NEW WAGE CODE

Subject: Legislation

Context: New wage code bars bonus for those facing sex abuse charges.

Concept:

The Code on Wages lays down norms for annual bonus dues that accrue to employees, replacing the Payment of Bonus Act, 1965. The new Code, expected to become operational once the government notifies the rules, includes ‘conviction for sexual harassment’ as a ground for denying bonus payouts to employees.

As per the extant law, bonus dues are barred only in case of employees dismissed for fraud, violent conduct and theft or sabotage.

Code on Wages Act

• The new wage code removes the multiplicity of wage definitions, which can significantly reduce litigation as well as compliance cost for employers.
• The new Act links minimum wage across the country to the skills of the employee and the place of employment.
• It seeks to universalizes the provisions of minimum wages and timely payment of wages to all employees irrespective of the sector and wage ceiling.
• It seeks to ensure “Right to Sustenance” for every worker and intends to increase the legislative protection of minimum wage.
• A National Floor Level Minimum Wage will be set by the Centre and will be revised every five years, while states will fix minimum wages for their regions, which cannot be lower than the floor wage.
• It subsumes the following four labour laws:

The Payment of Wages Act, 1936

The Minimum Wages Act, 1948

The Payment of Bonus Act, 1965

The Equal Remuneration Act, 1976.

Types of Wages

• Minimum Wage: International Labour Organization defines it as “the minimum amount of remuneration that an employer is required to pay wage earners for the work performed during a given period, which cannot be reduced by collective agreement or an individual contract”.

The minimum wage includes the bare needs of life like food, shelter, and clothing.

• Living Wage: It is the wage needed to provide the minimum income necessary to pay for basic needs based on the cost of living in a specific community.

In addition to bare needs, a ‘living wage’ includes education, health, insurance, etc.

• Fair Wage: A ‘fair wage’ is a mean between ‘living wage’ and ‘minimum wage’.
• Starvation Wage: It refers to the wages which are insufficient to provide the ordinary necessities of life.