Wage Code Bill, 2019 is a comprehensive act which simplifies the various
labour laws and combines four of them with reference to wages and bonus payments
and matters incidental there to. It is the first code acquiring status of an Act
out of the four labour codes; The Code on Wages 2019 ,The Occupational Safety,
Health and Working Conditions Code 2019,The Code on Social Security 2019 and The
Industrial Relations Code 2019.
As pointed above, the Wage Code Bill, 2019 subsumed and simplified the four
legislations; Minimum Wages Act, 1948 (for fixing minimum rates of wages in
certain employments) ,Payment of Wages Act, 1936 (to regulate the payment of
wages of certain classes of employed person), Payment of Bonus Act, 1965 (for
payment of bonus to persons employed in certain establishments on the basis of
profits or production or productivity) and Equal Remuneration Act, 1976 (to
provide equal remuneration to men and women and to prevent gender discrimination
in employment matters).
This bill amalgamates, simplifies and rationalises existing labour legislations
for the ease of doing business, removes existing outdates laws, provides unique
definitions, universal application throughout India to all establishments,
employees and employers, removes social, gender and income disparities and aims
to bring uniformity by establishing National Floor Wage.
“Minister of State (I/C) for Labour and Employment Shri Santosh Kumar Gangwar
said that it is a historic Bill which aims to transform the old and obsolete
labour laws into more accountable and transparent ones which is need of the
hour. As many as 17 present labour laws are more than 50 years old and some of
them even belong to pre-independence era.”
Perusal of the references reveals prevalence of more than 40 Central Labour Laws
out of which some have been rendered, outdated or insufficient to redress
grievance or anomalous there in. The Administration of India, during the
Government of Hon’ble Prime Minister Narender Modi, in 2015, had started
planning to consolidate 40 Central Labour Laws into four codes in order to
remove anomalous and deficiency in existing laws by establishing new ones as per
today’s need and for better wage policy.
In August 2017, The Wage Code Bill was presented for the first time in Lok Sabha
and was referred to Parliamentary Standing Committee which submitted its report
in December, 2018 having 24 recommendations and out of which 17 were
incorporated into the bill. However, the bill lapsed due to the general
elections. In 2019 the Bill was reintroduced and was passed from both the
houses. The bill was passed in Lok Sabha on July 30, 2019 and in Rajya Sabha on
August 2, 2019.
The President of India , Ram Nath Kovind gave its assent on August 8,2019
.Therefore, it came to be known as Wage Code Bill, 2019.The draft rules under
the Code ("Rules") were published in form of handbook on July 7, 2020 in public
domain for feedback and suggestions. The Code on Wage Bill, 2019 is scheduled to
come into effect from April 1, 2021.
Scope of the Bill
The bill has wide scope in view of its coverage and positive implications. The
Wage Code Bill, 2019 has IX Chapters and 69 Clauses which shall simplify, unite
and rationalise the existing Labour Laws.
Crux of the Bill
- Chapter I provides for definition- applicable across the code.
- Chapter II-IV covers provisions related to Minimum Wage, Payment of
Wages and Payment of Bonus and Provisions of Equal Remuneration
- Chapter V-VIII covers provisions related to Central Advisory Board and
State Advisory Boards, Payment of Dues, Claims and Audits,
Inspector-cum-Facilitator and Offences and Penalties.
- Chapter IX provides Miscellaneous Provisions.
- The code is aimed at benefiting approximately 500 million workers across
the country. It will apply to all establishments, employees and employers
across the Indian States and Union Territories.
- The wage code, clearly states the objective “to promote equity and
labour welfare on the one hand and encourage investment and setting up of
more enterprises on the other, thereby catalysing creation of more
- It also covers wage-related decisions for employments such as railways,
mines, and oil fields by Central Government.
It is comprehensive, easy to follow, implemented by employers and establishments
and has positive as well as negative implications.
It sets out time limit for payment of wages not later than 7th of each
- It has provision to standardise wages and bonus payments in all areas of
employment including organised and unorganised sectors; including commercial
establishment and facilitates easier compliance.
- It clearly defines and limits employee, wages, worker, contractor and
- It sets aside schedule and income brackets and focuses on skill and
geographical location to calculate minimum wage.
- It is consistent with the Equal Remuneration Act, the Code, inter-alia,
includes provisions prohibiting discrimination on grounds of gender (i) with
respect to wages by employers, with respect to same work or work of a
similar nature done by employees and (ii) with respect to recruitment of
employees for same work or work of a similar nature.
- It seeks for uniform floor wage, applicable to all types of
establishment and trades; except hazardous industries with separate minimum
- The onus of fixation of National Floor Wage will lie on central
government, which will not be liable to any later modifications by
- Provisions for paying wages to employee by appropriate government
through cheque or by crediting in the bank account.
- Minimum wages are liable be revised/ reviewed at the interval of not
exceeding 5 years.
