HANDBOOK ON

THE CODE ON
WAGES, 2019

i
November, 2020

Price : Rs.175/- (excluding postage)

© THE INSTITUTE OF COMPANY SECRETARIES OF INDIA

All rights reserved. No part of this Publication may be translated or copied

in any form or by any means without the prior written permission of The
Institute of Company Secretaries of India.

DISCLAIMER

Although due care and diligence have been taken in preparation of

this Publication, the Institute shall not be responsible for any loss or
damage, resulting from any action taken on the basis of the contents
of this Publication. Anyone wishing to act on the basis of the material
contained herein should do so after cross checking with the original
source.

Issued by :
THE INSTITUTE OF COMPANY SECRETARIES OF INDIA
ICSI House, 22, Institutional Area, Lodi Road,
New Delhi 110 003

ii
 Foreword

I am happy to learn that the Institute of Company Secretaries of

India is releasing the publication Handbook on the Code on Wages,
2019 and extending its whole hearted support in spreading awareness
about various initiatives of the Government of India including labour
laws reforms.
The Ministry with a view to facilitate ease of doing business, generate
employment and safeguard interest of workers and employers, has
taken various legislative, administrative and e-governance initiatives
relating to labour laws in India.
The Ministry has been working towards simplifying, amalgamating
and rationalizing the relevant provisions of the Central Labour
Laws and consolidating the same into four labour codes for
bringing out reforms in the provisions relating to minimum
wages, bonus, industrial relations, social security and safe

law under the initiatives for which the Ministry has put draft
rules in public domain for feedback and suggestions and is

Relations Code, 2020, the Code on Social Security, 2020 and

the Occupational Safety, Health and Working Conditions Code,
2020 have been passed by the Parliament and assented to by the
President on September 28, 2020.
iii
overhaul of India’s labour laws in relation to provisions governing
payment of wages and bonus. The provisions on payment of
minimum wages, timely payment of wages, payment of bonus,
and the prohibition of discrimination in matters of remuneration,
recruitment, and conditions of service etc. are provided in the Code

rationalized. Changes have also been introduced in the inspection

regime including web based randomised computerised inspection.
To protect the interest of the workers, the limitation period has been

be conducive for enforcement of labour laws with transparency and

accountability.
The Company Secretaries being the Governance Professionals have
an important role to play in the new regime of labour laws in relation
to compliance and implementation of the provisions of the Code
in true letter and spirit. I am hopeful that the Company Secretaries
will continue to play major role in new labour laws.
I am sure this publication would be of immense use for the
employers, employees, practitioners, students and other stakeholders
in understanding the compliances under the Code on Wage, 2019
and supplementing the government’s initiative of implementing
labour law reforms in a timely manner.

team for this initiative.

New Delhi

Dated: 21st October, 2020

iv
 Preface
“Capital is a result of labour, and is used by labour to assist it in
further production. Labour is the active and initial force, and labour
is therefore the employer of capital.”
– Henry George

The word ‘labour’ takes us back to those initial pages of Macroeconomics

further reiterated this role was not limited to a single economy, rather the
same was observed, perceived and acknowledged globally.
That said, the calculation of National Income thrives on the incomes of

India is known for excess availability of workers, the same comes across
as the raison d’être for the fairness in wage entitlement. The need of the

ground level wage earners which can not only drive up aggregate demand
but also spur a phase of sustainable and inclusive growth.

(bill) in Parliament after many multi-stakeholders consultations. The

said issues and put across itself as the perfect response and solution

the provisions of minimum wages and timely payment of wages to all

employees irrespective of the sector and wage ceiling.
v
I take this opportunity to express my sincere gratitude to the Hon’ble
Minister of State for Labour and Employment (Independent Charge) and
the Secretary, Ministry of Labour & Employment, Government of India for
bringing out reforms in the Labour Laws by the enactment of the Labour
Codes. This will surely prove to be an important milestone for the welfare
of the workers in the country.

Given the various new aspects introduced through the Code, the need
was felt to develop a comprehensive publication wherein the provisions of
the Code were explained in a simple and easy to understand manner so
as to accord better understanding to the professionals looking forward to

to give clarity by citing appropriate examples, comparative explanation

with existing laws and the diagrams.

I would like to place on record my sincere appreciation to CS Devendra

V. Deshpande, Chairman, Management Committee, ICSI-CCGRT and

and guidance in preparation of the publication.

I also express my sincere gratitude to Ms. Sudha Pillai, Chairperson and

inputs for improvement of this publication.

I appreciate the contribution made by CS Sandeep M. Nagarkar in

of the team at the ICSI under the able leadership of CS Asish Mohan,
Secretary, ICSI in preparing this publication.

I hope that this publication shall prove to be of great help in understanding

always scope for further improvement in any publication, I would be

Place: New Delhi CS Ashish Garg

Date: November 25, 2020 President
The Institute of Company Secretaries of India

vi
 Contents

Particulars Page No.

Background 1

Prohibition of Discrimination on the Ground of Gender 28

Payment of Bonus 50

Miscellaneous Provisions 82

vii
viii
 HANDBOOK ON THE CODE ON WAGES, 2019

BACKGROUND

Wages in Ancient India

During pre-Vedic and Vedic age, especially during Rigveda and till the
days of Mahabharata and Ramayana, wages were paid to the artisans and
craftsmen in kind by the local kings or the village guilds. Money wages
in the form of the present-day practice was quite unknown until money
was invented as a medium of exchange. A sort of barter system prevailed
during the period of Mahabharata.

India is from Kautilya’s ‘Arthashastra’ and ‘Nitisara’ by Shukracharya.

During the tenth century AD, ‘Nitisara’ gave a description of Indian polity,
especially organisation of the Central Government, town and village life,
particularly the village panchayat.

The panchayat members were elected and had executive-judicial powers

who collected taxes, distributed land, paid wages to the workers and also
paid the governments’ share on behalf of the village. In larger towns there
were varieties of artisans, merchants; craft guilds, merchantile associations
and Banking Corporation, and each of them had its own wage payment
systems.

The information relating to wages was, however, fragmentary in ‘Nitisara’.

But it was evident from other sources like inscriptions, that the system of

the kings and their council of ministers of the top seldom interfered with
economic and social activities of the elected bodies.

During the 4th century BC Kautilya’s Arthashastra gave us more details

about the statecraft and polity of ancient India which was principally an
agricultural civilisation based on village self-government.

According to the Jatakas, ancient India, even before 4th century BC

appeared to be a highly civilized society where trade associations, craft
guilds and trade unions were formed to safeguard the interest of all types

1
HANDBOOK ON THE CODE ON WAGES, 2019

Labour Law Reforms

India inherited its labour laws and practices from British Rule. However, the
speed of making changes in the labour laws was very slow till liberalization

scaled high and now it is set to become USD 5 trillion economy. Labour
reforms were always on the key agenda of every Government. Now in line
with overall vision of making India a hub of manufacturing base, existing
Government has embarked upon the rephrasing and replacing almost the
entire set of Central labour legislations by 2022.

to the Manufacturing Sector and do not address the problems of the fast
growing Service Sector of the Millennium which today accounts for about
55 per cent of our GDP. The current labour laws relating to wages protect

provisions which seriously hamper the employment generating capacity of

the organised sector. Most of the 10-12 million youth joining labour force
each year are forced to join the informal unorganised sector where both
the working conditions and wages are poor.

The 2nd
rationalization of existing laws relating to Labour in organized sector
and an umbrella legislation for ensuring a minimum level of protection
to workers in unorganized sector. The NCL which submitted its report in
June 2002 had recommended that the existing Labour laws should be
broadly amalgamated into the following groups:

1. Industrial relations

3. Social Security

Expert Committee on National Minimum Wage

In January 2019, the Expert Committee on Determining the
Methodology for Fixing the National Minimum Wage in its Report
recommended the following:

the light of the latest available evidence relating to per household

2
 HANDBOOK ON THE CODE ON WAGES, 2019

consumption units, food and nutritional requirements, changing

consumption pattern and non-food expenditure requirements.

Recognizing the changes in the population composition over time,

the Committee recommended increasing the previously established

units in order to calculate the minimum wage.

Considering the overall framework and guiding principles of the

Workmen v. Reptakos Brett

& Co., the Committee recommended that the national minimum

required expenditure on food and non-food, which should be

health of their families.

ensure that workers and their families are able to meet their
minimum nutritional requirements. The Committee recommended
elaborating a nationally representative and culturally palatable food
basket, by adopting an approach that would focus on a balanced
diet rather than merely its calorie intake. This approach should not
only concentrate on the minimum requirement of calories but also
on the minimum requirement of protein and fats.

Recognizing that there have been changes in the population’s

level of activity, implying a reduction in the proportion of workers
engaged in heavy work and an increase in the number of
workers in moderate and sedentary occupations, the Committee
recommended setting the minimum wage at a level that would
allow for a minimum recommended intake (per adult person per
day) of 2,400 calories, 50 grams of protein and 30 grams of fats.

The Committee recommended using the unit values (implicit prices)

of food items available through the Consumer Expenditure Surveys

the total food expenditure of households and setting the base level
minimum wage. However, in between the NSSO surveys, there
should be an intermediate adjustment to accommodate changes in
prices at least in every six months, on the basis of the CPI made
available by the CSO.

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HANDBOOK ON THE CODE ON WAGES, 2019

non-food items, namely clothing, fuel and light, house rent,

education, medical, footwear, and transport (or conveyance); and
ii) other non-food items, (such as entertainment, durable goods,
toilet articles, other household consumables, consumer services
excluding conveyance, and consumer taxes. The Committee
recommended that the required expenditure of essential non-food
items be equal to the median class of the expenditure distribution,
and that of the other non-food items be equal to the expenditure for
the sixth fractile (25-30 per cent) of the distribution in the NSSO-
CES 2011/12 survey data.

On the basis of this approach, the Committee is of the considered

Rs. 375 per day as of July 2018. This would be equivalent to Rs.

rural-urban locations.

group may include all north-eastern States except Assam. A

recommended using the nationally representative food basket for

all regions instead of estimating and using regional representative

the consumption pattern from the level of poverty and ability to

pay in a region, while maintaining the palatability of the food
basket. However, the Committee recommends using the regional
average unit price of each food item to arrive at the total minimum
consumption expenditure required for households. The required
expenditure for non-food items – both essential and other – will

month) for Region I, Region II, Region III, Region IV and Region

4
 HANDBOOK ON THE CODE ON WAGES, 2019

respectively, as of July 2018, irrespective of sectors, skills,

occupations and rural-urban locations.

non-food component, the Committee recommends an additional

house rent allowance, averaging up to Rs.55 per day i.e., Rs.1,430

this - city compensatory rent allowance may be allowed to vary

in accordance with the type of city and town. The Committee
recommended that a separate study should be undertaken to
determine the city compensatory rent allowance by type of city
and town.

round numbers, which are much easier to disseminate. This will

also facilitate the minimum wage enforcement process.

the regional levels proposed by this Committee, only accounts for

the expenditure required to meet the basic level of needs (food
and non-food expenditure) of workers and their families. In no way

productivity and other similar economic criteria. As recommended

healthy living of their families.

The Committee recommended that the period during which

the minimum proposed wages are implemented, and the terms

consultation process with the stakeholders.

Since the level of minimum wages is inextricably tied to the

consumption basket, and consumption patterns may change over
time, the Committee recommended that an expert committee

availability of NSSO-CES data. However, as stated earlier, the

Committee recommended that, during the interval period, the basic
minimum wage should be revised and at least updated in line with

5
HANDBOOK ON THE CODE ON WAGES, 2019

The Committee acknowledges that referring to the CPI to ascertain

the changes in the cost of living will ensure that the purchasing
power of the minimum wage will not deteriorate. The Committee
suggests that if the country’s economic realities are factored into
the minimum wage, any adjustments should take into account

research is required to arrive at any productivity-linked revisions.

The Committee recommended the creation of a research unit in

the Ministry of Labour and Employment to support the Central
Advisory Board and State Advisory Boards at the time of
formulating recommendations to set and adjust minimum wages.
This research unit should provide information, evidence based
studies and minimum wage impact analyses to pave the way for
the discussion on the revision and adjustment of the minimum
wage level.

The Committee recommended adhering to the provisions of the

the design and operation of the Indian minimum wage system.

The Committee recognizes the need for measures to be put in

to minimum wages. Once the national or regional minimum wages

wage campaign be launched with awareness-raising activities and

information dissemination strategies at the national and subnational
levels. Other measures might include capacity-building activities
and the use of technology, inter alia, to better enforce compliance
with minimum wage payments.

especially from online marketing platforms, employers are under

constant pressure to cut costs and resort to most competitive pricing and
delivery systems to suit the consumers. This is only possible by periodic
restructuring, adoption of technology for mass production so that India
can avoid losing investments to its neighboring countries.

