Code on Wages (Code)—Part 2

By greytHR
3 minute read ● August 31, 2021
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Code on Wages (Code)—Part 2

Change and reforms are desirable. We are to anticipate, await, and face them successfully. The long-awaited reform, Code on Wages, 2019, will enable employers to do business more easily while empowering employees.

In the third episode of the Parichay webinar series, experts from the government and private sectors deliberate on the implications of this reformatory Code. In Part 2 of the blog series, we capture the insights of Muthu Manickam, Former Deputy Chief Labour Commissioner (Tamil Nadu & Puducherry), Government of India.

The Best of Four Laws

The Code on Wages is a bold step taken by the government to simplify the law and the obligations of employers without compromising the rights of workers. Focused on wages, bonuses, and other relevant aspects, the Code subsumes and simplifies four old laws Minimum Wages Act, Payment of Wages Act, Payment of Bonus Act, and Equal Remuneration Act. Though it amalgamates the essential elements of existing laws, it is unique in many aspects.

We are talking about authority under the wage code only. We are not talking about authority under Factories Act, or ESI, or PF. This Code is a product of four labor laws.

Muthu Manickam, Former Deputy Chief Labour Commissioner (TN & Puducherry), Government of India

Universal Application

Unlike the Minimum Wages Act applied to Scheduled Employment, the Code on Wages deals with all kinds of employment. It is not only applicable to workers but also to supervisors and managerial personnel. The provisions of the Code can even address an MD’s grievances related to non-payment of wages.

Single & Appropriate Authority

Earlier, different authorities were involved in handling other labor laws. Even the provisions were either too limited or too broad. The definition of 'Appropriate Government' was leading to confusion, confrontation, and litigation. The new Code brought everything under a single authority and appointed an Appellate Authority. It also made everything concise and clear.

Clear Terms and Responsibilities

Different wage laws provide different definitions of wage and inclusion. The calculations and exclusions are different. The Code on Wages has simplified the same with two new concepts, Worker and Employee, which were not in the previous laws. Besides fixing the employer's responsibility, the Code provides definitions of a contractor and contract worker to ensure legal and statutory benefits to the concerned people.

Electronic Payment of Wages

The Code authorizes the electronic payment of wages and bonuses. Previously, the employer had to get the approval or consent of the employee to pay through the bank. Now, the employer can pay through the bank directly. This process eliminates many hassles with regard to handling cash. It also provides a systematic record for the organization.

The New Concept of Floor Wage

The Code introduces the new concept of Floor Wage. Fixed by the government, it refers to the lowest or minimum wage paid in a particular region. The Code also provides for a periodical revision of the same. The Floor Wage covers all types of employment and is not restricted to scheduled employment as in the Minimum Wages Act.

Gender-Neutral Remuneration

The provisions of the Equal Remuneration Act would have a comparison only between males and females if the nature of work was similar. There was also a comparison related to recruitment. The new Code provides equal employment opportunities, to all genders, without any discrimination.

A Better Claims Process for Better Rights

As per the new Code, one can take three years to file any payment-related claims. Earlier it was only 12 months. In the event of any complaint, the Burden of Proof lies with the establishment and the employer. Therefore, the employer must keep proper documents, accurate records and be conscious while making the payment. The person who is complaining is not required to prove the claim. Moreover, any worker can file a claim individually or collectively.

Trust in Audited Accounts

The Code neither compromises on the workers' rights nor creates unnecessary trouble for the organization. Under the Payment of Bonus Act, the presumption about the auditor and accuracy of the audited accounts was restricted to general public sector undertakings. As per the new Code, the court extends this privilege to all organizations. Any account audited by a chartered accountant is believed to be fair, correct, and beyond suspicion.

Employer-Friendly Inspections

The Code will assign an inspector-cum-facilitator to guide the employer in ensuring statutory compliance via a web-based system. Each establishment will be allotted a number, and the system will decide the course or periodicity of inspection. This provision in the Code is expected to bring the 'Inspector Raj' to an end.

Fair & Speedy Disposal of Cases

The Code has brought in significant reforms under the penal provision. Any violation done for the first time is treated as a civil offense and trialed by the authority at the level of Under Secretary. This way, it reduces the burden of the criminal courts. It also enables employers to get fair and easy remedies wherever they have a say. Stated simply, the Code has provisions for speedy disposal of cases and ensures that a law-abiding employer does not face any difficulty.

Here is the audio recording of the full webinar

Go to Part 1 for an overview of the webinar.

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