Positive Implications of the Bill
- In case of unemployment due to closure, removal, dismissal,
retrenchment, resignation from the service the employer is bound to release
the due wages within 2 working days.
- The role of inspector has is changed to inspector-cum-facilitator.
- The code encourages web-based inspection process.
- The process of registration and filing of returns has been streamlined
with online submission instead of hard copy.
- Offence and penalties have been revamped. It includes provision of
compounding offence and extends the period of filing complaint against
employer up to 3 years. The Code places the burden of proof on an employer
to prove that the amounts claimed by the employee have been paid.
Negative Implications of the Bill
- There is clear interpretation of the term wage laying to rest the
- It provides protection to the vulnerable workers and foster fair
competition through extension of legal coverage given to the floor wage and
minimum wages nationwide to all wage earners irrespective of any schedule or
wage ceiling. This will improve welfare of millions of low-paid workers in
- It seeks fixation of minimum wage across the nation by central
government on the basis of standard of living; with state government bound
to fix minimum wage equal or above the floor wage. Consequently, there will
be change in wage setting process, increase in the level of wages and remove
income disparities within and across states
- It simplifies and rationalise the complex minimum wage structure in
India which also provides space for collective bargaining among workers and
- It insures timely payment of wages by 7th of each succeeding month.
- It removes disparity of wages due to gender and also includes
transgender in its ambit through equal remuneration and pay clause.
- It seeks for payment of overtime, increased gratuity and post retirement
- It envisage single template for filing returns online, thereby removing
requirement of maintaining of registers, returns and other official
- It bolsters rights of contractual employee who can claim minimum bonus
from primary employer in case contractor fails to oblige.
- It provides extension of limitation period from 2 to 3 years, thereby
allowing raise of claims of workers.
- It introduces compoundable offences, which allows compromise between
employer and employee and drop of charges.
- The code provides for fixation of higher wages which can discourage
employers from hiring.
- The government’s intervention to impose floor wage will disturb the
equilibrium of wages.
- Increases cost of employment due to increase in wages on account of
inculcation of part of employment benefits.
- Decrease in take home salary due to increased deduction of PF (provident
fund) from net salary.
- Increased social disparity due to fixation of minimum wages on the basis
of location; which can lead to job outsourcing by industries.
- Lack of uniformity and compliance on account of empowerment of states to
fix ceiling of bonus; which renders employees in some states ineligible for
- Decreased effectiveness due to inclusion of some, exclusion of other
elements and retaining some of wage rules turning the code a mixed bag.
- Availability of overtime wage without any element of legal obligation,
only to set off employees with fixed minimum wages; excluding managerial and
- Increases gratuity cost of company due its calculation based upon
inclusion of allowance in the basic pay.
- Curtails employer’s right to deduction.
- Incompatibility of web based inspection scheme with ILO’s Labour
Inspection Convention, 1947. 
- It has overriding effect and is inconsistent with other existing labour
The Wage Code Bill, 2019 is an amicable legislation. It is aimed at transforming
the old and obsolete labour laws; promote transparency and accountability in its
enforcement. The Wage Code Bill, 2019 further balances, the interest of
employers and employees. It will introduce many reforms in India’s wage system;
subsumes four Central Law and vindicate 40 others.
The bill universalises application of minimum wage irrespective of schedule or
income brackets to all employees. It also simplifies the minimum wage structure
of the country. The bill takes one step ahead to fulfil long time demands of
trade unions. However, the Wage Code Bill, 2019 has some loose ends as fails to
redress many purple issues.
It highlights minimum wage but is silent about fair wages. Though the code was
discussed at length by several representatives but it failed to have any
representative of the labour union. The Code like any other existing central
labour laws fails to take care of migrant labours.
Further, the code provides for web based inspection which defies one of the
conventions of ILO. It fails to impose adequate fine/penalties on violators. The
provision of the code strengthens the business community, but it is short of
improving welfare of millions of low paid workers across India. In a nutshell,
the bill is a catchall act for its overweighing positive implications. It is all
set to be implemented in near future.
- Lok Sabha Passes the Code on Wages Bill, 2019,Ministry of Labour &
Employment, July 30, 2019 https://pib.gov.in/ 1 Press
- Yogima Sharma, Parliament Passes Wage Code Bill To Ensure Minimum Wage
For Workers, Economic Times
- See para 3 of ‘Statement of objects and reasons’ of the Code on Wages
Bill, 2019 (GoI 2019c: 30)
- Clause 3 of Code on Wages, 2019
- Clause 59 , The Code on Wages, 2019
- Devika Sharma, Code on Wages Bill, 2019 received President’s assent —
The Code on Wages, 2019 to be enacted, August, 2019, https://www.scconline.com/blog/post/2019/08/12/code-on-wages-bill-2019-received-presidentsassent-the-code-on-wages-2019-to-be-enacted/
- Convention C081 - Labour Inspection Convention, 1947 (No. 81)