6
 HANDBOOK ON THE CODE ON WAGES, 2019

more foreign investment, augment domestic capital in order to make India

a truly manufacturing hub as envisaged in ‘Make in India’ scheme, there
is an urgent need to create a conducive environment that can facilitate
and nurture industrial and manufacturing set-up(s). To achieve this, it is
necessary to reform and replace, on top priority basis, old and archaic
labour laws, which are often considered to be one of the key bottlenecks
in making India a manufacturing power house in the global map. India is
witnessing the much awaited reforms in the Labour Law regime.

In India, the law relating to employees/workmen has always been a

complex subject due to various factors whether due to its archaic laws,
multiplicity of laws/regulatory authorities, Central vs. States legislation
and so on. One of the key factors to remember is that labour laws are
part of the concurrent list and accordingly both the Central and the State
governments can legislate wherever they feel need for the same. However,
instead of bringing clarity, this has created confusion due to overlapping

till date pertaining to labour and related aspects while various State

on similar or the same subject. Secondly, not only the State and Central
laws clash on the same subject and create confusion but even in Central

leading to varying interpretations. Lastly, some of these laws are too old,
archaic and not in line with current economic and industrial requirement.

the urgent need of India and its manufacturing industry in order to scale
up further and put its footprint in global manufacturing base.

The Central Government with a view to facilitate ease of doing business,

generate employment and safeguarding interest of workers and employers,
has taken various legislative, administrative and e-governance initiatives
relating to Labour Laws in India. One of such major initiative is to enact
four (4) Labour Codes by simplifying, amalgamating and rationalising the
relevant provisions of the existing Central Labour Laws. The four Labour
Codes are as under:

2020
7
HANDBOOK ON THE CODE ON WAGES, 2019

3. The Industrial Relations Code, 2020

4. The Code on Social Security, 2020
The legislative developments related to these Codes and existing labour
laws to be repealed are mentioned below:

The Code on The The Industrial The Code on

Wages, 2019 Occupational Relations Code, Social Security,
Safety, Health 2020 2020
and Working
Conditions
Code, 2020

The Code on The Occupational The Industrial The Code on

Safety, Health Relation s Code, Social Security,
first introduced
in the Lok Sabha Conditions introduced in the introduced in the
on 10th August, Lok Sabha on Lok Sabha on
2017 and introduced in the November 28, D ec e mbe r 11,
referred to the Lok Sabha on
Parliamentary wa s re ferred to was referred to
S t a n d i n g Code was referred Parliamentary Parliamentary
Committee on to Parliamentary S t a n d i n g S t a n d i n g
S t a n d i n g Committee on
Labour. C omm itt ee on
C omm itt ee on Labour. The report
Labour. The report
However, the Labour. The report of th e St anding
of the Standing
bill lapsed on of the Standing Committee was
Committee was
dissolution of the Committee was placed before
p la c e d be f or e
p la c e d be f or e both the Houses
both the Houses of the Parliament both the Houses
The Code on
of the Parliament on September 15, of the Parliament
2020. on September 15,
was introduced
2020. 2020.
in Lok Sabha The Bill was
on 23rd July, The Bill was reintroduced as The The Bill was
reintroduced as Industrial Relations reintroduced as
The Occupational Code, 2020 in the The Code on
was passed Safe ty, Health Parliament and has Social Security,
by Lok Sabha been passed by the 2020 in the
on 30th July, Conditions Code, Lok Sabha on 22nd Parliament
2020 in the September, 2020, an d has be en
Sabha on 2nd Parliament and Rajya Sabha on passed by the
has been passed 23rd September, Lok Sabh a on
and received by the Lok 2020 and received 22nd September,
the assent of the Sabha on 22nd the assent of the 2020, Rajya
President on 8th September, 2020, President on 28th Sabha on 23rd
Rajya Sabha on September, 2020. September, 2020

8
 HANDBOOK ON THE CODE ON WAGES, 2019

The Code on The The Industrial The Code on

Wages, 2019 Occupational Relations Code, Social Security,
Safety, Health 2020 2020
and Working
Conditions
Code, 2020

23rd September, and received

2020 and received the assent of
the assent of the the President on
President on 28th 28th September,
September, 2020. 2020.

Existing labour laws to be repealed by these Codes*

1. The 1. The Industrial 1. The

Payment of Employees’
2. The Mines 2. The Trade Compensation

2. The 3. The Dock 3. The Industrial 2. The

Minimum Employment Employees’
Health and State Insurance
(Standing Orders)

3. The 3. The
4. The Building
Payment of Employees’
and Other
Bonus Act, Provident
Construction

4. The Equal (Regulation of Miscellaneous

Remuneration Employment and Provisions Act,
Conditions of
4. The
5. The Employment
Plantations Exchanges
(Compulsory

Labour Vacancies) Act,

(Regulation and
Abolition) Act,
5. The Maternity

7. The Inter-State

(Regulation of
Employment and of Gratuity Act,
Conditions of

9
HANDBOOK ON THE CODE ON WAGES, 2019

The Code on The The Industrial The Code on

Wages, 2019 Occupational Relations Code, Social Security,
Safety, Health 2020 2020
and Working
Conditions
Code, 2020

7. The Cine-
Journalists and
other Newspaper
Employees
(Conditions of 8. The Building
and Other
Service) and
Construction
Miscellaneous
Provision Act,

Journalists Unorganised

Security Act,
2008.

10. The Motor

11. The Sales

Promotion
Employees
(Conditions of

12. The Beedi and

(Conditions of
Employment) Act,

13. The Cine-

Cinema Theatre

(Regulation of
Employment) Act,

10
 HANDBOOK ON THE CODE ON WAGES, 2019

The Labour Codes aims to transform the old and obsolete labour laws into
more accountable and transparent ones which is need of the hour. It will
also make the existing labour laws in sync with the emerging economic

reduction in multiple authorities under various Acts and bring transparency

and accountability in enforcement of labour laws. This in turn would lead
to ease of compliance, catalyzing the setting-up of manufacturing units
including boosting labour intensive industries such as agriculture and
manufacturing exports. This would lead to enhancement in employment
opportunities as well as its formalization along with ensuring safety, social
security and welfare of workers.

The Code on Wages, 2019

Pursuant to the recommendations of 2nd NCL and with a view to
rationalize the Central labour enactment relating to wages, the Ministry of
Labour and Employment (Ministry) held consultations with trade unions,

(hereinafter also referred to as ‘the Code’) was made available in public

domain through Ministry’s website. The Bill was introduced in last Lok
Sabha on 10th August, 2017 and was referred to Parliamentary Standing
Committee which submitted its Report on 18th December 2018. Out of 24
recommendations made by Standing Committee, 17 were accepted by
the Government. However, the said Code lapsed upon dissolution of the

the Lok Sabha on 30th nd

th

Central Government has yet to notify its applicability and enforceability in

accordance with section 1(3) of the Code which mentions that it shall come

The preamble of the Code states that it is “an Act to amend and consolidate
the laws relating to wages and bonus and matters connected therewith or

overhaul of India’s labour laws in relation to wages and bonus. The Code
emphasizes on compliance as it increases the cost of non-compliance.
Gone are the days when employers could take it easy on non-payment

11
HANDBOOK ON THE CODE ON WAGES, 2019

of overtime wages as Shops & Establishments laws hardly provided a

are willing to comply with the Code get an opportunity to compound the

this opportunity to compound uniformly available and is a step forward in

the direction of ease of doing business.

August 8, 2019
August 10, 2017
received President assent
introduced in the Lok Sabha and published in the Gazette

August 21, 2017 August 2, 2019

The bill was referred to the
Parliamentary Standing
Committee

December 18, 2017 July 23 & 30, 2019

The bill lapsed with the
re-introduced and passed
Sabha by the Lok Sabha

Evolution of the Code on Wages, 2019

The Code ensures minimum wages along with timely payment of wages
to all the employees and workers. Many unorganized sector workers
like agricultural workers, painters, persons working in restaurants and
dhabas, chowkidars, etc. who were out of the ambit of minimum wages
will get legislative protection of minimum wages. It has been ensured
that employees getting monthly salary shall get the salary by 7 th of
next month, those working on weekly basis shall get the salary on
last day of the week and daily wagers should get it on the same day.

12
 HANDBOOK ON THE CODE ON WAGES, 2019

The Code will prove to be a milestone and give respectable life to 50

crore unorganized sector workers. Salient features of the Code are as
under:

The Code universalizes the provisions of minimum wages and

timely payment of wages to all employees irrespective of the
sector and wage ceiling. The provisions of both the Minimum

applicable to workers below a particular wage ceiling working

in Scheduled Employments only. This would ensure ‘Right to
Sustenance’ for every worker and intends to increase the legislative
protection of minimum wage from existing about 40% to 100%
workforce. This would ensure that every worker gets minimum
wage which will also be accompanied by increase in the purchasing

minimum living conditions, will extend qualitative living conditions

across the country to about 50 crore workers. It is envisaged that
the States shall notify payment of wages to the workers through
digital mode.

and will entail at lesser cost of compliance for an employer. An

returns, forms, etc., not only can be electronically filed and

maintained, but it is envisaged that through rules, not more than
one template will be prescribed.

and skills. It will substantially reduce the number of minimum wages

in the country from existing more than 2000 rates of minimum
wages.

Many changes have been introduced in the inspection regime

including web based randomised computerised inspection scheme,

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HANDBOOK ON THE CODE ON WAGES, 2019

jurisdiction-free inspections, calling of information electronically

conducive for enforcement of labour laws with transparency and

accountability.

There were instances that due to smaller limitation period, the

claims of the workers could not be raised. To protect the interest
of the workers, the limitation period has been raised to 3 years and

remuneration, etc. as against the existing varying period between

Repeal and Savings

The brief of these Acts are given below for better understanding:

1. The Payment of Wages Act, 1936: This Act was enacted to ensure
that the employers make the payment of wages of workers within
the time-limit prescribed under the Act. The Act also ensures that
unnecessary deductions are not made from the wages of workers
other than those mentioned in Law.

2. The Minimum Wages Act, 1948

minimum rates of wages in certain employments. The object is to
prevent exploitation of labour/workers and for that purpose it aims

3. The Payment of Bonus Act, 1965: This Act is applicable to every

factory and to any other establishment in which twenty or more
persons are employed on any day during an accounting year.
The Act is to provide for the payment of bonus to employees

productivity. As per the Act, minimum amount of bonus is obligatory

on the establishment even if it is incurring losses.

4. The Equal Remuneration Act, 1976: This Act provides for the
payment of equal remuneration to men and women workers and

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 HANDBOOK ON THE CODE ON WAGES, 2019

for the prevention of discrimination, on the ground of gender,

against women in the matter of employment and other related
aspects.

COMPARISON OF EXISTING LAWS WITH THE CODE ON WAGES,

2019

S. Provision Existing Laws The Code on Wages,

No. of the law 2019
1. Coverage The Minimum Wages Minimum wages will be
and appli- Act, 1948: Minimum paid to all employees.
cability wages are fixed by
the appropriate
S ta t e G o v er n m en t s
for scheduled
employments with more
than 1,000 employees
in the State.

The Payment of Provisions regarding

payment of wages will
Wa g e s A c t , 1 9 3 6 :
apply to all employees
Applies to employees
whose wages do not in both organized as
well as unorganized
exceed Rs.24,000 per
sectors, irrespective
month.
of any such wage limit.

The Payment of Bonus Payment of Bonus will

Act, 1965: Applies to apply to employees
every establishment whose wages do not
which has 20 or exceed a monthly
more employees, on amount notified
any given day, in an by Central or State
accounting year, but governments.
is applicable only on
those employees whose
wages do not exceed
Rs.21,000 per month.

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HANDBOOK ON THE CODE ON WAGES, 2019

S. Provision Existing Laws The Code on Wages,

No. of the law 2019
2. Revision of The Minimum Wages Mandates that
minimum Act, 1948 : Minimum minimum wages be
wages wages must be revised revised in five-year
by the Central or State intervals.
governments at least
o n c e in e v e r y f iv e
years.
3. National No provision. Central Government
minimum will fix national
wage/Floor minimum wage /floor
wage wage after taking into
account minimum
standard of living of
workers. The State
Government shall
not fix minimum

wage.
4. Overtime Different States have Overtime payment
payment di ffe ren t pro vi sio ns shall be at two times
for overtime payment the normal wa ges/
mostly provided ordinary wages.
in the Shops and
Establishments Act of
each respective State.
5. Gender The Equal Remuneration Prohibits gender
discrimina- Act, 1976: Prohibits discrimination in wage
tion gender discrimination payment.
in wage payment.

Prohibits gender Prohibits any form of

discrimination in gender discrimination
recruitment, transfers, in any of the ‘conditions
and promotions. of employment’.

