONTEN
TS 01
Code on wages act 2019:
brief backdrop

CODE ON 02 A Complete
WAGES,2020 overview

03 Major changes &

amendments
 01
BRIEF
BACKDROP
THE CODE ON
WAGES, 2019
 CODE ON WAGES ACT 2019:
BRIEF BACKDROP
 Under the Constitution of India, labour is a subject in the Concurrent List of the Seventh Schedule.

 The Central Government is empowered to fix the floor wages by taking into account the living standards of
workers. It may set different floor wages for different geographical areas.

 The minimum wages decided by the central or state governments must be higher than the floor wage.

 The Code of Wages Aims to transform the old and obsolete labour laws into more accountable and transparent
ones . It subsumes the following four labour laws:

 The Payment of Wages Act, 1936.

 The Minimum Wages Act, 1948.

 The Payment of Bonus Act, 1965.

 The Equal Remuneration Act, 1976.

 CODE ON WAGES ACT 2019:
BRIEF BACKDROP
 Regulates the wages and bonus payments in all employments where any industry, trade, business, or manufacturing
is being carried out.

 Links minimum wage across the country to the skills of the employee and the place of employment.

 It simplifies the methodology to fix minimum wage by doing away with the ‘type of employment’.

 It seeks to universalize the provisions of minimum wages and timely payment of wages to all employees
irrespective of the sector and wage ceiling.

 It seeks to ensure ‘Right to Sustenance’ for every worker and intends to increase the legislative protection of
minimum wage.

 Employees getting monthly salary shall get the salary by 7th of next month, those working on a weekly basis shall
get the salary.
 0
2
THE CODE ON
WAGES, 2020
 KEY POINTS

 The Draft Rules aim to fix a national floor minimum wage based on minimum living
standard including food, clothing, housing and any other factors prescribed by the
government. In the new draft rules for minimum wage law, the Centre has reduced
normal working hours in a day to eight hours from nine proposed in the earlier
version released in November.
 The 2020 draft rules are similar to the preliminary draft published in November 2019
with one major change.
 The Ministry has changed the work requirement for eligibility for minimum wages
and other benefits from nine hours to eight.
 The 2020 draft clarified the issue as the nine hours mentioned earlier included one
hour of rest, which has now been mentioned separately from the eight working
hours.
 NEW LABOUR CODES,
2020
03 04
LABOUR

01
LABOUR ON 02
LABOUR CODE
LABOUR CODE
ON INDUSTRIAL
RELATIONS
CODE ON
SOCIAL
SECUTIRY
CODE ON OCCUPATIONAL
 Employees provident
WAGES SAFETY, HEALTH  Trade unions act, 1926 fund and miscellaneous
& WORKING  Industrial employment provisions act
 Minimum wages act CONDITIONS (standing orders) act,  Employee’s state
 Payment of wages act 1946 insurance corporation act
 Payment of bonus act  Factories act  Industrial disputes act,  Maternity benefits act
 Equal remuneration act.  Mines act 1947.  Employee’s compensation
 Dock act.
workers(safety,
health and welfare)
act.
 WAGE
CODE
 An act to amend and consolidate laws relating to
wages and bonus.
 The code on wages seeks to regulate wages and
bonus, payments in all employments where any
industry, trade, business, or manufacturing is
carried out.
 Code has 09 chapters, 67 sections and 26
definitions
CREDITS: of constantly
This presentationused terms.
template was created by
 Intends
Slidesgo,to promote
including iconsequity and labour
by Flaticon, welfare and
and infographics
& images by Freepik.
sustanability of enterprises, thereby catalyzing
economic growth and creation of employment
opportunities.
 FLOOR
WAGE
 The central government will fix a floor wage, taking into account the
living standards of workers.
 Further, it may set different floor wages for different geographical areas.
 Before fixing the floor wage, the central government may obtain the
advice of the Central Advisory Board and may consult with the state
government.
 The minimum wages decided by the central or state governments must
be higher than the floor wage.
 PURPOSE OF
ENACTMENT
The main purpose of the enactment of the code on wages is to
universally regulate the provisions for minimum wages and to ensure a
well timed payment of minimum wages for all workers in India.

APPLICABILITY OF CODES
ON WAGES
 The code on Wages is applicable to all employees in both the organized
and unorganized sector.
 The provisions of the code covers all the employees of all the sectors
except the members of the Armed forces of the Union and apprentices
engaged under the Apprentices Act, 1961.
 Changes the role of
‘Inspector ’ to ‘Facilitator’ to
WAGE
guide and advise employers
and workers
CODE
04 WAGES ACTS SUBSUMED INTO 01 CODE

