India: Ushering In A New Framework For Wages: President Gives Assent To The Code On Wages 2019


A significant development in its own right, the Code on Wages, 2019 ("Wages Code") is an attempt by the Government of India to consolidate and simplify the existing multitude of labour laws in the country. The Wages Code will subsume and replace the following 4 labour statutes:

  1. Payment of Wages Act, 1936 ("PW Act");
  2. Minimum Wages Act, 1948 ("MW Act");
  3. Payment of Bonus Act, 1965 ("Bonus Act"); and
  4. Equal Remuneration Act, 1976 ("ER Act").

A consolidated code was first introduced in the Lok Sabha on 10 August 2017 ("Wages Bill 2017"). Thereafter, the same was referred to the Standing Committee on Labour 2018-19 ("Standing Committee") for examination, pursuant to which the Standing Committee released a report with its recommendations in December 2018. However, due to dissolution of the Parliament, the Wages Bill, 2017 lapsed. Our analysis of the Wages Bill, 2017 can be accessed here. We had previously also discussed the key recommendations of the Standing Committee, which can be accessed here.

After taking into account the report of the Standing Committee, the Code on Wages Bill, 2019 – which primarily consists of 4 chapters pertaining to equal remuneration irrespective of gender, minimum wages, payment of wages and payment of bonus – was again introduced in the Lok Sabha on 2 August 2019. Within a short span of time, the bill was passed by the Parliament and the same received the assent of the President on 8 August 2019. It may be noted that the Wages Code shall come into force on such date as may be appointed by the Central Government by way of a notification in the official gazette.

In this article, we set out and examine the key developments ushered in by the Wages Code.


  1. Extended coverage of the Wages Code: The Wages Code has, in certain respects, extended the coverage of the extant provisions it intends to repeal and replace.

    • Provisions relating to equal remuneration: The ER Act provides that no employer shall pay to any worker remuneration at rates less favourable than those at which remuneration is paid by him to the workers of the opposite sex, for performing the same work, or work of a similar nature. Therefore, the ER Act recognises only male and female employees in respect of which discrimination is prohibited. However, the Wages Code prohibits discrimination 'on grounds of gender', allowing a third category of gender i.e. transgenders to also be protected from discrimination in matters of payment of remuneration for carrying out same or similar work.
    • Provisions relating to minimum wages: Unlike the MW Act which is only applicable to the scheduled employments set out therein, the Wages Code extends its coverage to all employments, irrespective of whether they are in the organized or the unorganized sector.
    • Provisions relating to payment of wages: The PW Act is applicable to employees earning not more than INR 24,000 per month. However, this threshold has been done away with by the Wages Code, thus covering all employees irrespective of their monthly remuneration.

      Further, the PW Act is only applicable to 'industrial or other establishments'. The statute defines 'industrial or other establishment' to mean establishments relating to motor transport or air transport services, dock, wharf, jetty, inland vessel, mine, quarry, oilfield, plantation, production or manufacture of articles for their use / transport / sale, construction / development / maintenance of buildings etc., and any other establishment which the appropriate government may, having regard to the nature thereof and other relevant circumstances, specify. This means that for the PW Act to be applicable to shops and establishments, the appropriate government must issue a notification to that effect. So far, notifications in this regard have been issued by Maharashtra, Karnataka, Haryana and Tamil Nadu. On the other hand, the Wages Code uses the term 'establishment' which means 'any place where any industry, trade, business, manufacture or occupation is carried on', thus extending the application of the chapter on payment of wages to commercial establishments as well.
    • Provisions relating to payment of bonus: Currently, the Bonus Act is applicable to only workers earning wages up to INR 21,000 per month. However, this statutory threshold has not been incorporated in the Wages Code, leaving it up to the discretion of the appropriate government to prescribe the wage ceiling for eligibility of payment of bonus.
  2. Uniform definitions of 'wages': The Wages Code provides a uniform definition of 'wages', thereby catering to the problem of varied definitions of 'wages' under the extant laws. Section 2(y) of the Wages Code defines 'wages' as all remuneration whether by way of salaries, allowances or otherwise, expressed in terms of money or capable of being so expressed which would, if the terms of employment (express or implied) were fulfilled, be payable to a person employed in respect of his employment, and includes basic pay, dearness allowance and retaining allowance. The definition has now consolidated the exclusions from the definition of 'wages' under various laws and provided that the term 'wages' shall not include bonus, the value of any housing accommodation, contribution towards pension and provident fund by the employer, conveyance allowance and travelling concession, sums paid to the employee to defray special expenses, house rent allowance, overtime allowance, any commission payable to the employee, gratuity, retrenchment compensation, other retirement benefits and ex-gratia payments (if any).
  3. Fixation of floor wage: Under the MW Act, the respective state governments are responsible for fixing and notifying the basic rate of wages for the workers employed in the scheduled establishments. This resulted in a disparity in the basic rates of wages across states in India. As per the Wages Code, the Central Government shall fix a 'floor wage' taking account the minimum living standards of a worker. However, the Central Government may prescribe different floor wages for different geographical areas ("Floor Wage"). The respective state governments may fix a different minimum wage for areas falling under their jurisdiction, provided such wage should at least match the Floor Wage.