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 HANDBOOK ON THE CODE ON WAGES, 2019

S. Provision Existing Laws The Code on Wages,

No. of the law 2019
Inspection The office of
‘inspector’ under the
previous regime has
Payment of Bonus Act, been replaced with
an ‘Inspector-cum-
Remuneration Act,
additional duties of
guiding and advising
Inspectors are appointed
employers and
to carry out (i) surprise
checks, and (ii)
implementation of the
examine persons and
Code. Employer can
require them to give
seek help of Inspector-
in format ion, am o ng
other powers.
ensure compliance
under the Code.
7. Claims Claims for wages and The period of limitation
bonus c an be fil ed
within period varying to wages and bonus
has been enhanced
years. to 3 years as against
existing periods

to 2 years.
8. Penalties The Minimum Wages Employers who pay
Act, 1948: Offences less than what is due
include (i) paying under the Code shall
employees less than
minimum wages, and of up to Rs.50,000. If
(ii) not providing for an employer is guilty
a day of rest in the
week. Penalties include five years, penalties
include imprisonment
imprisonment up to six up to three months or a
months.
or both.

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HANDBOOK ON THE CODE ON WAGES, 2019

S. Provision Existing Laws The Code on Wages,

No. of the law 2019
The Payment of Employers who do not
Wa g e s A c t , 1 9 3 6 : comply with any other
Offences include (i) provision of the Code
non-payment of wages or any rule made or
at specified time order made or issued
period (ii) unauthorised thereunder shall be
deductions from wages. liable to pay a fine
of up to Rs.20,000. If
up to Rs.7,500. an employer is guilty
of the same offence
The Payment of
Bonus Act, 1965: In
penalties include
case a person or
imprisonment up to
company does not
one month or a fine
comply with the Act,
of up to Rs.40,000 or
they can be punished
both.
with imprisonment up to

Rs.1,000.

T h e E q u a l
Remuneration Act,
1976:
(i) non-maintenance of
documents in relation
to employees, and (ii)
discrimination against
women in recruitment.

up to Rs.20,000 or
imprisonment up to one
year or both.

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 HANDBOOK ON THE CODE ON WAGES, 2019

Coverage and applicability of the Code

The Code extends to the whole of India.
The Code universalizes right to minimum wages and timely payment of
wages to all the employees regardless of wage ceiling, employment sector.

to workers and employees below a particular wage ceiling (earning up to

to certain type of employment included in the Schedule of the said Act.

The Code prohibits gender discrimination on wage and employment
conditions related matters by same employer.

of the Code. It applies to all establishments, employees, and employers

The Code extends:

1. To all establishments where any trade, industry or manufacturing
process is carried on.
2. To all type of employees (irrespective of their wage limit), skilled,
semi-skilled, unskilled, supervisory, managerial across all sectors.
3. To all type of employers who engage employees for their trade,
industry or manufacturing activities.

Coverage of the Code

S. Chapter Coverage
No.
1 Chapter I Preliminary
2 Chapter II
3 Chapter III
4 Chapter IV Payment of Bonus
5 Chapter V Advisory Board
Chapter VI Payment of Dues, Claims and Audit
7 Chapter VII
8 Chapter VIII
Chapter IX Miscellaneous

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HANDBOOK ON THE CODE ON WAGES, 2019

KEY DEFINITIONS

Employee (Section 2k):

engaged on wages to do skilled, semi-skilled, unskilled, operational or

term includes a person declared to be an employee by the appropriate

government. However, it does not include apprentice engaged under the

Worker (Section 2z):

any Industry to do any manual, unskilled, skilled, technical, operational,
clerical or supervisory work for hire or reward.
It also includes ‘working journalist’ and ‘sales promotion employees’ and
for the purposes of any proceeding under this Code in relation to an
industrial dispute, includes any such person who has been dismissed,
discharged or retrenched or otherwise terminated in connection with,
or as a consequence of, that dispute, or whose dismissal, discharge or
retrenchment has led to that dispute.
It does not include any such person:

employee of a prison; or
c. who is employed mainly in a managerial or administrative capacity;
or
d. who is employed in a supervisory capacity drawing wage of

by the Central Government from time to time; or

Note: There is a distinction made between ‘employee’ and ‘worker’.

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 HANDBOOK ON THE CODE ON WAGES, 2019

The term ‘worker’ excludes managerial and supervisory employees and

includes sales promotion employees and working journalists.

Employee
(Section
2k)

Apprentice engaged Excludes

under the Apprentices
Act, 1961 All Employees engaged on
Members of the Armed wages to do -
Forces of the Union. Skilled work
Semi-skilled work
Unskilled work
Operational or Manual work
Including managers,
supervisors and
administrative staff.

Worker (Section 2z)

Includes Excludes

Any person employed in any Industry for Any such person:

hire or reward to do –
Any manual, unskilled, skilled, technical,
operational, clerical or supervisory work
“Working journalist” and “sales employed in the police service or
promotion employees” as an officer or other employee of
a prison; or
under this Code in relation to an employed mainly in a managerial
or administrative capacity; or
industrial dispute, includes any such
person who has been dismissed, employed in a supervisory
discharged or retrenched or otherwise capacity drawing wage of
exceeding Rs.15,000/- per month;
terminated in connection with, or as a
consequence of, that dispute, or whose apprentice engaged under the
dismissal, discharge or retrenchment
has led to that dispute.

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HANDBOOK ON THE CODE ON WAGES, 2019

– A person who employs direct or indirect

employees in his establishment
– The head of such department if
e st ab l is h m ent i s ca rr ie d on b y
department of the Central Government,
State Government
– Chief Executive in case of local body
– Occupier of the factory, in relation to
establishment which is a factory
– Manager or Managing Director of the
establishment where the person or

of the company.
Employer (Section 2l)

– Contractor
– Legal representative of a deceased
employer

Employer (Section 2l): Employer means a person who employs direct or

indirect employees (through contractor) in his establishment and where the
establishment is carried on by any department of the Central Government

of the department and in relation to an establishment carried on by a local

authority, the chief executive of that authority, and includes,—
(i) in relation to an establishment which is a factory, the occupier of

the factory under clause (f) of sub-section (1) of section 7 of the

said Act, the person so named;
(ii) in relation to any other establishment, the person who, or the
authority which, has ultimate control over the affairs of the

or managing director, such manager or managing director;

(iii) Contractor; and
(iv) legal representative of a deceased employer;
Note:

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 HANDBOOK ON THE CODE ON WAGES, 2019

one is ‘contractor’ as an employer and the ‘legal representative of a

the ‘Contractor’ is equally given importance as an employer, and would also

be held accountable as an ‘employer; in respect of employees provided
by it to the principal employer. Contractor shall issue standard employment

for payment of dues like minimum wages and bonus to the employees.
Establishment (Section 2m): Means any place where any industry,
trade, business, manufacture or occupation is carried on and includes
Government establishment;
Note:
establishments. Therefore, any person employed in such ‘establishment’

applicable provisions of the Code. Presently, there is no blanket exemption

However, the Code exempts certain establishments from the applicability

the Chapter on payment of bonus under the Code.

Inspector-cum-Facilitator (Section 2r): Means a person appointed by
the appropriate Government under sub-section (1) of section 51.
Note: His role includes to advise employer and workers relating
to compliance with the provisions of this Code and to inspect the
establishments as assigned to him by the appropriate Government. The
Code intends to combine the roles of facilitation and inspection rather than
only inspection. The appropriate Government may confer jurisdiction of
a randomized selection of inspection for the purpose of this Code to the

facility for electronic summoning of information to help compliance.

Contractor (Section 2f) in relation to an establishment, means a person,
who—
(i) undertakes to produce a given result for the establishment, other
than a mere supply of goods or articles of manufacture to such
establishment, through contract labour; or
(ii) supplies contract labour for any work of the establishment as mere
human resource and includes a sub-contractor;
Note: The contractor is equally given importance as an employer. The

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HANDBOOK ON THE CODE ON WAGES, 2019

contractor will also be liable for the implementation of the Code. The

Contract Labour (Section 2g) means a worker who shall be deemed to

be employed in or in connection with the work of an establishment when
he is hired in or in connection with such work by or through a contractor,
with or without the knowledge of the principal employer and includes
inter-State migrant worker.
It does not include a worker (other than part-time employee) who –
(i) is regularly employed by the contractor for any activity of his
establishment and his employment is governed by mutually
accepted standards of the conditions of employment (including
engagement on permanent basis), and
(ii) gets periodical increment in the pay, social security coverage and

in force in such employment;

Note:

Same work or work of a similar nature (Section 2v) means work in

are the same, when performed under similar working conditions by

and responsibility required for employees of any gender, are not of practical
importance in relation to the terms and conditions of employment;

Wages (Section 2y)

Excludes

Remuneration whether by way of

salaries, allowances or otherwise
Bonus, perquisites
Expressed in terms of money or Contribution of employer to any pension
capable of being so expressed or provident fund, and the interest
thereon
Includes basic pay, dearness Conveyance allowance/ travelling
allowance, and retaining allowance
allowances, if any Special expenses, house rent allowance,
overtime allowance
Commission, gratuity, retrenchment
compensation or retirement benefits

Wages (Section 2y) means all remuneration whether by way of salaries,

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 HANDBOOK ON THE CODE ON WAGES, 2019

allowances or otherwise, expressed in terms of money or capable of

being so expressed which would, if the terms of employment, express

his employment or of work done in such employment, and includes,—

(i) basic pay;

(ii) dearness allowance; and

(iii) retaining allowance, if any,

but does not include–

a. any bonus payable under any law for the time being in force, which
does not form part of the remuneration payable under the terms
of employment;

b. the value of any house-accommodation, or of the supply of light,

water, medical attendance or other amenity or of any service
excluded from the computation of wages by a general or special
order of the appropriate Government;

c. any contribution paid by the employer to any pension or provident

fund, and the interest which may have accrued thereon;

d. any conveyance allowance or the value of any travelling

concession;

e. any sum paid to the employed person to defray special expenses

entailed on him by the nature of his employment;

f. house rent allowance;

g. remuneration payable under any award or settlement between the

parties or order of a court or Tribunal;

h. any overtime allowance;

i. any commission payable to the employee;

j. any gratuity payable on the termination of employment;

to the employee or any ex gratia payment made to him on the

termination of employment:

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HANDBOOK ON THE CODE ON WAGES, 2019

Provided that, for calculating the wages under this clause, if payments
made by the employer to the employee under clauses (a) to (i) exceeds

Government, of the all remuneration calculated under this clause, the

be deemed as remuneration and shall be accordingly added in wages

under this clause:
Provided further that for the purpose of equal wages to all genders and

(d), (f), (g) and (h) shall be taken for computation of wage.

Explanation
of the wages payable to him, any remuneration in kind by his employer,

cent of the total wages payable to him, shall be deemed to form part of
the wages of such employee;

uniform approach and avoid multiple interpretations.

The Code introduces a special methodology for computation of ‘wages’

and in certain circumstances, various components of wages that are

considered as forming part thereof.

or provident fund, house rent allowance, overtime allowance, conveyance

allowance, commission payable to employee etc. are not conventionally
considered as ‘wages’. However, the Code provides that in the event

50% of all remuneration payable as ‘wages’ under the Code, such excess
amount shall be deemed as remuneration and will be considered as ‘wages’.

This is a unique provision and is seemingly aimed at compensation

structures where wages are less than 50% of the total remuneration of
the employee. This provision could result in situations where the ‘wage’ of
an employee has to be recalculated. E.g. if the aggregate of commission
/ sales incentive, house rent allowance and overtime exceeds 50% of the
monthly salary for that particular month, there could be a possibility of
re-computation of ‘wages’.
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 HANDBOOK ON THE CODE ON WAGES, 2019

under the Code or payment of ‘wages’ for overtime work, would also

Example – Salary payable per month to Mr. A is as under:

S. No. Particulars Amount

(in Rupees)
1. Basic 10,000
2. Dearness Allowance 5,000
3. Bonus 1,000
4. 1,800
5. Conveyance Allowance
House Rent Allowance (HRA) 4,500
7. Overtime Allowance 5,000
Total 33,800

Total Remuneration to Mr. A – Rs.33,800

exceeds 50% of total remuneration: Rs.18,800

Minimum wage would increase (earlier it was only basic plus DA,
now it includes other allowances as well).

Employer may have to pay leave encashment, bonus, and gratuity

at a higher rate and thus burden on employer will increase.

It is anticipated that the said move from ‘basic wages’ to ‘wages’

will substantially reduce disputes owing to the interpretation of the
‘any other allowance’ under the present regime.

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HANDBOOK ON THE CODE ON WAGES, 2019

PROHIBITION OF DISCRIMINATION
ON THE GROUND OF GENDER

The concept of gender equality is embedded in our Constitution. The

Constitution not only states all persons to be treated equally before the law
but also mandates that no citizen shall be discriminated on the grounds
only of religion, caste, gender etc.

in wage payments as well as recruitment of workers on the basis of

related to wages.

provisions in favor of women, the Code has taken a gender-neutral

approach by prohibiting discrimination on the ground of gender in matters
relating to wages.

