Beating the Rhetoric
In a rapidly changing global world new challenges are being confronted on a daily basis. The new world faces challenges in the form of increased automation, shifting international trade and a large growing population in the employable wages. All these have resulted in the need for newer reforms and newer challenges in the scope of employment and also how wages are defined.
In the backdrop of this the Code on Wages, 2017 was introduced in Lok Sabha in August 2017.It seeks to consolidate laws relating to wages by replacing: (i) the Payment of Wages Act, 1936, (ii) the Minimum Wages Act, 1949, (iii) the Payment of Bonus Act, 1965, and (iv) the Equal Remuneration Act, 1976.
The Code will apply to establishments where any industry, trade, business, manufacturing or occupation is carried out. This will also include government establishments. The central government will make wage-related decisions for its authorities, and establishments related to railways, mines, and oil fields, among others. State governments will make decisions for any other establishments. Wages include salary, allowance, or any other component expressed in monetary terms. This will not include bonus payable to employees or any travelling allowance, among others.
One of the most contentious issues in recent times is the issue of Minimum Wages. In the past few years with the idea of the Universal Basic Income getting much traction and finding a mention in the Economic Survey as well, the question of National Minimum Wage indeed needed to be revisited. This bill has done the same. On the questions of National Minimum wage it states that the central government may notify a national minimum wage for the country. It may fix different national minimum wages for different states or geographical areas.
The minimum wages decided by the central or state governments will not be lower than the national minimum wage. The central or state governments will not reduce the minimum wages fixed by them, if these wages are higher than the national minimum wage. The Code requires employers to pay at least the minimum wages to employees. These wages will be notified by the central or state governments. This will be based on time, or number of pieces produced, among others. The Code specifies that the central or state governments will review or revise the minimum wage every five years.
The Bill also tackles the question of working hours. On the question of working hours the bill says that the central or state governments will fix the number of hours that will constitute a working day. Further, they will provide for a day of rest for employees every week. An employee will receive overtime for working beyond these working hours on any day. This amount will be at least twice the normal wage of the employee.
The bill has sought to codify how wages can be paid to employees. This is important so that the whole system of meaningful wages and how to obtain the system is strengthened. The bill states that the wages can be paid in coins, currency notes, by cheque, or through digital or electronic mode. Regarding the time period the bill states that the wage period will be fixed by the employer as either: daily, weekly, fortnightly, or monthly.
On the question of deduction the Code specifies that, an employee’s wages may be deducted on certain grounds including: fines, absence from duty, accommodation given by the employer, or recovery of advances given to the employee, among others. These deductions should not exceed 50% of the employee’s total wage.
On the question of bonus the code seeks to clarify the following points. On the questions of determination of bonus: The employer will pay each employee an annual bonus of at least: 8.33% of his wages, or Rs 100, whichever is higher. In addition, the employer will distribute a part of the gross profits amongst the employees (allocable surplus). This will be distributed in proportion to the wages earned by an employee during the year.
An employee can receive a maximum bonus of 20% of his wages. This will include any amount distributed as allocable surplus. If this surplus exceeds the maximum bonus payable to all employees in a year, a certain amount will be carried forward to the following years (up to four years). The amount carried forward will not exceed 20% of the total wages payable to all employees during the year.
The other key features of the Code include the following: The central and state governments will constitute their respective advisory boards. These boards will have representation from: employees, employers, and independent persons. Further, one-third of the total members will be women. The boards will advise the respective governments on aspects including: fixation of minimum wages, and increasing employment opportunities for women.
The Code specifies penalties for offences committed by an employer, such as paying less than the due wages, or for contravening any provision of the Code. Penalties 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.
This Code is undoubtedly a welcome step towards improving the conditions of the labour class in the country. Many firms are often accused of exploiting their workforce and this bill makes a correct step towards reducing that imbalance.
(Views expressed are personal)