Code on Wages: Advisory Boards, Claims, Offences and Penalties

A wage law works only if there is a body to advise on rates, a quick forum for claims, and penalties that deter non-payment. The Code on Wages provides all three, and changes the old enforcement model in two ways: the inspector becomes an Inspector-cum-Facilitator who also advises, and most first offences are punishable with fine only and can be adjudicated or compounded. This note covers the Advisory Boards, the claims and appeals process, inspection, and the scheme of offences and penalties.

1. Advisory Boards, Section 42

Figure 1: Composition and functions

• Central Advisory Board. Constituted by the Central Government; it includes five representatives of State Governments and advises the Centre on minimum wages, the floor wage and women's employment.
• State Advisory Boards. Constituted by each State Government on the same pattern; they may form committees and sub-committees.

2. Claims and Appeals

Figure 2: Recovering wages, bonus and other dues

• Scope, s.45. Claims for unpaid or underpaid wages, bonus and other dues under the Code, including claims about unauthorised deductions and equal pay.
• Limitation. Three years from the date the claim arises, with power to admit later applications on sufficient cause.
• Bonus disputes, s.46. Disputes on the fixation or eligibility of bonus, or on applying the bonus chapter to a public sector establishment, are deemed industrial disputes; the section refers to the Industrial Disputes Act, now read as the IR Code.
• Burden of proof, s.59. The employer must prove payment.

3. Records and Inspection

• Records, s.50. Employers must maintain registers of persons employed, muster roll and wages, display an abstract of the Code with wage rates and pay dates, and issue wage slips. Employers of up to five persons for agricultural or domestic work are exempt, but must produce proof of payment if asked.
• Inspector-cum-Facilitator, s.51. Appointed by the appropriate Government. The Government may frame an inspection scheme, including web-based inspection and electronic calling of information.
• Powers. To examine premises, require information, and search, seize or copy registers and records of wages.
• Advisory role. To advise employers and workers on compliance; the officer is a public servant.

4. Offences and Penalties

Figure 3: Penalties under section 54

• Opportunity to comply, s.54(3). Before prosecution for certain contraventions, the Inspector-cum-Facilitator must give the employer a written direction to comply within a time limit; no prosecution follows if the employer complies, unless the same violation is repeated within five years.
• Adjudication, s.53. Fine-only offences under s.54(1)(a), (1)(c) and (2) may be adjudicated by an officer not below the rank of Under Secretary to the Government of India, or equivalent in a State, after an inquiry.
• Cognizance, s.52. Only on a complaint by the appropriate Government or an authorised officer, an employee, a registered trade union or an Inspector-cum-Facilitator; no court below a Metropolitan Magistrate or Judicial Magistrate of the first class tries the offence.
• Companies, s.55. Persons in charge of and responsible for the company's business are liable, unless the offence was committed without their knowledge or despite due diligence.

Composition, section 56

Figure 4: Compounding offences

5. Frequently Asked Questions

What is the penalty for paying less than the minimum wage?

Under section 54(1)(a), an employer who pays an employee less than the amount due is punishable with fine up to ₹50,000. If convicted again for a similar offence within five years, the employer faces imprisonment up to three months, or fine up to ₹1,00,000, or both. The employee can separately recover the shortfall with compensation up to ten times under section 45.

Can offences under the Code on Wages be compounded?

Yes. Under section 56 a Gazetted Officer notified by the appropriate Government may compound an offence, before or after prosecution, for 50% of the maximum fine. Offences punishable with imprisonment, and a second similar offence within five years, cannot be compounded.

6. Related Topics

• Topic 6: Payment of Wages. The obligations enforced here.
• Topic 37: Decriminalisation and Compounding across the Codes. The wider enforcement model.