Section 3 and 4 of the Code deals with the prohibition of discrimination

on the ground of gender.

Prohibition of Discrimination on Ground of Gender (Section 3)

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

No employer shall in order to pay equal remuneration:

(i) reduce the rate of wages of any employee; and

(ii) make any discrimination on the ground of sex while recruiting any
employee for the same work or work of similar nature and in the
conditions of employment, except where the employment of women
in such work is prohibited or restricted by or under any law for the
time being in force.

Equal remuneration under the Code prescribe that no discrimination is

permitted on the basis of the gender of said employees. This is slightly
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 HANDBOOK ON THE CODE ON WAGES, 2019

‘Remuneration’ means the basic wage or salary, and any additional

emoluments whatsoever payable, either in cash or in kind, to a person
employed in respect of employment or work done in such employment, if

However, as per the Code, the components that will constitute wages
for the purpose of payment of equal remuneration irrespective of gender,
is quite exhaustive and hence there will be less disputes related to the
concept of wage.

Decision as to disputes with regard to same or similar nature of

work (Section 4)

by the appropriate Government.

discrimination amongst
employees

On the grounds of In matters relating to In re

gender payment of wages by
same employer

HIGHLIGHTS

all category of employees including Managers, Supervisors,

Administrative, Operational persons.

No discrimination among employees on the ground of gender in

the matter of wages for similar work or work of similar nature.

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HANDBOOK ON THE CODE ON WAGES, 2019

MINIMUM WAGES

Payment of Minimum Wages

required to pay minimum wages to workers. The Act applies to the

organised sector as well as certain workers in the unorganised sector
such as agricultural workers. The Center and States may add more
employments to this list and mandate that minimum wages be paid for
those jobs as well. At present, there are more than 1700 employments

As per the Report of the National Commission on Labour, Ministry of

total workforce in the country. A large proportion of these workers are

under the Act, and mandates that minimum wages be paid for all types
of employment – irrespective of whether they are in the organised or the
unorganised sector. The Code links minimum wage across the country to
the skills of the employee and the place of employment.

Under the Code, the minimum wage has been universalised for all
employees and consequently those who were earlier out of the ambit of
minimum wages will be covered under the protection of minimum wages
as granted under the Code.

The procedure for determination of minimum wages by the appropriate

However, the Code introduces the concept of Floor Wage, which is

to be determined by the Central Government after taking into account
the minimum living standards of workers in a manner to be prescribed,

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 HANDBOOK ON THE CODE ON WAGES, 2019

However, if the existing minimum wages fixed by the appropriate

wages is to be reviewed and revised by the appropriate Government in

employer shall pay to any employee wages less than the minimum rate

It is a new concept under the Code

To be fixed by Central Government after taking into
account minimum living standards of workers in a
manner to be prescribed,

Determination geographical areas

-level
of floor wage minimum wages

Appropriate Government can, under no

circumstance, fix a minimum wage rate which is
lower than the floor rate
If the existing minimum wages fixed by the
appropriate Government is higher than the floor
Limitation wage, they cannot reduce the minimum wages

Floor Wage

Section 5 to 14 of the Code deals with provisions related to Minimum

Payment of minimum rate of wages (Section 5)

The Code envisages that no employer shall pay to any employee

Government.

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HANDBOOK ON THE CODE ON WAGES, 2019

Fixation of Minimum Wages (Section 6)

time work; or (b) for piece work.

Government, shall fix a minimum rate of wages for securing such

employees a minimum rate of wages on a time work basis.

one or more of the following wage period:

By the hour, or

By the day, or

By the month

the appropriate Government –

(a) 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; and

(b) may, in addition to such minimum rate of wages for certain

category of workers, take into account their arduousness of work

occupations or processes or underground work as may be

prescribed by that Government; and

as may be prescribed.

The minimum wages will vary from place to place depending upon
skill required, arduousness of the work assigned and the geographical
location.

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 HANDBOOK ON THE CODE ON WAGES, 2019

Applicable to all including organized and unorganised sector employees

No employer shall pay to any employee wages less than the minimum
rate of wages notified by the Appropriate Government

The appropriate Government shall fix a minimum rate of wages–

(a) for time work; or (b) for piece work.

the employees are employed on piece work basis, the

appropriate Government, shall fix a minimum rate of wages for
securing such employees a minimum rate of wages on a time work
basis

In case of time work the rates may be fixed in accordance with by the
hour, by the day or by the month

Minimum wage will depend on factors like skills and difficulty of work, ordinarily
be revised at an interval not exceeding 5 years

Provisions of Minimum Wages

Components of Minimum Wages (Section 7)

may consist of–

(a) a basic rate of wages and an allowance at a rate to be adjusted,

at such intervals and in such manner as the appropriate
Government may direct, to accord as nearly as practicable with
the variation in the cost of living index number applicable to such
workers (hereinafter referred to as ‘cost of living allowance’);
or

(b) a basic rate of wages with or without the cost of living allowance, and
the cash value of the concessions in respect of supplies of essential
commodities at concession rates, where so authorised; or

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HANDBOOK ON THE CODE ON WAGES, 2019

(c) an all-inclusive rate allowing for the basic rate, the cost of living
allowance and the cash value of the concessions, if any.

The cost of living allowance and the cash value of the concessions in
respect of supplies of essential commodities at concession rate shall
be computed by such authority, as the appropriate Government may

from time to time.

Endeavour shall be made so that the cost of living allowance and the cash
value of the concession in respect of essential commodities at concession
rate shall be computed once before 1st April and 1st October every year to
revise the dearness allowance payable to the employees on the minimum

declared on 1st January and 1st July of every year.

(a) a basic rate of wages and an allowance with the variation in the
cost of living index ("cost of living allowance"); or

(b) a basic rate of wages with or without the cost of living

allowance; or

(c ) an all-inclusive rate allowing for the basic rate, the cost of living
allowance and the cash value of the concessions, if any

Components of Minimum Wages

wages:

1. Committee Method

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 HANDBOOK ON THE CODE ON WAGES, 2019

Committee Method: The appropriate Government may appoint as many

committees as it considers necessary to hold enquiries and recommend

These committees shall comprise of:

1. Representatives of Employer.

2. Representatives of Employee which shall be equal in number of

the members as of employer.

3. Independent persons, not exceeding 1/3rd of the total members of

the Committee.

After considering the recommendation of the committee, the appropriate

it shall come into force on the expiry of three months from the date of
its issue.

: In this method, appropriate Government shall

publish its proposal for the information of the persons likely to be

into consideration.

as the case may be, revise the minimum rates of wages and unless such

three months from the date of its issue.

Provided that where the appropriate Government proposes to revise the

concerned Advisory Board constituted under section 42 of the Code.

Timeline for review or revision in minimum wages

The appropriate Government shall review or revise minimum rates of

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HANDBOOK ON THE CODE ON WAGES, 2019

Government appoint Committees to hold enquires

Committee
Method Recommend in respect of such fixation or revision of minimum
wages

Government shall publish its proposal for the information of the persons
Notification likely to be affected
Method The proposal shall have a date not less than two months from the date of
the notification on which the proposals shall be taken into consideration

After considering, the appropriate government shall by notification fix, or as

Government the case may be, revise the minimum rates of wages; and
Approval Unless such notification otherwise providdes, it shall come into force on the
expiry of three months from the date of its issue

The Code provides for review/revision of minimum wages at intervals not

living standards of a worker in such manner as may be prescribed.

areas.

However, if the minimum rates of wages fixed by the appropriate

earlier.

advice of the Central Advisory Board constituted under sub-section (1)

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 HANDBOOK ON THE CODE ON WAGES, 2019

of section 42 and consult State Governments in such manner as may be

prescribed.

Wages of an employee who works for less than normal working

day (Section 10)

Code by the day, works on any day on which he was employed for a
period of less than the requisite number of hours constituting a normal

wages in respect of work done on that day, as if he had worked for a full
normal working day.

Provided that he shall not be entitled to receive wages for a full normal
working day,—

(i) in any case where his failure to work is caused by his unwillingness
to work and not by the omission of the employer to provide him
with work; and

(ii) in such other cases and circumstances, as may be prescribed.

Wages for two or more classes of work (Section 11)

to such employee in respect of the time respectively occupied in each

such class of work, wages at not less than the minimum rate in force in
respect of each such class.

Minimum time rate wages for piece work (Section 12)

employer shall pay to such person wages at not less than the minimum
time rate.

Fixing hours of work for normal working day (Section 13)

appropriate Government may —

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HANDBOOK ON THE CODE ON WAGES, 2019

(b) provide for a day of rest in every period of seven days which shall

and for the payment of remuneration in respect of such days of

(c) provide for payment for work on a day of rest at a rate not less
than the overtime rate.

The aforesaid provisions shall, in relation to the following classes of

employees apply, only to such extent and subject to such conditions as
may be prescribed, namely:—

(a) employees engaged in any emergency which could not have been
foreseen or prevented;

(b) employees engaged in work of the nature of preparatory or

complementary work which must necessarily be carried on outside
the limits laid down for the general working in the employment
concerned;

(c) employees whose employment is essentially intermittent;

declared to be so by the appropriate Government on the ground

that the daily hours of duty of the employee, or if there be no daily
hours of duty as such for the employee, the hours of duty normally
include periods of inaction during which the employee may be on
duty but is not called upon to display either physical activity or

(d) employees engaged in any work which for technical reasons has
to be completed before the duty is over; and

(e) employees engaged in a work which could not be carried on except

at times dependent on the irregular action of natural forces.

Wages for overtime work (Section 14)

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.
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 HANDBOOK ON THE CODE ON WAGES, 2019

HIGHLIGHTS

Applicable to all including organized and unorganised sector

employees.

No employer shall pay to any employee wages less than

the minimum rate of wages notified by the appropriate
Government. The minimum rate of wages on time work basis

geographical area considering the minimum living standards

such minimum wage rates.

the advice of the Central Advisory Board and consult with the
State Government.

The minimum wages will be revised and reviewed by the

Central / State Government considering factors like skills

5 years.

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HANDBOOK ON THE CODE ON WAGES, 2019

PAYMENT OF WAGES

and Employment, was applicable only to employees drawing wages below

Rs.24,000 per month. However, the Code makes no mention of any such
threshold and the payment of wages provisions in the Code are applicable
to all employees across the board.

Accordingly, the Code has raised the responsibility of an employer to

ensure proper wage structuring and timely payment of such wages to all
its employees.

day of the succeeding month, as against 10th day of the succeeding

the date of payment of wages (before 7th day) so that the payment of
wages to the employees of contractor shall be made positively as per
section 17.

In case the employee is removed, dismissed, retrenched, resigns or

becomes unemployed due to closure of an establishment, the wages

cases.

Section 15 to 25 of the Code deals with the provisions for Payment of

Mode of payment of Wages (Section 15)

(iv) by crediting to the bank account of the employee, or (v) through

electronic mode.

or other establishment, the employer of which shall pay to every person

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 HANDBOOK ON THE CODE ON WAGES, 2019

employed in such industrial or other establishment, the wages only by

cheque or by crediting the wages in his bank account.

Crediting
Current Currency to the Electronic
Cheque
coin Notes bank mode
account

Mode of payment of Wages

Fixation of wage period (Section 16)

weekly, or (iii) fortnightly, or (iv) monthly.

No wage period in respect of any employee shall be more than a

month.

Daily
Period

Monthly

Fixation of wage period

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HANDBOOK ON THE CODE ON WAGES, 2019

Time limit for payment of wages (Section 17)

S. No. Wage period Payment timelines

1 Daily basis At the end of the shift

2 On the last working day of the week

that is to say before the weekly
holiday.
3 Before the end of the second day
after the end of fortnight

4 Monthly basis Before the expiry of the seventh day

of the succeeding month

(i) removed or dismissed from service; or

(ii) retrenched or has resigned from service, or became unemployed

due to closure of the establishment,

the wages payable to him shall be paid within two working days of
his removal, dismissal, retrenchment or, as the case may be, his
resignation.

This would imply that employers would have to expedite the process

the employers ordinarily pays separation dues within 30 days to 45

days from resignation/separation of the employee as per their internal

for resignation cases.

The appropriate Government may, provide any other time limit for
payment of wages where it considers reasonable having regard to the
circumstances under which the wages are to be paid.

in any other law for the time being in force.

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 HANDBOOK ON THE CODE ON WAGES, 2019

Deductions which may be made from wages (Section 18)

Notwithstanding anything contained in any other law for the time being
in force, there shall be no deductions from the wages of the employee,
except those as are authorised under this Code. Any payment made
by an employee to the employer or his agent shall be deemed to be a
deduction from his wages.

cause, resulting from—

(i) the withholding of increment or promotion, including the stoppage

of an increment; or

(ii) the reduction to a lower post or time-scale; or

(iii) the suspension,

shall not be deemed to be a deduction from wages in a case where

the provisions made by the employer for such purposes are satisfying

Government in this behalf.

