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LEGISLATIVE REVIEW ON LABOUR WAGE CODE

Author: Aman Tiwari, IV year of B.A.,LL.B from Delhi Metropolitan Education Noida, affiliated to Guru Gobind Singh Indraprastha University Delhi.


INTRODUCTION

The Wage Code Bill, 2019, is a comprehensive legislation that unifies and improves numerous labour regulations by combining four of them with regard to wages, bonus payments, and related concerns. It is the first of the four labour codes to be granted Act status: The Code on Wages 2019, the Code on Occupational Safety, Health, and Working Conditions 2019, the Code on Social Security 2019, and the Code on Industrial Relations 2019.


As previously stated, the Wage Code Bill, 2019 consolidated and simplified four statutes: the Minimum Wage Act of 1948(for establishing minimum pay rates in particular occupations), the Payment of Wages Act of 1936 (to govern the payment of salaries to specific types of employees), the Payment of Bonus Act of 1965 (for the payment of bonuses to employees in particular enterprises based on earnings, production, or productivity), and the Equal Remuneration Act of 1976 (to provide equal pay for men and women and to eliminate gender discrimination in the workplace).


This bill consolidates, streamlines, and rationalises current labour laws for ease of doing business, eliminates outdated laws, gives unique definitions, has universal application across India to all establishments, employees, and employers, eliminates social, gender, and income inequities, and intends to create uniformity through the establishment of a National Floor Wage.


According to Shri Santosh Kumar Gangwar, Minister of State (I/C) for Labour and Employment, it is a historic Bill that aspires to reform outdated and antiquated labour rules into more responsible and transparent ones that are urgently needed. There are now 17 labour laws that are more than 50 years old, with some dating back to the pre-independence era.



BACKGROUND

According to a survey of the references, there are more than 40 Central Labour Laws, some of which have become outdated or ineffective in resolving grievances or irregularities. In 2015, the Indian government announced plans to merge 40 Central Labour Laws into four codes in order to address gaps and inconsistencies in present laws by creating new ones that are more suited to today's demands and pay policies.


The Wage Code Law was introduced in the Lok Sabha for the first time in August 2017 and referred to the Parliamentary Standing Committee, which issued a report in December 2018 with 24 suggestions, 17 of which were adopted into the bill. Due to the general elections, the bill expired. The bill was reintroduced in 2019 and approved in both chambers. On July 30, 2019, the bill was passed in the Lok Sabha, and on August 2, 2019, it was passed in the Rajya Sabha. On August 8, 2019, India's President, Ram Nath Kovind, granted his approval to the bill. As a result, it was given the name Wage Code Bill, 2019. On July 7, 2020, the proposed regulations under the Code ("Rules") were made available in the form of a handbook for comment and suggestions. The Wage Code Bill of 2019 is set to go into effect on April 1, 2021.



SCOPE OF THE BILL

Because of its coverage and beneficial ramifications, the bill has a broad scope. The Wage Code Bill, 2019, consists of IX Chapters and 69 Clauses that aim to simplify, consolidate, and rationalise current Labour Laws.

  • Definitions are provided in Chapter I and are relevant throughout the code.

  • Chapter II-IV includes provisions relating to the Wage Payment, Bonus Payment, Equal Remuneration Provision, and Minimum Payment.

  • The regulations pertaining to the Central Advisory Board and State Advisory Boards, Payment of Dues, Claims and Audits, Inspector-cum-Facilitator, and Offenses and Penalties are covered in Chapters V-VIII.

  • Miscellaneous Provisions are covered in Chapter IX.

  • The bill is expected to benefit around 500 million employees across the country. It will apply to firms, workers, and employers in all Indian states and union territories.

  • “The wage code, clearly states the objective to promote equity and labour welfare on the one hand and encourage investment and setting up of more enterprises on the other, thereby catalysing creation of more employment opportunities.”

  • It also includes salary choices made by the Central Government for jobs like as railways, mining, and oil fields.



CRUX OF THE BILL

It is comprehensive, simple to follow, and is adopted by employers and businesses. It has both good and bad aspects.

  • It provides for the standardisation of salaries and bonus payments in all areas of work, including organised and unorganised sectors, as well as commercial establishments, and makes compliance simpler.

  • It defines and regulates the terms employee, pay, worker, contractor, and contract labour.

  • To determine minimum pay, it takes into account schedule and income levels, as well as talent and geographical area.

  • “It is consistent with the Equal Remuneration Act, the Code, inter-alia, includes provisions prohibiting discrimination on grounds of gender (i) with respect to wages by employers, with respect to same work or work of a similar nature done by employees and (ii) with respect to recruitment of employees for same work or work of a similar nature.”

  • It aims a consistent floor pay that applies to all sorts of establishments and trades, with the exception of hazardous industries, which have their own minimum pay.

  • Minimum salaries are subject to revision/review every five years at the most.

POSITIVE IMPICATIONS OF THE BILL

  • It protects disadvantaged employees and promotes fair competition by extending the legal protections provided by the minimum wage and floor wage to all wage earners across the country, regardless of schedule or pay limitation. Millions of India's low wage employees will benefit as a result of this.

  • It advocates central government fixing of minimum pay across the country based on standard of life, with state governments required to establish minimum pay equal to or higher than the floor pay. As a result, the wage-setting process will alter, wages will rise, and income disparities within and between states will be reduced.

  • It simplifies and rationalises India's complex minimum wage system while also allowing employees and corporations to engage in collective bargaining.

  • Through an equal payment and compensation clause, it removes gender discrepancies in compensation and covers transgender persons in its scope.

  • It requests more overtime compensation, a larger gratuity, and post-retirement benefits.

  • It raises the limitation period from two to three years, giving workers more time to submit claims.

  • It introduces compoundable offences, allowing for settlement and dismissal of charges between employer and employee.



NEGATIVE IMPLICATIONS OF THE BILL

  • The code requires greater wages, which may hinder businesses from hiring.

  • The government's involvement to establish a minimum wage will disrupt wage equilibrium.

  • Reduced take-home pay as a result of increasing PF (provident fund) deductions from net pay.

  • Increased socioeconomic inequity as a result of imposing minimum wages depending on geography, which might lead to industry outsourcing jobs.

  • Lack of consistency and compliance as a result of states' ability to set bonus ceilings, which makes employees in some areas ineligible for wage bonuses.

  • Due to its calculation based on the inclusion of allowance in the basic salary, the company's gratuity expense rises.

  • It has precedents and is at odds with other present labour laws.



CONCLUSION

The 2019 Wage Code Bill is a friendly legislation. Its goal is to reform outdated and antiquated labour regulations, as well as to improve openness and accountability in their implementation. The 2019 Wage Code Bill significantly aligns companies' and employees' interests. It will bring major changes to India's pay system, as well as subsume four central laws and uphold 40 others.


The bill applies the minimum wage to all employees, regardless of their schedule or income group. It also streamlines the country's minimum wage system. The law is a step forward in meeting long-standing labour union objectives. The Wage Code Bill of 2019, on the other hand, includes several loose ends and fails to address several critical concerns.


It emphasises the minimum wage but says nothing about equitable wages. Despite the fact that the code was reviewed in detail by multiple individuals, no representative from the labour union was present. The Code, like all other current central labour legislation, fails to protect migratory workers.


In addition, the code permits web-based inspection, which is in violation of one of the ILO's requirements. It fails to impose sufficient fines/penalties on violators. The code's provision benefits the business community, but it falls short of improving the lives of millions of low wage workers in India. In a nutshell, the law is a blanket policy with far-reaching positive implications.