Code on Wages, 2019 | Part 1 – Basics, Minimum Wages and payment deadlines | Labour law
The New code for minimum wages of workers and employees are coming into picture and in this Part 1 of Code of Wages, we are discussing some main points which are as under:
- Wages = Basic Pay + Dearness Allowance + Retaining allowance. If the above 3 does not contribute to 50% of total remuneration, then wages = 50% of total remuneration. (This will be very crucial as it will form bases for many calculations)
- Total Remuneration = Basis + DA + RA + Bonus + Value of house accommodations + Employer contribution to PF and pension funds + Conveyance Allowance + Amount paid to defray special expenses entailed on employee + HRA + Overtime + Commission + Gratuity + Retrenchment compensation/Ex-gratia (A bit of clarity may be required for the definition, as it is not specifically defined in the Code)
- Worker – Any person doing manual, unskilled, skilled, operational, clerical or supervisory work for hire or reward, including Working journalists and Sales promotion employees. Worker excludes – i)Person subject to Air Force Act, 1950, ii) employed in police service or as an officer of prison, iii) employed mainly in managerial or administrative capacity, or iv)employed in supervisory capacity and drawing wage of exceeding INR 15,000.
- No discrimination on matters related to wages by same employer on basis of gender in respect of same work or of similar nature. However, to comply with above, no employer can reduce the rate of wages of any employee. No discrimination while recruitment. (This should be prospective, but what effects any increments on current wages would have is subject to clarity)
- Minimum rate of wages to be notified by appropriate government. Can be for either time work or piece work. Time work wages may be fixed either per hour, day or month basis. (This will be very important)
- Where employees are employed on piece work, for the purpose of sub-section (1), the appropriate Government shall fix a minimum rate of wages for securing such employees a minimum rate of wages on a time work basis.
- If any work wage rate has been fixed by day works and the employee works less than requisite number of hours, then except for his unwillingness to work, it shall be considered as though he has worked for complete day. (Tracking the working hours is important for businesses)
- In case employee works on 2 classes of work having different minimum rate of wages, the payment to be done in respect of time occupied in each class of work.
- When person is employed for piece work, and the minimum rate of wages are fixed at time basis, the employer has to ensure to pay at not less than minimum wages. (No clause available for reverse of the same)
- Overtime rates cannot be less than twice of normal rate of wages. (It is not minimum rate but normal rate paid by the businesses)
- Appropriate government to fix number of hours which shall constitute normal working day.
- Employer to fix wage period for employees – Daily, weekly, fortnightly or monthly.
- Payment of wages to employees
- Daily – at end of the shift
- Weekly – On last working day of week
- Fortnightly – on second day after end of fortnight
- Monthly – before seventh day of succeeding month (Not seventh working day, but seventh day, i.e. 7th of the month)
- Full and final settlement to be done within 2 working days of his removal, dismissal, retrenchment or resignation. (There might be some relaxation provided in this clause on way forward but as of now it is 2 days)
This was all for Part 1 of Code of Wages, we shall discuss more details in our Part 2 which will be released soon so stay tuned.
To read the full Code CLICK HERE: 2589GI.p65 (egazette.nic.in)
Author
CA Sourabh Kothari (C.A., B.Com)
He is currently working as Partner – Risk and Transaction advisory with a renowned firm in Jaipur having experience in Internal Audit, IFC Audit, Business consultancy, Due Diligence and Management consultancy.
E-mail: Sourabh.kothari@jainshrimal.in | LinkedIn: Sourabh Kothari