List of authorized deductions from wages of an employee is as under:

S. No. Particulars of deductions

1.
2. Deductions for his absence from duty
3. Deductions for damage to or loss of goods expressly
entrusted to the employee for custody; or for loss of money
for which he is required to account, where such damage or
loss is directly attributable to his neglect or default;
4. Deductions for house-accommodation supplied by the
employer or by appropriate Government or any housing board
set up under any law for the time being in force, whether
the Government or such board is the employer or not, or
any other authority engaged in the business of subsidising

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HANDBOOK ON THE CODE ON WAGES, 2019

S. No. Particulars of deductions

5. Deductions for such amenities and services supplied by

authorise and such deduction shall not exceed an amount

equivalent to the value of such amenities and services;
Deductions for recovery of advances of whatever nature
(including advances for travelling allowance or conveyance
allowance), and the interest due in respect thereof, or for
adjustment of over payment of wages;
7. Deductions for recovery of loans made from any fund
constituted for the welfare of labour, as may be prescribed
by the appropriate Government, and the interest due in
respect thereof;
8. Deductions for recovery of loans granted for house-building
or other purposes approved by the appropriate Government
and the interest due in respect thereof
Deductions of income-tax or any other statutory levy levied
by the Central Government or State Government and payable
by the employee or deductions required to be made by order
of a court or other authority competent to make such order;
10. Deductions for subscription to, and for repayment of advances
from any social security fund or scheme constituted by law
including provident fund or pension fund or health insurance
scheme or fund known by any other name
11. Deductions for payment of co-operative society subject to
such conditions as the appropriate Government may impose
12. Deductions made, with the written authorisation of the
employee, for payment of the fees and contribution payable
by him for the membership of any Trade Union registered

13. Deductions for recovery of losses sustained by the railway

administration on account of acceptance by the employee
of counterfeit or base coins or mutilated or forged currency
notes

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 HANDBOOK ON THE CODE ON WAGES, 2019

S. No. Particulars of deductions

14. Deductions for recovery of losses sustained by the railway
administration on account of the failure of the employee to
invoice, to bill, to collect or to account for the appropriate
charges due to the railway administration whether in respect
of fares, freight, demurrage, wharfage and cranage or in
respect of sale of food in catering establishments or in
respect of commodities in grain shops or otherwise
15. Deductions for recovery of losses sustained by the railway
administration on account of any rebates or refunds
incorrectly granted by the employee where such loss is
directly attributable to his neglect or default
Deductions, made with the written authorisation of the
employee, for contribution to the Prime Minister’s National

Notwithstanding anything contained in this Code and subject to the

provisions of any other law for the time being in force, the total amount
of deductions as mentioned in the above table in any wage period

wages.

may be recovered in such manner, as may be prescribed.

employee but not deposited in the account of the trust or Government

fund or any other account, as required under the provisions of the law
for the time being in force, such employee shall not be held responsible
for such default of the employer.

In short, the Code also permits deduction of employees’ wages on

total deductions authorised cannot exceed 50 percent of the employees’

wages.

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Deductions for absence from duty;

Damage or loss of goods;
Permissible Recovery of advances and overpayment of salaries;
Deductions Deductions for amenities & services provided by the employer

Deductions for income tax, provident fund etc.

Limit on wage period.

Deduction

In cases where the authorized deductions exceed 50% of the wages, the
excess may be recovered by the employer in the manner to be
prescribed.
Recovery

Fines (Section 19)

acts and omissions on his part as the employer, with the previous
approval of the appropriate Government or of such authority as

2. A notice specifying such acts and omissions shall be exhibited

in such manner as may be prescribed, on the premises in which
the employment is carried on. Such notice shall be displayed at
the conspicuous place in the premises of the work place in which
the employment is carried on, so that every concerned employee
would be able easily to read the contents of the notice and a copy

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jurisdiction.

or otherwise than in accordance with such procedure as may be

period on any employee shall not exceed an amount equal to three

per cent of the wages payable to him in respect of that wage-period.

by instalments or after the expiry of ninety days from the day on

which it was imposed.

the act or omission in respect of which it was imposed.

to be kept in such manner and form as may be prescribed; and all

to the persons employed in the establishment as are approved by

the prescribed authority.

Deductions for absence from duty (Section 20)

Section 20 deals with the provisions for deductions for absence from duty.

1. Deductions may be made only on account of the absence of an

employee from the place or places where by the terms of his
employment, he is required to work, such absence being for the
whole or any part of the period during which he is so required to
work.

2. The amount of such deduction shall in no case bear to the wages

payable to the employed person in respect of the wage-period
for which the deduction is made in a larger proportion than the
period for which he was absent bears to the total period within
such wage-period during which by the terms of his employment
he was required to work:

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Provided that, subject to any rules made in this behalf by the appropriate
Government, if ten or more employed persons acting in concern absent
themselves without due notice (that is to say without giving the notice
which is required under the terms of their contracts of employment) and
without reasonable cause, such deduction from any such person may
include such amount not exceeding his wages for eight days as may by
any such terms be due to the employer in lieu of due notice.
Explanation: An employee shall be deemed to be absent from the place
where he is required to work if, although present in such place, he
refuses, in pursuance of a stay-in strike or for any other cause which is
not reasonable in the circumstances, to carry out his work.

Deductions for damage or loss (Section 21)

Section 21 deals with the provisions for deductions for damage or loss.

1. A deduction for damage or loss shall not exceed the amount of the
damage or loss caused to the employer by negligence or default
of the employee.
2. A deduction shall not be made until the employee has been given
an opportunity of showing cause against the deduction or otherwise
than in accordance with such procedure as may be prescribed for
the making of such deductions.

3. All such deductions and all realisations thereof shall be recorded

in a register to be kept in such form as may be prescribed.

Deductions for services rendered (Section 22)

Section 22 deals with deductions for services rendered.

A deduction shall not be made from the wages of an employee, unless

the house-accommodation amenity or service has been accepted by
him as a term of employment or otherwise and such deduction shall not
exceed an amount equivalent to the value of the house-accommodation
amenity or service supplied and shall be subject to such conditions as
the appropriate Government may impose.

Deductions for recovery of advances (Section 23)

Section 23 deals with the deductions for recovery of advances.

Deductions for recovery of advances given to an employee shall be subject

to the following conditions, namely:–
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(a) recovery of advance of money given to an employee before the

to him in respect of a complete wage-period but no recovery shall

be made of such advances given for travelling expenses;
(b) recovery of advance of money given to an employee after the
employment began shall be subject to such conditions as may be
prescribed;
(c) recovery of advances of wages to an employee not already earned
shall be subject to such conditions as may be prescribed.

Deductions for recovery of loans (Section 24)

Section 24 deals with the provisions for recovery of loans.
Deductions for recovery of loans granted to an employee, regulating the
extent to which such loans may be granted and the rate of interest payable
thereon, shall be such as may be prescribed.

Chapter not to apply to Government establishments (Section 25)

Section 25 deals with the provisions applicable to Government
establishments.
The provisions of this Chapter shall not apply to the Government

HIGHLIGHTS

establishments and ceiling of earning of Rs.24,000 under the

In case of removal, dismissal, retrenchment and resignation

of an employee, the wages has to be paid within two working
days.

the 7th day of the succeeding month, as against 10th day of

the succeeding month.

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PAYMENT OF BONUS

earning less than Rs.21,000 per month. The Code stipulates that

government, will be eligible for payment of bonus.

relating to bonus payments under the Code shall apply to only those
establishments employing at least 20 employees on any day in that
accounting year.

annual bonus. Bonus is payable on higher of minimum wage or the wage

that the provisions relating to the computation of bonus are consistent

Eligibility for bonus, etc. (Section 26)

Every employee drawing wages not exceeding such amount per mensem,

work in an accounting year to become eligible for bonus.

Rates of bonus
An annual minimum bonus calculated at the rate of 8.33% of the wages
earned by the employee or one hundred rupees, whichever is higher,
whether or not the employer has any allocable surplus during the previous
accounting year.

the amount of minimum bonus payable to the employees, the employer

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shall, in lieu of such minimum bonus, be bound to pay to every employee

in respect of that accounting year, bonus which shall be an amount in
proportion to the wages earned by the employee during the accounting
year, subject to a maximum of twenty per cent of such wages.

by the appropriate Government, the bonus payable to such employee shall

be calculated as if his wage were such amount, so determined by the

Government, whichever is higher.

In computing the allocable surplus, the amount set on or the amount

accordance with the provisions of that section.

Production or Productivity bonus

Any demand for bonus in excess of the bonus, either on the basis of
production or productivity in an accounting year for which the bonus is
payable shall be determined by an agreement or settlement between the
employer and the employees, subject to the condition that the total bonus
including the annual minimum bonus shall not exceed twenty per cent of
the wages earned by the employee in the accounting year.

the employer sells the goods produced or manufactured by him or renders

services, as the case may be, from such establishment, bonus shall be
payable only in respect of the accounting year in which the employer

in accordance with the provisions of this Code in relation to that year, but

in which the employer sells the goods produced or manufactured by him

or renders services, as the case may be, from such establishment, the

namely:—

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be, shall be made, in the manner as may be prescribed by the

if any, as the case may be, of the allocable surplus set on or set

be, shall be made, in the manner as may be prescribed by the

if any, as the case may be, of the allocable surplus set on or set

the employer sells the goods produced or manufactured by him or renders

services, as the case may be, from such establishment, the provisions of

relation to any other establishment.

Explanation 1
in any accounting year, unless–

(a) he has made provision for depreciation of that year to which he is

entitled under the Income-tax Act or, as the case may be, under
the agricultural income tax law; and

(b) the arrears of such depreciation and losses incurred by him in

respect of the establishment for the previous accounting years

Explanation 2: Sale of the goods produced or manufactured during the

course of the trial running of any factory or of the prospecting stage of

any question arises with regard to such production or manufacture,

the appropriate Government may, after giving the parties a reasonable
opportunity of representing the case, decide upon the issue.

apply to new departments or undertakings or branches set up by existing

establishments.

Proportionate reduction in bonus in certain cases (Section 27)

accounting year, the minimum bonus, if such bonus is higher than 8.33%
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of the salary or wage of the days such employee has worked in that
accounting year, shall be proportionately reduced.

Computation of number of working days (Section 28)

to have worked in an establishment in any accounting year also on the

days on which,––

standing orders under the Industrial Employment (Standing Orders)

other law applicable to the establishment;

(b) he has been on leave with salary or wages;

(c) he has been absent due to temporary disablement caused by

accident arising out of and in the course of his employment; and

(d) the employee has been on maternity leave with salary or wages,
during the accounting year.

Eligibility for bonus

Establishments in Bonus shall be

Applicable to which at least 20 payable in the range
establishments employees have been of 8.33% - 20% of the
employing at employed on any day employee’s wages or
least 20 in the relevant one hundred rupees,
employees accounting year whichever is higher

Eligibility for Bonus

if he is dismissed from service for-

(a) fraud; or

(b) riotous or violent behaviour while on the premises of the

establishment; or

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(c) theft, misappropriation or sabotage of any property of the

establishment; or

(d) conviction for sexual harassment. (This was not provided in the
earlier Act.)

Disqualifications

Theft,
Riotous or violent
misappropriation Conviction
behaviour in the
or sabotage of for sexual
premises of the
any property of harassment
establishment
establishment

Establishments to include departments, undertakings and branches

(Section 30)

all such departments or undertakings or branches shall be treated as

parts of the same establishment for the purpose of computation of bonus
under this Code.

Provided that where for any accounting year a separate balance sheet

any such department or undertaking or branch, then, such department

or undertaking or branch shall be treated as a separate establishment
for the purpose of computation of bonus, under this Code for that year,
unless such department or undertaking or branch was, immediately
before the commencement of that accounting year treated as part of the
establishment for the purpose of computation of bonus.

Payment of bonus out of allocable surplus (Section 31)

1. The bonus shall be paid out of the allocable surplus which shall

the available surplus shall be the amount calculated in accordance

with section 33.

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2. Audited accounts of companies shall not normally be questioned.

jurisdiction may call upon the employer to produce the balance

sheet before it, but the authority shall not disclose any
information contained in the balance sheet unless agreed to
by the employer.

of the accounting year shall,

(a) in the case of a banking company, be calculated in the manner

as may be prescribed by the Central Government;

(b) in any other case, be calculated in the manner as may be

prescribed by the Central Government.

Computation of available surplus (Section 33)

The available surplus in respect of any accounting year shall be the

in section 34.

