Let’s discuss on Major Impacts of the Code on Wages Act’2019 instead of Earlier laws of Wages.
From India, Kolkata
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4From India, Kolkata
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Definition of wages under the Code:
As per the Code – (i) basic pay, (ii) dearness allowance and (iii) retaining allowance have been included as components of 'wages'.
Further, the Code excludes the following components from the definition of wages: (a) bonus payments;
(b) value of the house-accommodation, supply of light, water, medical attendance or other amenity or of any service excluded from the computation of wages by an order of the appropriate Government;
(c) employer contributions to any pension or provident fund;
(d) conveyance allowances;
(e) sums paid to the employee to defray special expenses on him by the nature of his employment;
(f) house rent allowance;
(g) remuneration payable under award or settlement between the parties or order of court or tribunal;
(h) overtime allowance;
(i) commission payable to employee;
(j) gratuity payments; and,
(k) retrenchment compensation or other retirement benefit payable to the employee or any ex-gratia payment made to the employee on the termination of his employment.
It is to be noted that for the purpose of equal wages to all genders and for the purpose of payment of wages, the emoluments specified in clauses (d), (f), (g) and (h) (specified above), should also be considered for computation of wages.
The Code prescribes that if the sum-total of the excluded components (apart from gratuity and retrenchment compensation) exceeds 50% (Fifty Percentage) (or such other percentage notified by the Central Government) of the total remuneration, then that portion of the amount exceeding 50% (Fifty percentage) (or such other percentage notified by the Central Government) is also to be calculated as 'wages' under the Code. Employers should be particularly wary of such a stipulation in devising salary structures for their employees.
From India, New Delhi
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As per the Code – (i) basic pay, (ii) dearness allowance and (iii) retaining allowance have been included as components of 'wages'.
Further, the Code excludes the following components from the definition of wages: (a) bonus payments;
(b) value of the house-accommodation, supply of light, water, medical attendance or other amenity or of any service excluded from the computation of wages by an order of the appropriate Government;
(c) employer contributions to any pension or provident fund;
(d) conveyance allowances;
(e) sums paid to the employee to defray special expenses on him by the nature of his employment;
(f) house rent allowance;
(g) remuneration payable under award or settlement between the parties or order of court or tribunal;
(h) overtime allowance;
(i) commission payable to employee;
(j) gratuity payments; and,
(k) retrenchment compensation or other retirement benefit payable to the employee or any ex-gratia payment made to the employee on the termination of his employment.
It is to be noted that for the purpose of equal wages to all genders and for the purpose of payment of wages, the emoluments specified in clauses (d), (f), (g) and (h) (specified above), should also be considered for computation of wages.
The Code prescribes that if the sum-total of the excluded components (apart from gratuity and retrenchment compensation) exceeds 50% (Fifty Percentage) (or such other percentage notified by the Central Government) of the total remuneration, then that portion of the amount exceeding 50% (Fifty percentage) (or such other percentage notified by the Central Government) is also to be calculated as 'wages' under the Code. Employers should be particularly wary of such a stipulation in devising salary structures for their employees.
From India, New Delhi
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Dear Ranjeet,
As the Code on Wages, 2019 subsumes the existing Payment of Wages Act, 1936, the Minimum Wages Act, 1948, the Payment of Bonus Act, 1965, and the Equal Remuneration Act, 1976, it acts as a single monetary legislation relating to employment. Broadly speaking, it has the following merits in a nutshell over the existing laws which stand subsumed:
1) Removal of multiplicity of definitions promoting ease of understanding and interpretative convenience.
2) Removal of multiplicity of authorities.
3) Ensuring timely payment of wages to all employees.
4) Ease of compliance and
5) Modification of the role of the inspector to that of a facilitator.
To be specific, the following provisions of the Code on Wages, 2019 can be described as improvements over the subsumed four laws:
1) The definition of the term wages under Section 2(y) of the Code removes the confusion over the components of the wage structure, thereby eliminating disproportionate apportionment of components to reduce the fringe benefits of employment like statutory bonus, gratuity, retrenchment compensation.
2) The Code empowers the Central Government to fix National Floor Wages universally or region-wise and imposes restrictions on the fixation of minimum wages by the appropriate Governments not less than the NFW.
3) Conviction for sexual harassment has been included as a disqualification for eligibility for statutory bonus.
4) Resignation is also included in the final payment time limit for the settlement of dues.
5) The time limit for filing all claims under the Code has been extended to three years.
6) Inspectors are redesignated as facilitators with expanded jurisdiction. Web-based electronic inspections have been introduced to help employers with better compliance.
7) Penal provisions have been modified by providing for compounding of certain offenses and by an enhanced penalty of up to one lakh Rupees with imprisonment for up to 3 months in case of repeated offenses.
From India, Salem
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As the Code on Wages, 2019 subsumes the existing Payment of Wages Act, 1936, the Minimum Wages Act, 1948, the Payment of Bonus Act, 1965, and the Equal Remuneration Act, 1976, it acts as a single monetary legislation relating to employment. Broadly speaking, it has the following merits in a nutshell over the existing laws which stand subsumed:
1) Removal of multiplicity of definitions promoting ease of understanding and interpretative convenience.
2) Removal of multiplicity of authorities.
3) Ensuring timely payment of wages to all employees.
4) Ease of compliance and
5) Modification of the role of the inspector to that of a facilitator.
To be specific, the following provisions of the Code on Wages, 2019 can be described as improvements over the subsumed four laws:
1) The definition of the term wages under Section 2(y) of the Code removes the confusion over the components of the wage structure, thereby eliminating disproportionate apportionment of components to reduce the fringe benefits of employment like statutory bonus, gratuity, retrenchment compensation.