    In case the existing minimum rates of wages fixed by the appropriate government are higher than the Floor Wage that would be prescribed by the Central Government, such minimum rates will continue to apply and shall not be reduced.

    Further, the criteria for fixing the minimum wage rate is not elaborated under the MW Act. However, the Wages Code has provided certain guidelines to the appropriate governments for the purpose of fixing / revising the minimum wage rate, which include the skill required, the arduousness of the work assigned to the worker, the cost of living of the worker, and the geographical location of the place of work.
  4. Inspector-cum-facilitator: The extant laws provide for labour 'inspectors' to carry out inquiry and investigation into alleged contraventions of the stipulated provisions. However, the Wages Code introduces the concept of a 'inspector-cum-facilitator' who shall not only carry out inspections, but also provide employers and workers with information on how to improve their compliance with the law. While the inspector-cum-facilitator retains the labour inspector's power to examine the workplace, search and seize copies of relevant documents, the Wages Code, in a significant relaxation, provides that before initiation of prosecution for any non-compliance, the inspector-cum-facilitator would provide an opportunity to the employer to comply with the provisions of the Wages Code. It is only in the event the employer fails to comply with the directions of the inspector-cum-facilitator within the specified time period will the inspector-cum-facilitator initiate prosecution against the employer.
  5. Compounding of offences: The Wages Code has introduced a provision for compounding of offences which are not punishable with imprisonment. Such compounding may be allowed by the prescribed officer for a sum of 50% of the maximum fine provided for the relevant offence. However, such an opportunity is unavailable to an employer for the second time or thereafter within a period of 5 years from the date of either (i) commission of a similar offence which was earlier compounded; or (ii) commission of a similar offence for which such person was earlier convicted.
  6. Increase in penalties: The Wages Code has enhanced the penalties for contravention of various provisions thereof. Under the extant laws, the maximum fine which could be imposed by the labour authorities for the contravention of the relevant provisions ranges from INR 500 to INR 20,000. However, the Wages Code provides that for any failure to pay the sums due to the employee, the employer shall be punishable with fine which may extend to INR 50,000, while for any failure to comply with other provisions of the Wages Code, the employer shall be punishable with fine which may extend to INR 20,000.
  7. Miscellaneous provisions: Some other important changes in the extant law on wages are briefly discussed below:

    • The Wages Code has introduced conviction for sexual harassment as a ground for disqualification for payment of bonus.
    • The Wages Code promotes digitalisation by allowing the appropriate government to make it mandatory for every employer to make payment of wages only by cheque or by crediting the wages in the employee's bank account.
    • The Wages Code provides for consolidation of compliance requirements for maintaining registers. It mandates every employer to maintain a single register (preferably electronic) containing the details of persons employed, wages and other details prescribed by the appropriate government.
    • The Wages Code increases the period of limitation for filing of claims in relation to payment of any sums due to 3 years, as against the varying period between 6 months to 2 years under the extant laws.


The debate and deliberation around consolidation of the law on wages in India has been doing the rounds for some time now. With the passage of law by the Parliament and the assent accorded to it by the President, the uncertainty in this regard has been finally put to rest.

Several provisions of the Wages Code merit attention. The unorganised sector comprises of a significant portion of the workforce in the country and was previously not covered under the MW Act. The Wages Code brings this sector within the ambit of the law on minimum wages. Further, with the removal of the wage ceiling for the application of the law relating to payment of wages and the extension of the application of the law to all kinds of establishments, the terms and conditions of a significant number of employees will now be governed by the Wages Code, as opposed to the present scenario where these are largely governed by the employment contract.

The introduction of the concept of inspector-cum-facilitator and the specific incorporation of the provision relating to rendering advice to employers and workers to ensure compliance with the law may be seen as the Central Government's attempt to play a facilitative role rather than an antagonistic one in matters of compliance. This, coupled with the provisions relating to compounding of offences, may help prevent arduous litigations.

The content of this document do not necessarily reflect the views/position of Khaitan & Co but remain solely those of the author(s). For any further queries or follow up please contact Khaitan & Co at

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
AZB & Partners
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
AZB & Partners
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions