Code of Wages,2019, replaces
The Payment of Wages Act, 1936 – To regulate the payment of wages to employees ensuring payments are disbursed on time without any undue deductions.
The Minimum Wages Act, 1948 – To protect workers against low pay and enforce fixing of minimum rates of wages.
The Payment of Bonus Act, 1965 – To provide for payment of bonus to persons employed in certain establishments based on profits or production.
The Equal Remuneration Act, 1976 – To mandate equal remuneration for men and women workers and to prevent gender discrimination in employment matters.
The “Code on Wages” Act has 9 chapters with 69 sections covering different aspects of payment of wages, minimum wages, equal remuneration, and payment of bonus.
Separate definitions of who is a worker, not a worker, and who is an employee are given in the code.
Definition of “wages” has been unified with intent to bring a uniform definition of “wages” across all legislation and to minimize litigation and what all Components are included in the wages: Basic Pay, Dearness Allowance, Retaining Allowance if any.
And also what is excluded in wages like for example HRA.
The Act is extensive and all HRs must make themselves thorough about key provisions.
From India, Pune
3131The Payment of Wages Act, 1936 – To regulate the payment of wages to employees ensuring payments are disbursed on time without any undue deductions.
The Minimum Wages Act, 1948 – To protect workers against low pay and enforce fixing of minimum rates of wages.
The Payment of Bonus Act, 1965 – To provide for payment of bonus to persons employed in certain establishments based on profits or production.
The Equal Remuneration Act, 1976 – To mandate equal remuneration for men and women workers and to prevent gender discrimination in employment matters.
The “Code on Wages” Act has 9 chapters with 69 sections covering different aspects of payment of wages, minimum wages, equal remuneration, and payment of bonus.
Separate definitions of who is a worker, not a worker, and who is an employee are given in the code.
Definition of “wages” has been unified with intent to bring a uniform definition of “wages” across all legislation and to minimize litigation and what all Components are included in the wages: Basic Pay, Dearness Allowance, Retaining Allowance if any.
And also what is excluded in wages like for example HRA.
The Act is extensive and all HRs must make themselves thorough about key provisions.
From India, Pune
Code of wages impact
New ruling of capping allowances at 50% of total compensation will be game changer as Changes in percentage of salary components (Provident Fund , Gratuity and Take home).
Many people look at present take home pay as very important, forgetting the future.
As per the new code, basic pay should be above 50% of total compensation offered to each worker. This ruling will increase PF contribution in proportion to variance in basic pay.
One consequence of this provision is that there will be cut down in take home salary of workers and enhancement in post retirement fund due to higher PF contribution and gratuity.(which is good for future rainy days and retired life)
However, reduction in take home salary could affect workers as they need to adjust their monthly spending in proportion to reduced earnings.
One side effect of this ruling is that it will enhance financial burden on companies as they need to contribute higher amounts towards PF and gratuity.
The new law will be good from employee perspective in long run as post retirement funds will go up due to cut down in take home salary and will push up contributions of companies for welfare of the employees. Companies may see reduced profits for the time being as a side effect.
All changes have positive and negative effects,but change is inevitable and one must adjust,understand and tackle change by understanding the new law well enough,
From India, Pune
New ruling of capping allowances at 50% of total compensation will be game changer as Changes in percentage of salary components (Provident Fund , Gratuity and Take home).
Many people look at present take home pay as very important, forgetting the future.
As per the new code, basic pay should be above 50% of total compensation offered to each worker. This ruling will increase PF contribution in proportion to variance in basic pay.
One consequence of this provision is that there will be cut down in take home salary of workers and enhancement in post retirement fund due to higher PF contribution and gratuity.(which is good for future rainy days and retired life)
However, reduction in take home salary could affect workers as they need to adjust their monthly spending in proportion to reduced earnings.
One side effect of this ruling is that it will enhance financial burden on companies as they need to contribute higher amounts towards PF and gratuity.
The new law will be good from employee perspective in long run as post retirement funds will go up due to cut down in take home salary and will push up contributions of companies for welfare of the employees. Companies may see reduced profits for the time being as a side effect.
All changes have positive and negative effects,but change is inevitable and one must adjust,understand and tackle change by understanding the new law well enough,
From India, Pune
Community Support and Knowledge-base on business, career and organisational prospects and issues - Register and Log In to CiteHR and post your query, download formats and be part of a fostered community of professionals.
Code on wages (TN) rules 2022.pdf