Provided that the available surplus in respect of the accounting year

commencing on any day in a year after the commencement of this
Code and in respect of every subsequent accounting year shall be the
aggregate of—

the sums referred to in section 34; and

(i) the direct tax, calculated in accordance with the provisions of

of the employer for the immediately preceding accounting

year; and

(ii) the direct tax, calculated in accordance with provisions of

of the employer for such preceding accounting year after

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deducting therefrom the amount of bonus which the employer

has paid or is liable to pay to his employees in accordance
with the provisions of this Code for that year.

charges, namely:—

(a) any amount by way of depreciation admissible in accordance with

the provisions of sub-section (1) of section 32 of the Income-tax

income-tax law, for the time being in force, as the case may
be;

(b) subject to the provisions of section 35, any direct tax which the
employer is liable to pay for the accounting year in respect of his

(c) such further sums in respect of the employer as may be prescribed

by the Central Government.

Calculation of direct tax payable by employer (Section 35)

for any accounting year shall, subject to the following provisions, be

calculated at the rates applicable to the income of the employer for that
year, namely:—

(a) in calculating such tax no account shall be taken of (i) any loss
incurred by the employer in respect of any previous accounting
year and carried forward under any law for the time being in
force relating to direct taxes; (ii) any arrears of depreciation
which the employer is entitled to add to the amount of the
allowance for depreciation for any succeeding accounting year
or years under sub-section (2) of section 32 of the Income-tax

(b) where the employer is a religious or a charitable institution to which

the provisions of section 41 do not apply and the whole or any
part of its income is exempt from the tax under the Income-tax

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institution shall be treated as if it were a company in which the

public are substantially interested within the meaning of that Act;

shall be calculated on the basis that the income derived by him

from the establishment is his only income;

derived from the export of any goods or merchandise out of India

and any rebate on such income is allowed under any law for the
time being in force relating to direct taxes, then, no account shall
be taken of such rebate;

(e) no account shall be taken of any rebate other than development

rebate or investment allowance or development allowance or
credit or relief or deduction (not hereinbefore mentioned in this
section) in the payment of any direct tax allowed under any
law for the time being in force relating to direct taxes or under

industry.

the amount of maximum bonus payable to the employees in the

limit of twenty per cent of the total salary or wage of the employees
employed in the establishment in that accounting year, be carried
forward for being set on in the succeeding accounting year and so
on up to and inclusive of the fourth accounting year to be utilised
for the purpose of payment of bonus in such manner as may be
prescribed by the Central Government.

allocable surplus in respect of that year falls short of the amount

of minimum bonus payable to the employees in the establishment

carried forward and set on which could be utilised for the purpose
of payment of the minimum bonus, then, such minimum amount

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to and inclusive of the fourth accounting year in such manner as

may be prescribed by the Central Government.

the Central Government under this Code shall apply to all other
cases not covered by sub-section (1) or sub-section (2) for the
purpose of payment of bonus under this Code.

for the succeeding accounting year, the amount of set on or set

taken into account.

Adjustment of customary or interim bonus against bonus payable

under this Code (Section 37)

(a) an employer has paid any puja bonus or other customary bonus
to employee; or

(b) an employer has paid a part of the bonus payable under this Code
to an employee before the date on which such bonus becomes
payable,

then, the employer shall be entitled to deduct the amount of bonus so

paid from the amount of bonus payable by him to the employee under
this Code in respect of that accounting year and the employee shall be
entitled to receive only the balance.

Deduction of certain amounts from bonus payable (Section 38)

lawful for the employer to deduct the amount of loss from the amount
of bonus payable by him to the employee under this Code in respect
of that accounting year only and the employee shall be entitled to
receive the balance, if any.

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Time limit for payment of bonus (Section 39)

1. All amounts payable to an employee by way of bonus under

this Code shall be paid by crediting it in the bank account of the
employee by his employer within a period of eight months from
the close of the accounting year.

Provided that the appropriate Government or such authority as the

appropriate Government may specify in this behalf may, upon an

by order, extend the said period of eight months to such further

so extended shall not in any case exceed two years.

before any authority, such bonus shall be paid, within a period

of one month from the date on which the award becomes
enforceable or the settlement comes into operation, in respect
of such dispute.

Provided that if, there is a dispute for payment at the higher

rate, the employer shall pay eight and one-third per cent of
the wages earned by the employee as per the provisions of
this Code within a period of eight months from the close of the
accounting year.

Application of this Chapter to establishments in public sector in

certain cases (Section 40)

1. If in any accounting year an establishment in public sector sells any

goods produced or manufactured by it or renders any services, in
competition with an establishment in private sector, and the income
from such sale or services or both, is not less than twenty per cent
of the gross income of the establishment in public sector for that
year, then, the provisions of this Chapter shall apply in relation to
such establishment in public sector as they apply in relation to a
like establishment in private sector.

2. Save as otherwise provided in sub-section (1) of Section 40,

nothing in this Chapter shall apply to the employees employed by
any establishment in public sector.

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Non-applicability of bonus provisions (Section 41)

The provisions of bonus payment shall not apply to establishment in which

less than twenty persons are employed.

(a) employees employed by the Life Insurance Corporation of India;

(c) employees registered or listed under any scheme made under

employed by registered or listed employers;

(d) employees employed by an establishment under the authority of

any department of the Central Government or a State Government
or a local authority;

(e) employees employed by (i) the Indian Red Cross Society or

any other institution of a like nature including its branches; (ii)
universities and other educational institutions; (iii) institutions
including hospitals, chamber of commerce and social welfare

(f) employees employed by the Reserve Bank of India;

than a banking company, which the Central Government may, by

its objectives and the nature of its activities; (iii) the nature and

Government; and (iv) any other relevant factor;

(h) employees employed by inland water transport establishments

operating on routes passing through any other country; and

(i) employees of any other establishment which the appropriate

in such establishments to the employees.

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Establishment in which less than twenty persons are employed

Employees employed by the Life Insurance Corporation of

India, Reserve Bank of India

Seamen as defined in clause (42) of section 3 of the

Employees of the Central Government or a State

Government or a local authority

Employees registered or listed under any scheme made

Employees employed by public sector financial institution other

than a banking company and

Employees employed by inland water transport establishments

operating on routes passing through any other country, the Indian Red
Cross Society, universities and other educational institutions,
hospitals, chamber of commerce.

Non-applicability of bonus provisions

HIGHLIGHTS

Applicable on establishments employing 20 or more persons.

Bonus will be paid to every employee earning wages below

All amounts payable to an employee by way of bonus will be

credited in the bank account of the employee within 8 months
from the close of the accounting year.

The period of 8 months can be extended to two years by the

appropriate government on application of the employer with

is dismissed from service on conviction for sexual harassment.

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CENTRAL ADVISORY BOARD AND

STATE ADVISORY BOARDS

Section 42 of the Code deals with provisions relating to functions of Central

and State Advisory Board.

Central Advisory Board

The Central Government shall constitute the Central Advisory Board which
shall consist of persons to be nominated by the Central Government
consisting of (a) representing employers; (b) representing employees

(c) independent persons, not exceeding one-third of the total members

may be nominated by the Central Government.

clause (c) above shall be appointed by the Central Government as the

Chairperson of the Board.
The Central Advisory Board shall advise the Central Government on
reference of issues relating to –

(b) providing increasing employment opportunities for women;

(c) the extent to which women may be employed in such establishments

specify in this behalf; and

(d) any other matter relating to this Code,
and on such advice, the Central Government may issue directions to the

referred to the Board.

State Advisory Board

Every State Government shall constitute a State Advisory Board for
advising the State Government -

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matters;

(b) for the purpose of providing increasing employment opportunities

for women;

(c) with regard to the extent to which women may be employed in

such establishments or employments as the State Government

(d) in any other matter relating to this Code, which the State
Government may refer from time to time to the Board.

The State Advisory Board may constitute one or more committees or sub-

and increasing employment opportunities for women, etc.

The State Advisory Board and each of the committees and sub- committees
thereof shall consist of persons –

(a) representing employers;

(b) representing employees which shall be equal in number of the

(c) independent persons, not exceeding one-third of the total members

of the Board or committee or sub-committee, as the case may be.

One-third of the members shall be women and one among the members

(a) appointed by the State Government as the Chairperson of the

Board;

(b) appointed by the State Advisory Board as the Chairperson of the

committee or sub-committee, as the case may be.

to the number of women employed in the concerned establishment, or

employment, the nature of work, hours of work, suitability of women
for employment, as the case may be, the need for providing increasing
employment opportunities for women, including part time employment,

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The Central Government shall constitute the Central Advisory

Board
Central Advisory Board consist of persons representing
Central Advisory employers, employees, independent persons and 5
Board representatives of State Government nominated by the Central
Government
One-third of the members shall be women

Every State Government shall constitute a State Advisory Board

for advising the State Government
The State Advisory Board may constitute one or more
committees or sub-committees
State Advisory The constitution of State Advisory Boards is same as Central
Board Advisory Board except nominees of Central Government

Fixation or revision of minimum wages and other connected

matters
Providing increasing employment opportunities for women
Broad Functions of The extent to which women may be employed in such
Central and State establishments
Advisory Boards Any other matter relating to the Code

Central Advisory Board and State Advisory Boards

HIGHLIGHTS
The Central Government will constitute the Central Advisory
Board consisting of persons representing employers, employees,
independent persons and 5 representatives of State Government,
and one-third of the members will be women.
Similarly, every State Government will constitute a State Advisory
Board.
The Central Advisory Board will advise the Central Government on:

matters;
(ii) providing increasing employment opportunities for women;
(iii) the extent to which women may be employed in such
establishments or employments as the Central Government

(iv) any other matter relating to this Code

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PAYMENT OF DUES, CLAIMS AND

AUDIT

Section 43 to 50 of the Code deals with the provisions for payment of

dues, claims and audit.

Responsibility for payment of various dues (Section 43)

Every employer shall pay all amounts (like unpaid salary, leave
encashment, bonus etc.) required to be paid under this Code to every
employee employed by him.

Provided that where such employer fails to make such payment in

association or any other person who is the proprietor of the establishment,

in which the employee is employed, shall be responsible for such payment.

Payment of various undisbursed dues in case of death of

employee (Section 44)
All amounts payable to an employee under this Code shall, if such amounts
could not or cannot be paid on account of his death before payment or
on account of his whereabouts not being known,

(a) be paid to the person nominated by him in this behalf in accordance

with the rules made under this Code; or

(b) where no such nomination has been made or where for any
reasons such amounts cannot be paid to the person so nominated,
be deposited with the such authority, as may be prescribed, who
shall deal with the amounts so deposited in the manner as may
be prescribed.

All amounts payable to an employee under this Code—

(a) are paid by the employer to the person nominated by the employee;
or

(b) are deposited by the employer with the authority referred to above,

then, the employer shall be discharged of his liability to pay those amounts.
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Claims under Code and procedure thereof (Section 45)

Section 45 of the Code deals with claims under the Code and procedure
thereof.

and determine the claims which arises under the provisions of this
Code.

2. The appointed authority while deciding the claim, may order,

having regard to the circumstances under which the claim arises,
the payment of compensation in addition to the claim determined,
which may extend to ten times of the claim determined and
endeavour shall be made by the authority to decide the claim
within a period of three months.

3. If an employer fails to pay the claim determined and compensation

to the Collector or District Magistrate of the district where the

establishment is located who shall recover the same as arrears
of land revenue and remit the same to the authority for payment
to the concerned employee.

(a) the employee concerned; or

of which the employee is a member; or

5. Subject to such rules as may be made, a single application may

of employees employed in an establishment.

of three years from the date on which claims arises.

Provided that the concerned authority may, entertain the application

applicant for such delay.

7. The authority appointed under section 45 and the appellate authority

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the purpose of taking evidence and of enforcing the attendance of

witnesses and compelling the production of documents, and every
such authority or appellate authority shall be deemed to be a civil

Reference of disputes under this Code (Section 46)

Notwithstanding anything contained in this Code, where any dispute arises

between an employer and his employees with respect to -

provisions of this Code; or

(b) the application of this Code, in respect of bonus, to an establishment

in public sector,

then, such dispute shall be deemed to be an industrial dispute within the

account of corporations and companies (Section 47)

1. Section 47 of the Code deals with the provisions relating to

account of corporations and companies.

(a) the authority under section 45; or

(c) a Tribunal; or

(d) an arbitrator referred to in clause (aa) of section 2 of the

or a company (other than a banking company), duly audited by

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the Comptroller and Auditor-General of India or by auditors duly

the Companies Act, 2013, are produced before it, then, the said
authority, appellate authority, Tribunal or arbitrator, as the case
may be, may presume the statements and particulars contained

and it shall not be necessary for the corporation or the company

to prove the accuracy of such statements and particulars by the

Provided that where the said authority, appellate authority, Tribunal

loss account of the corporation or the company are not accurate, it

of such statements and particulars.

