Code on Occupational

Code on Industrial
Safety, Health and
Relations
Working Conditions
New Labour Code
2020

Code on Social Security Code on Wages

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 New Labour Codes, 2020
1. Labour Code on
2. Labour Code on 3. Labour code 4. Labour Code on social
Occupational Safety,
Industrial Relations on Wages security
Health and Working
Conditions
Minimum Wages Employees’ Provident Fund
Trade Unions Act,
Act, and Miscellaneous Provisions
Factories 1926,
Act,
Act, • Payment of
Wages Act,
Industrial • Payment of Employees’ State Insurance
Employment Bonus Act, Corporation Act,
Mines Act (Standing Orders) • Equal
Act, 1946, and Remuneration
Act. Maternity Benefits
Dock Workers (Safety, Industrial Disputes Act,
Health and Welfare) Act. Act, 1947.

Building and Other Construction

Workers Act and the
Employees’ Compensation Act

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Labour code on wages replaces the following four
laws:

The Payment Minimum

of Wages Act, Wages Act,
1936 1948,

Payment of Equal
Bonus Act, Remuneration
1965 Act, 1976
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 Coverage and applicability of the Code
Universalizes Right to Prohibits gender
Whole of India; minimum wages and timely discrimination on wage and
payment of wages; employment conditions

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
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Exclusion from the definition of Worker and Employee

It does not include any such person:

• who is subject to the Air Force Act, 1950, or the Army Act, 1950,
or the Navy Act, 1957; or
• who is employed in the police service or as an officer or other
employee of a prison; or
• who is employed mainly in a managerial or administrative
capacity; or
• who is employed in a supervisory capacity drawing wage of
exceeding Rs.15,000 per month or an amount as may be
notified by the Central Government from time to time; or
• who is apprentice engaged under the Apprentices Act, 1961.
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Distinction made between ‘employee’ and ‘worker’.

Employee Worker

• All employees including • Does not include

managers, supervisors and administrative and managerial
administrative staff staff.
• The supervisors are also
excluded from the definition of
the worker if their monthly
wage is more than Rs.15,000/-.
• Though, It includes sales
promotion employees and
working journalists.
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Definition of ‘Employer’

• In relation to an establishment which is a factory, the occupier of the

factory as defined in the Factories Act, 1948
• Any other establishment, the person who, or the authority which,
has ultimate control- Manager or managing director.
• Contractor; and
• Legal representative of a deceased employer.

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 Definition of wages under the Code

The definition of 'wages' varies across labour legislations in India. The

Code seeks to provide a single uniform definition of 'wages' as applicable
to minimum wages, payment of wages and payment of bonus.

As per the Code –

• (i) Basic pay,

• (ii) Dearness allowance and
• (iii) Retaining allowance have been included as
components of 'wages'.
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 Exclusion from ‘Wages’
(c) Employer
(b) Value of the
contributions to any (d) Conveyance
(a) Bonus payments; house-
pension or provident allowances;
accommodation, etc.
fund;

(e) Defray special

(g) Remuneration
expenses on him by (f) House rent (h) Overtime
payable under award
the nature of his allowance; allowance;
or settlement
employment;

(k) Retrenchment
(i) Commission (j) Gratuity payments; compensation or
payable to employee; and, other retirement
benefit

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The Code prescribes that if the sum-total of
the excluded components (apart from
gratuity and retrenchment compensation)
exceeds 50% of the total remuneration, then
that portion of the amount exceeding 50% is
also to be calculated as 'wages' under the
Code

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Code prohibit gender discrimination

Equal Remuneration Act, 1976

• The Equal Remuneration Act, 1976 prohibits employers from

discrimination against women in wage payments as well as
recruitment of workers.

Code has taken a gender-neutral approach by prohibiting

discrimination on the ground of gender in matters relating to wages

• However, unlike in the Equal Remuneration Act 1976, the Code

does not explicitly prohibit gender discrimination at the stage
of recruitment.
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01. Minimum Wages

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 Who will be entitled to minimum wages?
Do away with Currently, the Minimum Wages Act, 1948 lists the
concept of listing employments where employers are required to pay
minimum wages to workers. Now, it will be linked only to
employment
factors such as skills and geographical regions.
Organised sector
as well as The Act applies to the organised sector as well as certain
unorganised workers in the unorganised sector such as agricultural
sector workers.

Centre and States

may add more The centre and states may add more employments to this
employments list and mandate that minimum wages be paid for those
jobs as well.
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Introduce National minimum wage
Set by the central government
• This will act as a floor for state governments to
set their respective minimum wages. The central
government may set different national minimum
wages for different states or regions

Different states will set their respective minimum

wages

• Both of these states would then have to set their

minimum wages either equal to or more than
the national minimum wage applicable in that
state.
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Will Benefit Unorganised sector?