2) The Code empowers the Central Government to fix National Floor Wages universally or region-wise and imposes restrictions on the fixation of minimum wages by the appropriate Governments not less than the NFW.
3) Conviction for sexual harassment has been included as a disqualification for eligibility for statutory bonus.
4) Resignation is also included in the final payment time limit for the settlement of dues.
5) The time limit for filing all claims under the Code has been extended to three years.
6) Inspectors are redesignated as facilitators with expanded jurisdiction. Web-based electronic inspections have been introduced to help employers with better compliance.
7) Penal provisions have been modified by providing for compounding of certain offenses and by an enhanced penalty of up to one lakh Rupees with imprisonment for up to 3 months in case of repeated offenses.
From India, Salem
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Thanks to HR-Revolution & Mr. Umakanthan. M for your brief notes. However if any .pdf or .ppt file available kindly upload the same for details understanding.
From India, Kolkata
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From India, Kolkata
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@Ranjeetjha,
By reducing the number of prevailing Labour Laws and also by aiming labor reforms and far-reaching changes in the field of labor, out of the four Codes of Labor implemented by the Government of India, 3 Codes have been passed in Parliament. The Occupational Safety, Health and Working Conditions Code, 2020, the Industrial Relations Code 2020, and the Code on Social Security, 2020 are the three bills that have been approved in both Houses of Parliament. The Code of Wages, the fourth Code, was already passed in Parliament in the year 2019, and assent from the President was also received.
The definitions of words such as Employer, Employee, Establishment, and Wages are given equal definitions in all four Codes. Therefore, confusion and arguments arising out of these words shall come to an end. The process of registration is also simplified. An Establishment that is registered under one law need not apply for registration under the remaining laws.
From India, Aizawl
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By reducing the number of prevailing Labour Laws and also by aiming labor reforms and far-reaching changes in the field of labor, out of the four Codes of Labor implemented by the Government of India, 3 Codes have been passed in Parliament. The Occupational Safety, Health and Working Conditions Code, 2020, the Industrial Relations Code 2020, and the Code on Social Security, 2020 are the three bills that have been approved in both Houses of Parliament. The Code of Wages, the fourth Code, was already passed in Parliament in the year 2019, and assent from the President was also received.
The definitions of words such as Employer, Employee, Establishment, and Wages are given equal definitions in all four Codes. Therefore, confusion and arguments arising out of these words shall come to an end. The process of registration is also simplified. An Establishment that is registered under one law need not apply for registration under the remaining laws.
From India, Aizawl
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Hi Everyone,
Related to the topic of discussion - Impact of COW 2020 - while viewing a webinar on YouTube, I learned from one of the speakers that since "Occupier" and "Manager" have been clearly defined as "Employer" in the case of a factory, the owners of the factory who lease it are now protected from several vicarious liabilities, which was not the case earlier. However, upon further reading, it was found that the same definition is also present in the repealed act POW 1936.
I kindly request experts to shed some light on this.
Thanks and regards.
From India, Calcutta
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Related to the topic of discussion - Impact of COW 2020 - while viewing a webinar on YouTube, I learned from one of the speakers that since "Occupier" and "Manager" have been clearly defined as "Employer" in the case of a factory, the owners of the factory who lease it are now protected from several vicarious liabilities, which was not the case earlier. However, upon further reading, it was found that the same definition is also present in the repealed act POW 1936.
I kindly request experts to shed some light on this.
Thanks and regards.
From India, Calcutta
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Under the Code on Wages, scheduled employments have been abolished, and therefore all workers are covered under the Minimum Wages Act. The wage limit under the Payment of Wages Act is also removed to protect the wages of all 'employees'.
From India, Pune
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From India, Pune
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There is one point that I feel requires review. Settlement for exiting employees within 2 days from the last working day. I assume this is framed keeping in mind the Government sector. In the IT sector, there would be a number of assets and clearances that need to be done on the last working day before terminating the employee in the system. Given that the payroll has a defined pay cycle, this would lead to a daily process of settlements and can have an impact on the final pay as taxes would have to be recovered if the employee has not made his investments for the year at the time of exit.
From India, Bangalore
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From India, Bangalore
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Dear all,
Hoping to get some advice from experts as I am a bit confused. We have an employee whom we will be paying as below for 2020-21:
Monthly Basic: 14,450
Monthly HRA: 7,225
Monthly Conveyance: 1,600
Monthly special allowance: 14,150
TOTAL MONTHLY: 37,425
Yearly LTA+Medical (Fixed): 20,000
Yearly Bonus + Performance payment: 43,350 (ALMOST SIMILAR EVERY YEAR)
TOTAL ANNUAL: 512,450
Apart from this, we also pay gratuity in the group gratuity fund and employer PF.
What changes would we need to make to fit the new CODE OF WAGES?
From India, Aurangabad
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Hoping to get some advice from experts as I am a bit confused. We have an employee whom we will be paying as below for 2020-21:
Monthly Basic: 14,450
Monthly HRA: 7,225
Monthly Conveyance: 1,600
Monthly special allowance: 14,150
TOTAL MONTHLY: 37,425
Yearly LTA+Medical (Fixed): 20,000
Yearly Bonus + Performance payment: 43,350 (ALMOST SIMILAR EVERY YEAR)
TOTAL ANNUAL: 512,450
Apart from this, we also pay gratuity in the group gratuity fund and employer PF.
What changes would we need to make to fit the new CODE OF WAGES?
From India, Aurangabad
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