The Bill seeks to regulate wage and bonus payments in all employments where any industry, trade, business, or manufacture is carried out.



Key Highlights of the Bill

The Code on Wages 2019 Bill seeks to regulate wage and bonus payments in all employments where any industry, trade, business, or manufacture is carried out.

  • The Code on Wages 2019 replaces the following four laws:
    1. The Payment of Wages Act, 1936, 
    2. The Minimum Wages Act, 1948,
    3. The Payment of Bonus Act, 1965, and 
    4. The Equal Remuneration Act, 1976.

Coverage of the Bill 

  • It will apply to all employees.  
  • All the wage-related decisions for employments such as railways, mines, and oil fields, among others will be made by Central Government.  
  • State governments will make decisions for all other employments.

Definition of Wages

  • According to the Code on Wages 2019, wages include ‘salary, allowance, or any other component expressed in monetary terms.’ This does not include bonus payable to employees or any travelling allowance.

Provision for Floor wage 

  • A floor wage will be fixed by Central Government, taking into account living standards of workers. Also, there might be a set of different floor wages for different geographical areas.  
    • The central government may obtain the advice of the Central Advisory Board and State governments before fixing the Floor Wage.   

It is to be noted that the according to the Code, the minimum wages decided by the central or state governments must be higher than the floor wage. In case the existing minimum wages fixed by the central or state governments are higher than the floor wage, they cannot reduce the minimum wages.

Setting up the minimum wage 

  • The Code on Wages 2019 prohibits employers from paying wages less than the minimum wages which will be notified by the central or state governments and will be based on time, or number of pieces produced.  
    • Central or state governments at will review the minimum wage at an interval of not more than five years.  
    • Also, central or state governments may take into account factors while fixing the minimum wage, (i) skill of workers, and (ii) difficulty of work. 

Provisions for Overtime 

  • Number of hours that constitute a normal working day are to be fixed by Central or State Government.  Also, an Overtime Wage, which should be atleast twice the normal wage is to be given in case of extra work done other than the normal day.   

Method of Payment of Wages

  • Wages are to be paid in coins, currency notes, by cheque, by crediting to the bank account, or through electronic mode.  
    • The wage period will be fixed by the employer as either daily, weekly, fortnightly, or monthly.

Deductions under the Code (Not to exceed 50% of the Employee’s total wage) 

  • It could be done on the following grounds :
    • Fines, 
    • Absence from duty, 
    • Accommodation given by the employer, or 
    • Recovery of advances given to the employee.

Method of calculating bonus 

  • All employees whose wages do not exceed a specific monthly amount, notified by the central or state government, will be entitled to an annual bonus.  
    • The bonus will be at least 8.33% of his wages, or Rs 100whichever is higher.  
    • Besides this, the employer will distribute a part of the gross profits amongst the employees.
    • An employee can receive a maximum bonus of 20% of his annual wages.

Discrimination on ground of sex 

  • The Code on Wages 2019 prohibits gender discrimination in matters related to wages and recruitment of employees for the same work or work of similar nature.

Establishment of Advisory boards 

  • It is to be constituted both at State as well as Central Level. 
    • The Central Advisory Board will consist of employers, employees (in equal number as employers), independent persons, and five representatives of state governments.  
    • State Advisory Boards will consist of employers, employees, and independent persons.
    • Further, 1/3rd of the total members on both the central and state Boards will be women. 
    • The Boards will have advisory functions with respect to : 
      • fixation of minimum wages, and 
      • increasing employment opportunities for women.

Provision for Offences under the Code 

  • It specifies penalties for offences which may vary depending on the nature of offence, with the maximum penalty being imprisonment for three months along with a fine of up to one lakh rupees. These include :
    • Paying less than the due wages, or 
    • For contravening any provision of the Code.  


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