The Code on Wages, 2019
📘 The Code on Wages, 2019
1. ✅ Background and Purpose
The Code on Wages, 2019 is part of the Government of India’s major labor law reforms. It consolidates and rationalizes four key labor laws related to wages and bonuses:
The Payment of Wages Act, 1936
The Minimum Wages Act, 1948
The Payment of Bonus Act, 1965
The Equal Remuneration Act, 1976
🎯 Objectives:
Simplify the complex structure of wage-related laws.
Ensure uniform definitions and applicability across sectors.
Promote ease of doing business while protecting workers’ rights.
Provide a national floor wage to prevent exploitation.
2. 🧱 Structure and Coverage
Enacted: August 8, 2019
Came into force: Yet to be fully notified in most states (as of 2025, implementation varies)
Applicable to all establishments and employees, in organized and unorganized sectors, including government and private employees.
3. 📌 Key Definitions
(a) Wages [Section 2(y)]
A comprehensive and uniform definition of "wages", which includes:
Basic pay
Dearness allowance
Retaining allowance
Excludes (for calculation purposes):
Bonus
House rent allowance (HRA)
Conveyance
Overtime
Gratuity
Commission, etc.
👉 If excluded components exceed 50% of total remuneration, the excess is added back into "wages".
(b) Employee
Includes skilled, semi-skilled, unskilled, operational, clerical, supervisory, and manual workers, whether in express or implied employment.
4. ⚖️ Key Provisions of the Code
A. Minimum Wages (Sections 5–9)
Minimum wages are to be fixed by the Central and State Governments.
Concept of National Floor Wage introduced.
Employers must not pay below the minimum wage, regardless of the nature of work.
B. Timely Payment of Wages (Sections 10–13)
Wages must be paid within:
7 days (if <1,000 employees)
10 days (if ≥1,000 employees)
In case of resignation, dismissal, or removal, wages must be paid within 2 working days.
C. Equal Remuneration (Section 3)
No discrimination on the basis of gender in wages and recruitment for same or similar work.
D. Payment of Bonus (Sections 26–29)
All employees earning wages up to a certain limit are eligible.
Minimum bonus: 8.33% of wages.
Maximum bonus: 20%.
Bonus payable only if the employee has worked at least 30 days in a year.
E. Inspector-cum-Facilitators (Section 51)
Inspectors are now "facilitators", emphasizing compliance over punishment.
They can advise employers and conduct inspections.
F. Offenses and Penalties (Sections 52–56)
Failure to pay minimum wages or bonus may attract fines or imprisonment.
First-time offenses may be compounded (settled without prosecution).
5. 📚 Case Law and Judicial Principles
While direct judicial interpretation of the 2019 Code is still limited due to delayed implementation, several older cases under the repealed laws remain relevant because the substance of rights continues under the new Code.
1. Bhikusa Yamasa Kshatriya v. Sangamner Akola Bidi Kamgar Union (AIR 1963 SC 806)
Upheld the constitutional validity of the Minimum Wages Act.
Court emphasized that fixation of minimum wages is not an infringement of the freedom to carry on trade (Article 19(1)(g)).
2. Mackinnon Mackenzie & Co. Ltd. v. Audrey D’Costa (AIR 1987 SC 1281)
Under the Equal Remuneration Act, the Court ruled that employers must pay equal wages to male and female employees for the same work.
This principle has been preserved under Section 3 of the Code on Wages.
3. Municipal Council, Hatta v. Bhagat Singh (AIR 1998 SC 1125)
Clarified that delayed payment of wages is a violation of employees’ rights under the Payment of Wages Act.
These obligations now apply under Sections 10–13 of the Code.
4. U. Unichoyi v. State of Kerala (AIR 1962 SC 12)
Reaffirmed the power of the State to fix minimum wages and held it does not violate Article 14 or 19.
The judgment supports the legal basis of the minimum wage provisions in the new Code.
6. 🧑⚖️ Constitutional Validity
The Code is consistent with:
Article 14: Right to equality.
Article 15(1): Prohibition of discrimination (used in equal pay cases).
Article 23: Prohibits forced labor.
Directive Principles (Article 39, 41, 43): Provide for living wages, equal pay, and decent working conditions.
7. 📈 Impact and Benefits
Benefits for Workers:
Uniform wage structure.
Timely payment and transparency.
Better wage protection in the unorganized sector.
Gender equality in pay.
Benefits for Employers:
Single compliance mechanism instead of four separate laws.
Reduced litigation due to clarity in definitions.
Scope for digital compliance and self-certification.
8. 🚧 Challenges and Concerns
Implementation depends heavily on state rules, many of which are still pending.
National floor wage is not binding — states may fix lower rates.
Private sector compliance may be difficult in unorganized and gig economies.
Bonus eligibility limits may exclude many employees in modern sectors.
9. 📌 Summary Table
| Feature | Description |
|---|---|
| Laws Repealed | 4 (Minimum Wages, Bonus, Payment of Wages, Equal Remuneration) |
| Uniform Definition of Wages | Yes |
| Minimum Wage | Mandatory (Central/State fixed) |
| Equal Pay for Equal Work | Mandatory, gender-neutral |
| Bonus Provision | 8.33% to 20% (based on profit and eligibility) |
| Inspector-cum-Facilitator | Compliance support + inspection |
| Penalties | Fine/imprisonment for non-payment or discrimination |
| Scope | All sectors, all employees (unless exempted) |
🔚 Conclusion
The Code on Wages, 2019 is a progressive and streamlined labor legislation that aims to balance workers' rights with employer flexibility. Though its full implementation is pending across states, it provides a comprehensive framework to ensure fair wages, equal treatment, and timely payment, marking a significant step in India’s labor law modernization.
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