92% of workforce

• The unorganised sector comprises 92% of the total

workforce in the country

Do not have a written contract

• 90% of the workers in the unorganised sector do not have a

written contract, which hampers the enforcement of various
labour laws.

mandates that minimum wages for

unorganised sector too
• mandates that minimum wages be paid for all types of
employment – irrespective of whether they are in the
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organised or the unorganised sector.
On what basis will the minimum wages be calculated
and fixed?

Different criteria
• Basis of different criteria such as type of industry or skill
level of the worker

skills required and difficulty of work

• The Code also specifies that the centre or states will fix
minimum wages taking into account factors such as skills
required and difficulty of work.

Consider price variations

• Consider price variations while determining the
appropriate minimum wage. This process of fixing
minimum wages is similar towww.successtree.in
the current law.
 Procedure for fixing and revising minimum wages

The code has

prescribed two 1. 2.
methods for fixing Committee Notification
or revising minimum Method Method
wages:

The appropriate Government shall review or revise minimum rates

of wages ordinarily at an interval not exceeding five years.

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 Timeline for review or revision in minimum wages

Committee Notification Government

Method Method Approval
• Government • Government shall • After considering, the
appoint publish its appropriate
Committees to proposal for the government shall by
hold enquires information of the notification fix, or as
persons likely to the case may be,
• Recommend in be affected. revise the minimum
respect of such • The proposal shall rates of wages; and
fixation or have a date not • Unless such
revision of less than two notification otherwise
minimum wages months from the provides, it shall come
date of the into force on the
notification on expiry of three
which the months from the date
proposals shall be of its issue
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taken into
 ANOOP SATPATHY COMMITTEE

Background The Ministry of Labour and Employment had constituted an

expert committee in 2017, under the Chairmanship Dr. Anoop
Satpathy.

Mandate To review and recommend methodology for fixation of National

Minimum Wage (NMW).

There have been several developments since the norms for

Need of the fixation of the minimum wages were recommended by
the 15th ILC in 1957 and subsequently strengthened by the
review Supreme Court in the judgement of Workmen v Reptakos
Brett & Co. case in 1992.
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02. PAYMENT OF WAGES

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 Coverage

Previously, the Payment of Wages Act, 1936 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.

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

unemployed due to closure of an establishment, the wages are required to be paid
within two working days. The Payment of Wages Act, 1936 did not provide for any
specific timelines for resignation cases.

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 Time limit for payment of wages
S. No. Wage period Payment timelines
1 Daily basis At the end of the shift
2 Weekly basis On the last working day of the week
that is to say before the weekly holiday.

3 Fortnightly basis 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

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 Deductions which may be made from wages
Particulars of deductions
Fines
Deductions for his absence from duty
Deductions for damage where such damage or loss is directly attributable to his neglect or default;

Deductions for house-accommodation.

Deductions for such amenities and services

Deductions for recovery of advances

Deductions for recovery of loans
Deductions for recovery of loans granted for house-building
Deductions of income-tax or any other statutory levy levies

Deductions for subscription of provident fund or pension fund or health insurance scheme etc.

Deductions for payment of co-operative society;

Fees and contribution payable by him for the membership of any Trade Union

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Prime Minister’s National Relief Fund or to such other fund.
02. PAYMENT OF BONUS

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PAYMENT OF BONUS

The Payment of Bonus Act, 1965 was applicable only to employees earning
less than Rs. 21,000 per month.
The Code stipulates that employees earning below the salary threshold to be
notified by the State government, will be eligible for payment of bonus.

Similar to the provisions of the Payment of Bonus Act, 1965, the chapter
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.

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Disqualification for bonus

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Further the bonus provisions are not applicable to:
• 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 the Merchant Shipping Act, 1958
• Employees of the Central Government or a State Government or a
local authority
• Employees registered or listed under any scheme made under the Dock
Workers
• 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.

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Implementation of the Code

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CENTRAL ADVISORY BOARD AND STATE ADVISORY BOARDS

Central Advisory Board shall advise the Central Government

on reference of issues relating to –
• (a) fixation or revision of minimum wages and other connected
matters;
• (b) providing increasing employment opportunities for women;
• (c) the extent to which women may be employed in such
establishments or employments as the Central Government may, by
notification, 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 State Government
as it deems fit in respect of matters relating to issues referred to the
Board.
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PAYMENT OF DUES, CLAIMS AND AUDIT

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How is the Code going to be enforced?

Inspectors replaced with facilitator

• The four Acts being subsumed under the Code specify that
inspectors will be appointed to ensure that the laws are being
enforced properly.
Concept of a ‘facilitator’
• The Code introduces the concept of a ‘facilitator’ who will carry
out inspections and also provide employers and workers with
information on how to improve their compliance with the law.
• Inspections will be carried out on the basis of a web-based
inspection schedule that will be decided by the central or state
government.
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