Wages means all remuneration capable of being expressed in terms of money, which would, if the terms of the contract of employment express or implied were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment. It, however, does not include the value of any house-accommodation, supply of light, water, medical attendance, or any other prescribed amenity or service; any pension or provident fund, or social insurance scheme, contributions paid by the employer; travelling allowances or concessions; reimbursement for special expenses incurred by the employee; or gratuity payable on discharge.
In accordance with the Minimum Wage Act, the employer is obliged to pay wages on regular and timely basis at least once a month. Wage period may be fixed on hourly, daily, weekly or monthly basis. The employer is under obligation to pay wages in cash on a working day before the expiry of the 7th day after the last day of the wage period (in establishments with less than 1000 workers). In other establishment, i.e., those hiring more than 1,000 workers, wages must be paid before expiry of 10th day after the last day of the wage period. If the employment of a worker is terminated by or on behalf of the employer, the outstanding wages are paid within two days of employment termination. Wage periods can’t be fixed for duration longer than one month.
Minimum wages are generally payable in cash however if it is customary to pay wages wholly or partly in kind, the appropriate Government may authorize the payment of minimum wages either wholly or partly in kind.
The Wage Code proposed that wages are paid in (i) coins, (ii) currency notes, (iii) by cheque, (iv) by crediting to the bank account, or (v) through electronic mode.
The wages can be paid by the employer on (i) daily, (ii) weekly, (iii) fortnightly, or (iv) monthly basis. The industrial or commercial establishments may be required by notification to pay wages through cheque or by crediting the wages directly in the worker’s bank account.
The Wage Code also specifies the time limit for payment of wages. For daily wagers, the wages must be paid at the end of daily shift. In the weekly wage period, the wages must be paid on the last working day of the week; for fortnightly wage period, the wages must be paid within 2 days at the end of fortnight. For monthly wage period, the wages must be paid within 7 days of the end of working month.
Under the Wage Code, workers’ wages may be deducted on certain grounds including: (i) fines, deductions for loss of goods or money due to the worker’s neglect (ii) absence from duty, (iii) accommodation given by the employer or other amenities, (iv) recovery of loans and advances given to the employee, among others, (v) deductions for payment of trade union fees or contribution to social security schemes, or (vi) deductions of income tax. The total deductions should not exceed 50% of the worker’s total wage.
The Wage Code also has provision on determination and payment of bonus. All such worker who have worked at least 30 working days in a year with an establishment and whose wages do not exceed a specific monthly amount, as notified by the central or state government, will be entitled to an annual bonus. The bonus will be at least: (i) 8.33% of his/her wages, or (ii) Rs. 100, whichever is higher. In addition to the minimum bonus (where the allocable surplus exceeds the minimum bonus), the employer is required to distribute a part of the gross profits amongst the workers. It is distributed in proportion to the annual wages of a worker. The worker can receive a maximum bonus of 20% of his annual wages.
The Code on Wages Bill, 2019 was passed by the Lok Sabha on July 30, 2019 and Rajya Sabha on 02 August 2019.
The Wage Code regulates wage and bonus payments in all employment. The Code combines the provision of the following four laws: (i) the Payment of Wages Act, 1936, (ii) the Minimum Wages Act, 1948, (iii) the Payment of Bonus Act, 1965, and (iv) the Equal Remuneration Act, 1976. The Wage Code repeals the above 4 laws.