The Wage Code 2017

Code on Wage bill has been recently presented and approved in Loksabha. As a part of its mission to strengthen the ease of doing business in India by simplifying the labour compliance, central government has decided to consolidate huge number of labour laws in India in four major codes namely code on wages, code on industrial relations, code on social security and code on working conditions and safety. Code on Wage bill is the first step towards this process. While consolidating the five current Acts centrally Labour Ministry has focussed on following major aspects;

  1.  Wider coverage with easier understanding

  2.  Simplification of compliance process

  3.  More facilitation and no inspection

  4.  Easy, economical and speedy redressal concerns

  For the benefit of our readers, I am giving below the must know points about this new wage code, along with its impact in order of importance;

  ·    Repeal of Certain Acts – The Payment of Wages Act, 1936, The Minimum Wages Act, 1948, The Payment of Bonus Act, 1965 and The Equal Remuneration Act, 1976 will cease of exist post effect of this Act as their provisions are getting consolidated in this code

·    Wider Coverage - New Code will be applicable to all industry segments and not only scheduled industries and establishments

  ·    Confusion of definitions – New Act will clarify the confusions of multiple definition of the same concept say workmen, wages etc.

  ·    Coverage for all class of employees – All collars of employees, including managerial, clerical, administrative, supervisory will be covered by this code.

  ·    Definition of Wages – In this, there is still difference between Payment of Bonus and other chapters. While wages for the chapter on Payment of Bonuswill continue to hold the old definition, other chapters considers the wages as all components of remuneration except statutory bonus, value of supplies, retirals and social security contribution, LTA.

  ·    National Minimum Wage –State Governments and UTs will decide the minimum wages for their respective geographies. Central Government will fix the national level minimum wages, below which no state or UT can fix their wages.

  ·    Digital Transactions – Employers to make bank or digital transactions for payment under this code

  ·    Facilitators, not Inspectors – Henceforth there will be no inspectors under this code. Government officers will be facilitators, who will help employers for smooth implementation of this code towards compliance and execution. They will facilitate employees, unions for better understanding of the code. Henceforth, there will be no ad hoc Inspection. Inspections to be done as per the web based inspection schedule and reports to be uploaded online

·    Appointment of Appealate Authority – Appropriate government to appoint the Appealate Authority within the jurisdiction which will help for speedy and economical redressal of claims/concerns. This is an additional forum before one approaches to the judicial machinery.

  ·    Exemption of Employer and fixation of offender – If employer proves that he has taken due diligence for execution of this code and other person has committed the offence without his knowledge and consent, such other person to be convicted (as if he is the employer) and employer to be exempted. 

  Advise at this point in time to all is to wait and watch till the roll out of this Act and then take appropriate steps. What I see as an immediate impact is, post implementation of this Act, employers may need to redesign their salary structure, convert all cash pay-outs into banking / digital transactions. Hence they can start the background work to avoid last minute hassles. Trade Unions and Employees should wait and watch till the State Enactments comes into force.