Tribunal or arbitrator, as the case may be, referred to above,

by any Trade Union being a party to the dispute or as the case
may be, an appeal, and where there is no Trade Union, by the
employees being a party to the dispute, or as the case may be,

appellate authority, Tribunal or arbitrator, may, after satisfying itself

or, as the case may be, the company, to furnish to the Trade Union

be, the company, shall comply with such direction.

Audit of account of employers not being coporations or companies

(Section 48)
Section 48 of the Code deals with the provisions relating to Audit of
account of employers not being coporations or companies.

under this Code between an employer, not being a corporation or

a company, and his employees is pending before any authority,
appellate authority, Tribunal or arbitrator, as the case may be, as
referred to in sub-section (1) of section 47 and the accounts of such
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companies under the provisions of section 141 of the Companies

Act, 2013, are produced before such authority, appellate authority,
Tribunal or arbitrator, then the provisions of section 47 shall, so
far as may be, apply to the accounts so audited.

such employer have not been audited by any such auditor and
it is of opinion that an audit of the accounts of such employer
is necessary for deciding the question referred to it, then, such
authority, appellate authority, Tribunal or arbitrator, may, by order,
direct the employer to get his accounts audited within such time as

the employer shall comply with such direction.

appellate authority, Tribunal or arbitrator, referred to above as the

case may be, may, without prejudice to the provisions of section
54, get the accounts audited by such auditor or auditors as it thinks

of section 47 shall, so far as may be, apply to the accounts so

audited.

5. The expenses of, and incidental to, any audit including the
remuneration of the auditor or auditors shall be determined by
the authority, appellate authority, Tribunal or arbitrator, as the case
may be, and paid by the employer and in default of such payment
shall be recoverable by the authority referred to in sub-section (3)
of section 45 from the employer in the manner provided in that
sub-section.

Appeal (Section 49)

1. 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

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from the date of such order, in such form and manner as may be
prescribed.

Provided that the appellate authority may entertain the appeal

appropriate Government holding the post at least one rank higher

than the authority referred under sub-section (1) of section 45.

3. The appellate authority shall, after hearing the parties in the appeal,
dispose of the appeal and endeavour shall be made to dispose of
the appeal within a period of three months.

4. The outstanding dues under the orders of the appellate authority

shall be recovered by the authority referred to in section 45, by

section (3) of that section.

Appeal

Any person aggrieved The Appellate Authority Appellate Authority

by an order passed shall be appointed from shall endeavour to
by the Authority may the officers of the dispose appeal
appropriate Government in 3 months
to Appellate Authority

Appeal

Records, returns and notices (Section 50)

Section 50 of the Code deals with the provisions relating to records,
returns and notices.

1. Every employer of an establishment to which this Code applies

shall maintain a register containing the details with regard to
persons employed, muster roll, wages and such other details in
such manner as may be prescribed.

2. Every employer shall display a notice on the notice board at a

prominent place of the establishment containing:

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 HANDBOOK ON THE CODE ON WAGES, 2019

the abstract of this Code,

category-wise wage rates of employees,
wage period,
day or date and time of payment of wages, and

jurisdiction.
3. Every employer shall issue wage slips to the employees in such
form and manner as may be prescribed.
4. The aforesaid provisions shall not apply in respect of the employer

or domestic purpose:
Provided that such employer, when demanded, shall produce before the

to the persons so employed.

Explanation—
‘domestic purpose’ means the purpose exclusively relating to the home

any establishment, industry, trade, business, manufacture or occupation.

Records, Returns and Notices

Registers
details of the Display on Notice
Board Issue wage slips
persons
abstract of the Code on to employees in
employed the format to be
muster roll prescribed
category-wise wage
wages and other
rates of employees
details
wage period
day or date and time of
payment of wages
name and address of
the Inspector-cum-

Records, Returns and Notices

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HANDBOOK ON THE CODE ON WAGES, 2019

HIGHLIGHTS

The appropriate government will appoint one or more

authorities to hear and determine the claims arising under the
provisions of this Code.

of three years from the date on which claims arises.

The concerned authority may entertain the application even

applicant for such delay.

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APPOINTMENT OF INSPECTOR-CUM-
FACILITATORS AND THEIR POWERS

their powers. These authorities would have a dual function – providing

compliance advisory to employers and workers and conducting inspections,
which is a step in the right direction, as the Inspector would now also

appropriate Government may lay down an inspection scheme, which may

also contain web-based inspection processes. This has been done with the
objective of removing the arbitrariness and malpractices in inspection. It is
expected that this will reduce the potential for corruption and harassment
that a physical inspection entail.

The ‘inspector’ under the previous regime has been replaced with

Inspections are now possible through a web-based inspection scheme

and electronic summoning of information, which may ease compliance
burdens, and be in sync with current trends towards digitalization.

Appointment of Inspector-cum-Facilitators and their powers

(Section 51)
Section 51 of the Code deals with the provisions relating to appointment

the powers conferred on them under sub-section (4) throughout

the State or such geographical limits assigned in relation to one or
more establishments situated in such State or geographical limits or
in one or more establishments, irrespective of geographical limits,
assigned to him by the appropriate Government, as the case may
be.

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HANDBOOK ON THE CODE ON WAGES, 2019

inspection scheme which may also provide for generation of a

web-based inspection and calling of information relating to the
inspection under this Code electronically.

appropriate Government may, by notification, confer such

jurisdiction of randomised selection of inspection for the purposes

shall be deemed to be public servant within the meaning of section

(a) advice to employers and workers relating to compliance with

the provisions of this Code;

(b) inspect the establishments as assigned to him by the

appropriate Government,

subject to the instructions or guidelines issued by the appropriate

Government from time to time.

(a) examine any person who is found in any premises of the

reasonable cause to believe, is a worker of the establishment;

(b) require any person to give any information, which is in his

power to give with respect to the names and addresses of
the persons;
(c) search, seize or take copies of such register, record of wages

believe has been committed by the employer;

(d) bring to the notice of the appropriate Government defects or
abuses not covered by any law for the time being in force;
and

(e) exercise such other powers as may be prescribed.

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 HANDBOOK ON THE CODE ON WAGES, 2019

7. Any person required to produce any document or to give any

section (5) shall be deemed to be legally bound to do so within

far as may be, apply to the search or seizure under sub-section (5)
as they apply to the search or seizure made under the authority

The government can

ay inspect the conduct web-based may advice the
establishments as inspection and can call mployers and mployees
assigned to him by the for any information in relation to compliance
appropriate Government lectronically. with the Code

Inspector-cum-Facilitator

HIGHLIGHTS
The appropriate government will appoint Inspector-cum-

the powers throughout the State or such geographical limits

assigned in relation to one or more establishments.

through a random computerized system will de-link inspectors

from dedicated geographical regions and thus will lead to
transparency, accountability & better enforcement of laws.

inspection and can call for any information electronically.

employers and workers relating to compliance & inspect the

establishments as assigned by the appropriate Government.

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OFFENCES AND PENALTIES

The Code provides for a graded penalty system for contraventions under
the provisions of the Code.

up to six months, the penal consequences under the Code are relatively

improper maintenance of records and registers in the establishment are

opportunity to the employer before initiating prosecution proceedings in

are non-intentional or due to genuine lack of information on the part of the

have been provided under the Code.

Penalties for non-compliances have now been substantially enhanced,

which may foster a compliance culture by acting as a deterrent.

to be on the employer.

and penalties.

this Code, save on a complaint made by or under the authority of

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or by an employee or a registered Trade Union registered under

2. Notwithstanding anything contained in the Code of Criminal

in certain cases (Section 53)

1. Notwithstanding anything contained in section 52, for the purpose

of imposing penalty under clauses (a) and (c) of sub-section (1)

of equivalent rank in the State Government, as the case may be,

for holding enquiry in such manner, as may be prescribed by the
Central Government.

shall have the power to summon and enforce attendance of any

person acquainted with the facts and circumstances of the case to
give evidence or to produce any document, which in the opinion

in accordance with such provisions.

1. Any employer who—

(a) pays to any employee less than the amount due to such
employee under the provisions of this Code shall be

rupees;

again found guilty of similar offence under this clause,

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HANDBOOK ON THE CODE ON WAGES, 2019

imprisonment for a term which may extend to three months

both;

(c) contravenes any other provision of this Code or any rule made
or order made or issued thereunder shall be punishable with

again found guilty of similar offence under this clause,

punishable with imprisonment for a term which may extend to

rupees, or with both.

2. Notwithstanding anything contained in sub-section (1), for the

which may extend to ten thousand rupees.

3. Notwithstanding anything contained in clause (c) of sub-section

under the said clause or sub-section, give an opportunity to the

employer to comply with the provisions of this Code by way of
a written direction, which shall lay down a time period for such
compliance.

If the employer complies with the direction within such period,

proceeding and, no such opportunity shall be accorded to an

employer, if the violation of the same nature of the provisions under

prosecution shall be initiated in accordance with the provisions of

this Code.

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 HANDBOOK ON THE CODE ON WAGES, 2019

charge of, and was responsible to the company for the conduct of
business of the company, as well as the company, shall be deemed

against and punished accordingly.

Provided that nothing contained in this sub-section shall render

any such person liable to any punishment if he proves that the

2. Notwithstanding anything contained in sub-section (1), where an

connivance of, or is attributable to any neglect on the part of, any

against and punished accordingly.

Explanation.––

(a) ‘company’ means anybody corporate and includes— (i) a

the Limited Liability Partnership Act, 2008; or (iii) other

association of individuals; and

1. Notwithstanding anything contained in the Code of Criminal

accused person, either before or after the institution of any

prosecution, be compounded by a Gazetted Officer, as the

the manner as may be prescribed.

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HANDBOOK ON THE CODE ON WAGES, 2019

committed by a person for the second time or thereafter within a

(i) of commission of a similar offence which was earlier

compounded;

earlier convicted.

and supervision of the appropriate Government.

in such manner as may be prescribed.

prosecution, no prosecution shall be instituted in relation to such

compounded.

referred to in sub-section (1) in writing, to the notice of the court

in which the prosecution is pending and on such notice of the

referred to in sub-section (1), shall be punishable with a sum

compounded except under and in accordance with the provisions

of this section.

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Paying less than the due wages; or

Offences Contravening any provision of the Code

If any employer pays less than the due amount to any

employee, fine upto Rs.50,000 can be imposed
If similar offence is committed within 5 years, imprisonment
for a term upto 3 months or fine upto 1 lakh rupees or both
can be imposed
Penalties If any employer contravenes any other provision of this
and Code, fine up to Rs.20,000 can be imposed
Limitation If similar offence is committed within 5 years, imprisonment
Period for a term upto 1 month or fine upto Rs.40,000 or both can
be imposed
In case of non-maintenance or improper maintenance of
records, the employer will be fined up to Rs.10,000
The period of limitation for filing of claims by a worker has
been enhanced to three years (from months to 2 years)

HIGHLIGHTS

If any employer pays less than the due amount to any

imposed.

If any employer contravenes any other provision of this Code,

committed within 5 years, imprisonment for a term upto 1

In case of non-maintenance or improper maintenance of

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MISCELLANEOUS PROVISIONS

Bar of suits (Section 57)

Section 57 deals with the provisions relating to bar of suits.

No court shall entertain any suit for the recovery of minimum wages, any
deduction from wages, discrimination in wages and payment of bonus, in
so far as the sum so claimed—

(a) forms the subject of claims under section 45;

(b) has formed the subject of a direction under this Code;

(c) has been adjudged in any proceeding under this Code;

(d) could have been recovered under this Code.

Protection of action taken in good faith (Section 58)

Section 58 deals with the provision relating to protection of action taken
in good faith.

No suit, prosecution or any other legal proceeding shall lie against the

which is in good faith done or intended to be done under this Code.

Burden of proof (Section 59)

or bonus or less payment of wages or bonus or on account of making

deductions not authorised by this Code from the wages of an employee,
the burden to prove that the said dues have been paid shall be on the
employer.

Contracting out (Section 60)

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
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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.

(Section 61)

etc., inconsistent with this Code.

inconsistent therewith contained in any other law for the time being in force
or in the terms of any award, agreement, settlement or contract of service.

Delegation of powers (Section 62)

exercisable by it under this Code shall, in relation to such matters and

be also exercisable—

(a) where the appropriate Government is the Central Government, by

(b) where the appropriate Government is a State Government, by

Exemption of employer from liability in certain cases (Section 63)

from liability in certain cases.

be entitled upon complaint duly made by him, to have any other person

time appointed for hearing the charge; and if, after the commission of

the court—

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HANDBOOK ON THE CODE ON WAGES, 2019

(a) that he has used due diligence to enforce the execution of this
Code; and

his knowledge, consent or connivance,

the like punishment as if he were the employer and the employer shall be

Provided that in seeking to prove, as aforesaid, the employer may be

examined on oath, and the evidence of the employer or his witness, if
any, shall be subject to cross-examination by or on behalf of the person

Protection against attachments of assets of employer with

Government (Section 64)

attachments of assets of employer with Government.

