Code on Wages 2019: Scheme, Application and Key Definitions

The Code on Wages, 2019 was the first of the four Codes to be enacted. It brings together the law on minimum wages, payment of wages, bonus and equal remuneration in a single statute of 69 sections, and extends the core wage protections to every employee in every establishment. This note maps the structure of the Code, explains its reach, sets out its key definitions and covers the general provisions that protect wage claims across all its chapters.

1. Structure of the Code

Figure 1: Nine chapters, 69 sections

Figure 2: The four repealed Acts and their place in the Code

2. Application

• Territorial extent. The Code extends to the whole of India.
• Universal wage protection. Minimum wages and timely payment of wages now apply to all employees in all establishments, organised or unorganised. The old Minimum Wages Act covered only scheduled employments, and the Payment of Wages Act only employees below a wage ceiling.
• Government establishments. Under s.25, Chapter III on payment of wages does not apply to Government establishments unless the appropriate Government extends it by notification.
• Bonus. Chapter IV has its own, narrower conditions of eligibility and coverage (Topic 7)
• Apprentices and the Armed Forces. Both are outside the definition of employee.

3. Key Definitions in Section 2

• Employee, s.2(k). Any person, other than an apprentice, employed on wages to do skilled, semi-skilled, unskilled, manual, operational, supervisory, managerial, administrative, technical or clerical work (Topic 3)
• Worker, s.2(z). Narrower: excludes persons in managerial or administrative capacity and supervisors drawing over ₹18,000 a month; includes working journalists and sales promotion employees.
• Employer, s.2(l), and establishment, s.2(m). The employer includes a contractor and the legal representative of a deceased employer; establishment means any place where an industry, trade, business, manufacture or occupation is carried on, including a Government establishment.
• Minimum wage, s.2(s). The minimum wage fixed under section 6.
• Same work or work of a similar nature, s.2(v). Work requiring the same skill, effort, experience and responsibility, performed under similar working conditions, where any difference is not of practical importance.
• Wages, s.2(y). The uniform definition with the 50% rule (Topic 3)
• Inspector-cum-Facilitator, s.2(r). The officer appointed under section 51 to inspect and to advise employers and employees (Topic 9)

4. Gender Equality: Sections 3 and 4

• Section 3(1). No discrimination among employees on the ground of gender in matters relating to wages for the same work or work of a similar nature.
• Section 3(2). No employer may reduce any employee's wages to comply, or discriminate on the ground of sex in recruitment or conditions of employment for similar work, except where the law restricts the employment of women in that work.
• Gender, not sex. The Code uses the wider word gender, unlike the Equal Remuneration Act, which spoke of men and women.
• Section 4. Disputes about whether work is the same or of a similar nature are decided by the authority under section 45.

5. General Protective Provisions

• Responsibility, s.43. Every employer must pay all amounts due under the Code to every employee employed by him.
• Burden of proof, s.59. In a claim for non-payment or short payment of wages or bonus, or for unauthorised deductions, the burden of proving payment lies on the employer.
• Contracting out, s.60. Any contract or agreement by which an employee gives up the right to any amount or bonus due under the Code is null and void.
• Overriding effect, s.61. The Code prevails over inconsistent laws, awards, agreements and contracts of service.
• Claims, s.45. Claims go to an authority not below the rank of a Gazetted Officer, within three years, with power to award compensation up to ten times the amount due (Topic 9)

6. Frequently Asked Questions

Which laws does the Code on Wages replace?

It repeals and replaces the Payment of Wages Act, 1936, the Minimum Wages Act, 1948, the Payment of Bonus Act, 1965 and the Equal Remuneration Act, 1976, under section 69.

Does the Code on Wages apply to every employee?

The provisions on minimum wages and payment of wages apply to all employees, including managerial staff, without a wage ceiling and regardless of the type of employment. The payment of wages chapter does not apply to Government establishments unless the appropriate Government notifies otherwise, and the bonus chapter has its own conditions.

7. Related Topics

• Topic 3: Common Concepts Across the Codes. Employee, worker and the definition of wages.
• Topic 5: Minimum Wages and the Floor Wage. Chapter II in detail.
• Topic 8: Equal Remuneration and Non-Discrimination. Sections 3 and 4 in detail.