Code on Wages (Central) Rules 2020 - (Draft)
The central government has made the draft for the Code on Wages. With
the powers conferred under section 67 of the Code on Wages, 2019 read with
section 24 of the General Clauses Act, 1897 the Central Government can make the
rule in this Code. Only the Central Government has the power to make rules and
we can also see the State Acts coming in various states by State Governments
with maybe/maybe not some minor changes. This draft is been published in the
official gazette, which means that the government is wanting to make it
final. Rules are important and impact all those people who are an
employee or an employer. Let see what Code includes and what all statues
will be affected because of these new rules.
These rules will have an implication on various statues like:
Payment of Wages (Procedure) Rules, 1937
Payment of Wages (Nomination) Rules, 2009
Minimum Wages (Central) Rules, 1950
Minimum Wages (Central Advisory Board) Rules, 2011
Payment of Bonus Rules, 1975
Equal Remuneration Rules, 1976 and
Central Advisory Committee on Equal Remuneration Rules, 1991
Who is Workman?
The definition of a workman is the Industrial Dispute Act under section
2 (s), “any person employed in any industry to do any manual, unskilled,
skilled, technical, operational, clerical or supervisory work for hire or
reward, whether the terms of employment be express or implied, and for the
purposes of any proceeding under this Act in relation to an industrial dispute.
But it clearly does not include:
(a). Person who is subject
to the Air Force Act, Army Act, or the Navy Act.
(b). Person employed in the police service as an officer or employee of a
prison
(c). Person who engage in a managerial or administrative job
(d). Person who act in a supervisory capacity and draws wages exceeding Rs.
10,000 per month
Highlights of Code:
1. Reduced Working Hours
As per the new
rules, the number of working hours is reduced from 9 hours (under rule 6 of the
earlier rules) to 8 hours in a normal working day.
2. Payments on Death of Employee
Addition of rule of what
to do with the undispersed amount due to the death or whereabouts of the
employee not known?
Earlier only Rule 46 was containing this provision, but
it is now split into 2 rules.
Situation 1: When a nomination is made by the employee.
The draft says that if the amount is not paid to the nominee of the
employee from 3 months expiry from the due date, then such amount shall be
deposited by the employer to the Deputy Chief Labour Commissioner Central
having jurisdiction of the case and within next 2 months of the deposit to the
nominee of the employee.
Situation 2: What to do with the undispersed amount due when the nomination
is not made by the employee?
If such is not been paid to the nominee of the employee until the expiry
of 6 months from the due date, then all such amount shall be deposited to the
Deputy Chief Labour Commissioner Central having the jurisdiction of the case
before the expiry of 15 days after the expiration of 6 months.
3. Labour Welfare Fund by State Governments
If any due amount is not paid by the employer until 3 years then all the
amount shall be paid to the Labour Welfare Fund. Therefore, where
there is no such provision, this provision will come into existence.
4. The Introduction of Floor Wage System
It says that the floor line is a baseline and below which no government
can fix wages. Section 9 empowers the central government to fix
floor wages taking into account the minimum living standards of workers. Even
the fixation of different wages will be on the geographical standards, which
might induce fear of flight of capital (from low wages area to high wages
area).
5. The Bifurcation of Skilled Labour
There was no schedule employment concept for the payment of minimum
wages earlier in any statues. Therefore, the central government has listed all
the occupation in Schedule-E and also define different skill
level with the definition.
6. Competence of bonus
The central has kept the same schedule which was originally part of
Payment of Bonus act 1965, with revised numbering.
Till now as per judicial pronouncement principal employer was not liable
for the non-payment of the bonus but the contract employees considering the
interpretation employee and employer and wage statement in the relevant statues.
New provision incorporated to the code under Section 43 of the
code says that if the contract employer fails to pay all amount required to be
paid under the code which also includes payment of bonus, then the proprietor
of the establishment, here the principal employer shall be responsible for such
payments. if the contractor fails to pay all amount to his employer then the principal
employer also liable to make such payments.
And the minimum bonus has to be paid by the principal contractor when
the contract employer fails to pay it.
7. Principal Employer Liable to Pay Before Time
The principal employer is liable to pay the contractor the amount
payable before the date it is due so that the contractor could ultimately make
the payment of wages of the employment can be made on time as per Section
67 of the code.
8. Expenditure Consideration for Wages
Rule 11: Minimum wages shall be fixed considering expenditure towards
food, clothing and housing of the standard working-class family and "any
factors considered appropriate."
9. Revision of Wages
Section 8(4) says that the revision of the wages will happen ordinarily at an interval
not exceeding 5 years.
10. Assumption
Wages to be fixed on the expenses of a standard working family. And it
should consider 3 adults’ consumption in a family if there is a family of
husband-wife and their 2 children.
11. Computation of the Standard of Living Cost
Rule 5 says that the endeavour is made to estimate the
standard of living cost of a standard working-class family in order to revise
the dearness allowance payable to employees on the minimum wages.
12. Inspection
Section 58 empowers the Chief Labour Commissioner (central) to frame
inspection scheme with the central government approval. Section 51 provides
that the appointment of inspectors cum facilitators by the central and the
state governments be done in order to keep a check on the implication of law.
Though the qualification has not been specifically mentioned for the inspectors
in the code.
13. Factorisation of expenditure
10% : for house rent
20% : for electricity, food, clothing and fuel
25% : for education and health
These norms are largely based on the 15th Indian Labour
Conference recommendations and measure given by the Supreme Court in Workmen
represented by Secretary v. Management of Reptakos Brett and Co. Ltd[1].
14. Elderly Parents
Reinforced by the
Maintenance and Welfare of Parents and Senior Citizens Act, 2007 and hence
presumption will be taken that the standard working family comprises of 6 adult
members.
This was assumed on the basis of NSS report 2011-12 on the Consumer
Expenditure Survey.
15. Calories
Calories intake and
cloth per year. Assumption took is of at least 2700 calories per day
consumption unit and 66 meters of cloth per year per standard working class of
people.
16. Monthly Payment
Rule 3 says
that for fixation of the minimum wages on daily basis, could be disadvantageous
for the worker therefore, minimum wages act should be on monthly
basis.
17. Division of Zones
The drafts divide 3
zones into: Metropolitan area, non-metropolitan area and rural area for the better
implication of fixation of wages as per requirement. So, if this methodology is
adopted nationwide then the wage disparity between similar zones or geography
may disappear. Provided every state will adopt the same
concept.
Objection
It is just a draft, so if any objections and suggestions are made then
it is to be addressed to Shri M. A. Khan, Deputy Director (ma.khan15@nic.in),
and Smt. Rachana Bolimera, Assistant Director (r.bolimera@nic.in), Government
of India, Ministry of Labour and Employment, Shram Shakti Bhawan, Rafi Marg,
New Delhi-110001.
The last date is till 24th of August 2020.
Also read - Scope of Equal Pay for Equal Work in Indian: Quick Overview
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