Any amount deposited with the appropriate Government by an employer to

secure the due performance of a contract with that Government and any
other amount due to such employer from that Government in respect of
such contract shall not be liable to attachment under any decree or order of
any court in respect of any debt or liability incurred by the employer other
than any debt or liability incurred by the employer towards any employee
employed in connection with the contract aforesaid.

Power of Central Government to give directions (Section 65)

Government to give directions.

The Central Government may, for carrying into execution of the provisions
of this Code in the State give directions to the State Government, and the
State Government shall abide by such directions.

Saving (Section 66)

of the Mahatma Gandhi National Rural Employment Guarantee Act, 2005

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Power of appropriate Government to make rules (Section 67)

Government to make rules.

The appropriate Government may, subject to the condition of previous

publication, make rules for carrying out the provisions of this Code. This
includes without limitation providing for manner of calculating the minimum
rate of wages, the procedure for making deductions from wages, formats
for registers and records to be maintained, inspection scheme etc. The

of the code.

Gazette, make such provisions not inconsistent with the provisions

of this Code, as may appear to be necessary for removing the

Provided that no such order shall be made under this section after
the expiry of a period of three years from the commencement of
this Code.

2. Every order made under this section shall be laid, as soon as may
be after it is made, before each House of Parliament.

Repeal and savings (Section 69)

2. Notwithstanding such repeal, anything done or any action taken

nomination, appointment, order or direction made thereunder or

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HANDBOOK ON THE CODE ON WAGES, 2019

any amount of wages provided in any provision of such enactments

for any purpose shall be deemed to have been done or taken or
provided for such purpose under the corresponding provisions of
this Code and shall be in force to the extent they are not contrary
to the provisions of this Code till they are repealed under the

repeal of such enactments.

HIGHLIGHTS

remuneration or bonus or less payment of wages or bonus or

on account of making deductions not authorised by this Code
from the wages of an employee, the burden to prove that the
said dues have been paid shall be on the employer.

anything inconsistent therewith contained in any other law for

the time being in force or in the terms of any award, agreement,
settlement or contract of service.

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 HANDBOOK ON THE CODE ON WAGES, 2019

Draft Code on Wages (Central)

Rules, 2020

2020 for seeking public suggestions on 7th July, 2020. They shall come

Coverage of the Code on Wages (Central) Rules, 2020

divided into Nine Chapters.

Chapter I deals with Preliminary

Chapter V deals with Payment of Bonus

Chapter VI deals with Central Advisory Board

Chapter VII deals with Payment of Dues, Claims, etc.

Chapter IX deals with Miscellaneous

Some Important Provisions of the Code on Wages (Central) Rules,

2020

Manner of Calculating the Minimum Rate of Wages (Rule 3)

view the following criteria, namely:-

(i) the standard working class family which includes a spouse and

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HANDBOOK ON THE CODE ON WAGES, 2019

two children apart from the earning worker; an equivalent of three

adult consumption units;

(ii) a net intake of 2700 calories per day per consumption unit;

(iv) housing rent expenditure to constitute 10 per cent. of food and

clothing expenditure;

(v) fuel, electricity and other miscellaneous items of expenditure to

constitute 20 percent of minimum wage; and

(vi) expenditure for children education, medical requirement, recreation

and expenditure on contingencies to constitute 25 per cent of
minimum wages;

and multiplication the factors of one-half and more than one-half shall be

divide the concerned geographical area into three categories, that is to

say the metropolitan area, non-metropolitan area and the rural area.

The Central Government shall constitute a technical committee for

the purpose of advising the Central Government in respect of skill
categorization.

Time Interval for revision of dearness allowance (Rule 5)

Endeavour shall be made so that the cost of living allowance and the cash
value of the concession in respect of essential commodities at concession
rate shall be computed once before 1st April and 1st October in every
year to revise the dearness allowance payable to the employees on the
minimum wages.

(1) The Board (Central Advisory Board) shall be consulted by the

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minimum living standards taking into account an equivalent of three

adult consumption units including worker of the family comprising
of food, clothing, housing and any other factors considered
appropriate by the Central Government from time to time.

(2) The advice of the Board obtained in consultation shall be

circulated by the Central Government to all State Governments
for consultation with them.

(3) The advice of the Board referred above and the views of the State
Governments received in consultation referred to in that sub-rule

(1).

years and undertake adjustment for variations in the cost of living

periodically in consultation with the Board.

Constitution of Central Advisory Board (Rule 28)

(1) The Board shall consist of the persons to be nominated by the
Central Government representing employers and employees as

and the independent persons and representatives of the State

(2) The persons representing employers as referred to in clause (a)

of sub-section (1) of section 42 shall be twelve and the persons
representing employees referred to in clause (b) of that sub-section
shall also be twelve.

of section 42 to be nominated by the Central Government shall

consist of the following, namely:

(i) the Chairperson;

(ii) two Members of Parliament;

(iii) four members each of whom, shall be a professional in the

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HANDBOOK ON THE CODE ON WAGES, 2019

Industrial Tribunal constituted by the Central Government

(v) two members, each of whom shall be the Chairperson of

such State Advisory Board referred to in sub-section (4) of
section 42, to the extent possible, has been taken in rotation
from the States.

The Forms, Registers and Wage Slip

employer in Form–I.

45 in Form-II
respect of claims which arise under the provisions of this Code.

Any person aggrieved by an order passed by the authority under

sub-section 2 of section 45 may prefer an appeal under sub-section
Form-III

Every employer of an establishment to which the Code applies shall

maintain registers under sub-section (1) of section 50 in Form-I
and Form-IV, electronically or otherwise.

Every employer shall issue wage slips, electronically or otherwise

to the employees in Form-V under sub-section 3 of section 50 on
or before payment of wages.

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IMPACT OF THE CODE AND WAY

FORWARD

The Code is a well-intentioned piece of legislation which aims to balance

the interests of the employer and the employee. Though the Code contains
substantial portions of the repealed legislations, it makes a decent attempt

forms of maintenance of records, registers, returns and display of notices

will be substantially reduced. Thus, Cost of compliance will reduce and

wage, employee, etc. Government shall have strong process to resolve

complaints by the employee as Code will be applicable to almost all
employees. Suppose 5% of the total employees (approximately 50
crores are employees) make claims/complaints for their dues, then the
Government shall have robust system in place to resolve these claims/
complaints expeditiously.

and further clarity can be realized once the subordinate legislations

and rules under the Code are in place. There would be a challenge of

adopt the Central Rules (including the prescribed forms) under the Code.
The ease of compliance is also expected to promote setting-up of more
enterprises catalyzing the creation of more employment opportunities.

The Code consolidates the provisions of four Acts namely, the Payment of

statute or law can be complete in all respects and cannot provide solution
to each and every issue and hence, there will be some challenges in the

rules will be accordingly drafted by respective State government to address

issues and challenges that might crop up during the implementation of
the Code across India.

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It would also be interesting to note how the other Codes relating to social
security; occupational safety, health and working conditions; and industrial

The Code is being hailed as a historic step towards labour reforms

and ease of doing business in India without diluting any basic rights
of employees. The Code aims for enforcement of Labour laws with
transparency and accountability, and it is expected to reduce the cost of

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HANDY TIPS FOR EMPLOYERS

1. The Code is applicable to all establishments where any trade,

industry or manufacturing process is carried on and to all type of
employees (irrespective of their wage limit), skilled, semi-skilled,
unskilled, supervisory, managerial across all sectors.

2. Many unorganized sector employees will now get minimum wages

under the Code.

cost of compliance.

4. Employer shall not discriminate 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.

minimum standard of living of workers. The State Government shall

basic standard of living for all employees across India. Employer

the Central Government.

or electronic mode of payment or by crediting into account of the

employees before 7th day of the succeeding month, where they
are engaged on monthly basis.

7. Employer can make deductions from wages on certain grounds like

shall not exceed 50% the employee’s wage.

8. Employer shall make overtime payment which shall not be less
than the double the rate of ordinary wages.

engages 20 or more employees.

a part of compliance.

11. Every employer of an establishment to which this Code applies

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HANDBOOK ON THE CODE ON WAGES, 2019

shall maintain a register containing the details with regard to

persons employed, muster roll, wages and such other details in
such manner as may be prescribed.

12. Every employer shall display a notice on the notice board at a

prominent place of the establishment containing:

the abstract of this Code,

category-wise wage rates of employees,

wage period,

day or date and time of payment of wages, and

jurisdiction.

13. Every employer shall issue wage slips to the employees in such
form and manner as may be prescribed.

and maintaining multiple records and registers under each of the

four legislations is reduced.

claims relating to wages and bonus has been enhanced to 3 years

The Code provides for a graded penalty system for contraventions

under the provisions of the Code.

17. The ‘Inspector’ under the previous regime has been replaced with

to ensure compliance under the Code.

Note: It is important for employers, to familiarise themselves with the Code
and understand the impact on their operations. The employers should also
analyse the requirement of revision of the salary structure as per the new

be revised as per the provisions of the Code to ensure that their policies
are HR friendly and legally compliant.
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 HANDBOOK ON THE CODE ON WAGES, 2019

ROLE AND SCOPE FOR

COMPANY SECRETARY

The Company Secretary in employment has to play an important role in

the new regime of labour law. Company Secretary has to guide the Board
of Directors on the new labour codes and devise practical systems and
procedures for introducing the social security measures in his organization
for registering the unorganised workers in cooperation with the District
Administration in his or her State, especially migrant workers. Company
Secretary has to ensure the observance of health, safety, welfare and
conditions of service by the professional managers in his organization
especially the payment of national minimum wages.

Company Secretaries shall acquaint themselves with the latest changes

the setting-up of new establishments in India and functioning of the

existing ones. Since Company Secretaries have a major role to play
in terms of providing advisory, incorporation and compliances services
to the corporate, it is appropriate time to grab this opportunity while
contributing in the endeavour of the government of rationalising of
labour laws in India.

Now, since Companies Act, 2013 require Director to give declaration about
compliance with all the applicable laws to the organization and as Good
Governance practice, it will widen the scope of the CS in other areas of
law including labour laws.

A Company Secretary has to play an important role in the new regime

of Labour law. Company Secretary has to guide top management on the
new Labour Codes and impact thereof on the industries. As the Code on

The compliance of Labour Laws is as important for good corporate

governance like other corporate, economic and securities laws. A Company
Secretary in Practice by virtue of his knowledge and expertise in corporate
laws is equally competent enough to render value added services in
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HANDBOOK ON THE CODE ON WAGES, 2019

ensuring the compliance of these new laws to protect and further the
interests of labour, industry and all stakeholders and at same time prevent
unwanted litigation and penalty for non-compliance.

Opportunities for Company

Secretary

Advisor to the Board

Registration services

Establishing system and

procedures

Compliance

Representation

Role and Scope for Company Secretary

Role and scope for Company Secretaries under new regime of Labour
law is as under:

1. To obtain registrations of the establishment under various applicable

Labour Codes.

2. Submission of returns on a regular basis to the authorities under

the various Codes.

3. Maintenance of appropriate records with regard to employees

of the establishment under various Labour Codes like employee

for damage and loss, wage slip, etc.

4. Display of various notices in the establishment like abstract of

the code, minimum rate of wage, day-or date and time of wage

5. Intimation to Labour department of important corporate actions

conditions of an employee, etc.

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the employees have been provided for the employees on behalf

of the establishment under various Codes.

7. Drafting of various deeds and documents relating to employment

like HR manual, offer /appointment letter, non-disclosure
agreement, transfer letter, warning letters, termination letter, etc.

8. Advisory services relating to salary structure and pay roll related

compliances.

Codes.

By undertaking the above mentioned activities, a Company Secretary can

achieve the following:

1. Play an important role in assuring compliance with the provisions

of the various Labour Codes.

2. Set-up adequate internal control systems (vis-a-vis compliance of

Labour Codes) to minimize risks.

3. Identify gaps in compliance and ensure adequate measures are

adopted to rectify the same.

4. Implement an adequate system of compliance to ensure regular

and timely compliance of the provisions of the various Labour
Codes.

5. Prevent litigation and penalties for non-compliance of the Labour

Codes.

Currently, inspectors visit various establishments to check if they are

complying with Labour laws, like minimum wages and working hours,
etc. The Company Secretaries are competent professionals to verify
compliance level of the establishments under the Code. They can
point out gaps in company’s compliance and help them increase their
compliance levels. If Company Secretaries are authorized for checking the
compliances with the Code and other three Codes relating to Occupational

Relations, it will be a win-win situation for all stakeholders — industry,

employees and the government.

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NOTES

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NOTES

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NOTES

100