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Cracking The Code on Wages, 2019


The Code on Wages Bill, 2019 passed by both the Houses received the assent of the President on the 8th August 2019 thus transforming into the Code on Wages, 2019. The Act aims to amend and consolidate the laws relating to wages and bonus and matters connected therewith or incidental thereto. This move is expected to benefit 50 crore workers working in different parts of the country. This Code forms a part of the deliberate attempt to merge various labour laws into four codes in order to simplify their regulation and compliance. The intention is to streamline 44 labour laws so that the existing labour laws are in accordance with the existing economic conditions in the country and ensure the welfare of the labour. The four proposed codes are meant to deal with wages, social security, industrial safety and welfare, and industrial relations. It is surprising to note that around 15 labour laws are more than 5 decades old and some are even existing since the pre-independence time. The Code on Wages, 2019 incorporates relevant provisions of the Payment of Bonus Act, 1965, Payment of Wages Act 1936, The Minimum Wages Act, 1948 and Equal Remuneration Act 1976. This Act by coming into force will surely ensure a step towards the objectives mentioned under the Directive Principles of State Policy of the Constitution of India which states that the state shall endeavour to secure by suitable legislation or economic organization or in any other way to all workers a living wage, conditions of work ensuring a decent standard of life and full enjoyment of pleasure and social and cultural opportunities.[1]

The Relevant Provisions

The Act provides with a common definition of the term “wages” as against the separate definitions of “wages” provided under the Payment of Wages Act 1936, The Minimum Wages Act, 1948 and Payment of Bonus Act, 1965. [2] This will help to bring consistency and avoid multiplicity of efforts. Under the 2019 Act, for the purpose of fixation of the minimum rate of wages, the appropriate Government as per Section 6 of the Act, shall primarily take into account the skill of workers required for working under the categories of unskilled, skilled, semi-skilled and highly-skilled or geographical area or both. The Act provides the power to the Central Government to fix floor wage taking into account minimum living standards of a worker in such manner as may be prescribed, provided that different floor wage may be fixed for different geographical areas.[3] Section 9 also provides that the minimum rates of wages fixed by the appropriate Government under section 6 shall not be less than the floor wage and if the minimum rates of wages fixed by the appropriate Government earlier is more than the floor wage, then, the appropriate Government shall not reduce such minimum rates of wages fixed by it earlier. Section 14 of the Act provides in clear terms wages for overtime work and reads as, “Where an employee whose minimum rate of wages has been fixed under this Code by the hour, by the day or by such a longer wage-period as may be prescribed, works on any day in excess of the number of hours constituting a normal working day, the employer shall pay him for every hour or for part of an hour so worked in excess, at the overtime rate which shall not be less than twice the normal rate of wages.”

Why is this Code Beneficial?


Section 2(y) as discussed above gives a clear indication that the Code on Wages, 2019 is meant to remove the multiplicity of definitions, authorities and efforts and thus leading to a better life for the workers and enable a conducive environment for the rolling out of social welfare legislation.

Prohibition on Discrimination

Section 3 of the Act explicitly prohibits discrimination on ground of gender and thus reads as, “There shall be no discrimination in an establishment or any unit thereof among employees on the ground of gender in matters relating to wages by the same employer, in respect of the same work or work of a similar nature done by any employee.”

Fixed Time Limit for Payment of Wages

The Act ensures the timely payment of wages as it fixes the time limit for payment of wages.[4]

Digitization & Transparency

Section 15 provides that the appropriate Government may, by notification, specify the industrial or other establishment, the employer of which shall pay to every person employed in such industrial or other establishment, the wages only by cheque or by crediting the wages in his bank account. This will help in the introduction of digitization as well as transparency to ensure the actual amount which is shown on the papers is actually received by the workers.

Appellate Authority

The Act provides for the appellate authority for the speedy redressal of the grievances in a cheap and efficient manner.[5] Any person aggrieved by an order passed by the authority under sub-section (2) of section 45 may prefer an appeal, to the appellate authority having jurisdiction appointed by the appropriate Government, by notification, for such purpose.

No Contracting Out

Section 60 provides that, “Any contract or agreement whereby an employee relinquishes the right to any amount or the right to bonus due to him under this Code shall be null and void in so far as it purports to remove or reduce the liability of any person to pay such amount under this Code.” Therefore, the workers can’t be coerced by the employers to let go the amount which is rightfully due to him/her for the services rendered.

Issues that need to be Considered

  • Section 3 of the Act prohibits gender discrimination on wage-related matters but does not include provisions to deal with discrimination at the time of recruitment while The Equal Remuneration Act, 1976, prohibits employers from discriminating on the basis of gender in the payment of wages as well as at the time of recruitment.

  • Labour being a subject in the Concurrent List both the Central & State Governments are competent to enact legislation.[6] It has been observed over the years that the subjects mentioned in the Concurrent List prove to be a bone of contention between the Centre and the States. Therefore, we need to wait and see how things roll out and how an amicable solution is achieved around the fixing of floor wage and the minimum rate of wages.


[1] INDIA CONST. art. 43.

[2] The Code on Wages, 2019, § 2(y).

[3] The Code on Wages, 2019, § 9.

[4] The Code on Wages, 2019, § 17.

[5] The Code on Wages, 2019, § 49

[6] INDIA CONST. schedule VII, list 3, entry 24.

Submitted by,

Pallav Arora,

Year III, B.A.LL.B. (Hons.),

Rajiv Gandhi National University of Law.


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