Ensures
timely The Equal Remuneration act, 1976
Universalizes
provision of
MAIN wages
payment
minimum wages FEATUR The Minimum Wages Act, 1948
ES
Removes The Payment of Bonus Act, 1965
Ease of compliance will multiplicity of
incentivize setting up of definitions and
more enterprises thus authorities
The Payment of Wages Act, 1936
more opportunities
KEY REFORM
MEASURES
THE CODE ON WAGES, 2020
 CONDITIONS FOR FIXING THE FIXED WAGE
MINIMUM WAGES PERIOD
 Under section 06 of the code, the appropriate government The wage periods shall be fixed by the employer for
(central or state) shall fix a minimum rate of wages based on the employees by section 16 of the code, either as
time work or piece work. While fixing the minimum wages, daily or weekly or fortnightly or monthly subject to
the governments may take into account factors such as skill conditions and the wage period must not exceed
of workers, difficulty of work, etc. more than one month.
 Also, by section 08 of the code, the minimum wages shall
be revised and reviewed by the central or state governments
at intervals of not more than 05 years.
MODES OF PAYMENT
OF WAGES
 Section 15 of the code states, all the wages shall
OVERTI be paid in the following mode:
 Coin or
ME  Currency notes or
Under section 10 of the code, if an employee works for overtime  By cheque or
than the normal working time, he will be entitled to get overtime  By crediting wages in the bank accounts of
wages which is twice the rate of normal wages. employee or
 By electronic mode
 PAYMENT OF
BONUS
 All employees whose wages do not exceed a specific
monthly amount, notified by the central or state government,
will be entitled to an annual bonus.
 The bonus will be at least: 8.33% of his wages or Rs 100
whichever is higher. In addition, the employer will distribute
a part of the gross profits amongst the employees.
 This will be distributed in proportion to the annual wages of
an employee. An employee can receive a maximum bonus
of 20% of his annual wages.
EQUAL
REMUNERATION
Section 03 of the code prohibits distribution based on gender. As per
this section the employer is restricted to reduce the rate of wages of
any employee and make any discrimination based on the ground of
sex while recruiting employees.
DEDUCTION FROM
THE WAGES
 According to section 18 of the code, there shall be
no deduction from the wages of the employee’s.
But on the following cases deduction can be made,
these deductions should not exceed 50% of the
employee’s total wage which is explained in
section 18(02) of the code and they are:
 Fines imposed on him or
 Absence from duty or
 Damage to or loss of goods entrusted to him for
custody or
 House accommodation provided for the employer
or
 For amenities and services provided to the
employee.
 Definition of ‘worker’ &
‘employer’
The definition of ‘employer’ is broader than that of ‘worker’ as it
includes persons carrying out managerial and administrative
work. The definition of ‘worker’, however, expressly includes
working journalists and sales promotion employees.

Inspectors cum facilitators

The code provides the appropriate government to appoint
inspectors-cum-facilitators (in the place of inspectors), to carry out
inspections. Such inspectors cum facilitators may advice
employers and employees for better compliance. This has been
done with the objective of removing the arbitrariness and
malpractices in the inspection. The quantum of penalties specified
under the code is also significantly high which varies depending
on the nature of the offence. The maximum being imprisonment.
 03
Major changes & amendments
SUMMARY OF new provisions under the bill
THE CODE ON
WAGES, 2020
SUMMARY

These Draft Rules will apply to all

central sector establishments. These
include:
(i) Railways, mines, oilfields, and
banking companies &
(ii) Establishments carried on by or
under the authority of the Central
Government.
 Calculation of minimum
wage
The Draft Rules lay down the criteria for fixing the
minimum rate of wages per day for employees.
These criteria include:
(i) Three adult consumption units per household,
(ii) Daily intake of 2700 calories per consumption
unit,
(iii) 10% expenditure on rent,
(iv) 20% expenditure of fuel, electricity, and
miscellaneous items, and
(v) 25% expenditure on education, medical
requirements and contingencies.
Norms for fixing minimum
wage
Minimum wages will be calculated on the basis of the
geographical area of employment and the skill category of
an employee. For this purpose, the central government
will divide the geographical area into three categories:
metropolitan (population of 40 lakh or more), non-
metropolitan (between 10 lakh and 40 lakh), and rural
areas (all other areas). The Draft Rules categorize
occupations into four skill categories: unskilled, semi-
skilled, skilled and highly skilled. The central government
will constitute a committee (Chair: Chief Labour
Commissioner) to advise on modifications in skill
categorization of these categories of occupations. A
separate technical committee may be constituted to
recommend the fixing of minimum wages for working
journalists.
 Revision of dearness
allowance
The Draft Rules state that an endeavor will be made to
revise the dearness allowance linked to the minimum
wage twice a year; before April 1 and October 1 each
year.
The floor wage will be decided in consultation with the
Central Advisory Board and certain state governments as
the central government deems necessary. The Board will
consist of:
(i) Employers,
(ii) Employees (in equal number as employers),
(iii) Independent persons, and
(iv) Five representatives of state governments. The
Board will advise the central government on
various issues including minimum wage fixation.
Calculation of floor wage
According to the Code on Wages 2019, the central
government will fix a floor wage. The minimum wage
must be higher than the floor wage. The Draft Rules
provide that the central government will decide the floor
wage on the basis of minimum living standards taking
into account food, clothing, and housing for a family of
three consumption units. The floor wage may be revised
every five years, and periodic adjustments may be made
to accommodate variations in the cost of living.
 Work hours Inspection scheme
The Draft Rules state that a normal working day will As per the Code, the appropriate government may
constitute a maximum of nine hours of work per day, specify an inspection scheme which will provide for the
with a maximum spread over of 12 hours including rest generation of web-based inspection and calling for
intervals. The spread over may be increased to 16 hours inspection-related information under the Code
in certain cases, such as: electronically. The Draft Rules state that Chief Labour
(i) Where employment is intermittent, and Commissioner (Central) will formulate an inspection
(ii) The employee is engaged in an unforeseen scheme, with the approval of the central government.
emergency. Further, every employee will be
allowed one rest day per week. The employer may
substitute the rest day for any other day of the
week, which may fall within five days before or
after the scheduled rest day. Substituted rest days
will be eligible for overtime wages.
THANK YOU!