Draft Wages Code Bill 2017

With an attempt to mark the initiation of labour reforms the government is pushing for the Wages Code Bill. The purpose of the Bill is to enable the government to set up a benchmark minimum wage for the different regions of India.

Features of the Bill

• The Code would replace four existing laws of Payment of Wages Act, 1936, Minimum Wages Act, 1948, Payment of Bonus Act, 1965, and Equal Remuneration Act, 1976.
• The code provides central government to set minimum wages for certain employments including railways and mines and State governments to set minimum wages for all other employments. It seeks to cross the threshold of scheduled mentioned in the Minimum Wages Act and the Payment of Wages Act in terms of scheduled employments and establishments. Now, timely payment of wages is mandatory for all workers irrespective of the sector in which they are working.
• The Code provides for a national minimum wage to be set by the central government.  States cannot set minimum wages lower than the national minimum wage.  Further, the central government may set separate national minimum wages for different states or regions of the country.
• Minimum wages must be revised by the central or state governments at an interval of five years.
• The overtime rate to be at least twice the normal rate of wages of the employee.
• An appellate authority is being created between the claim authority and the judicial forum. This is to ensure that the grievances and claims are settled in a faster, cheaper and efficient way.
• Penalties are provided for a variety of violations.

Significance of the bill

• The Bill strives to maintain the balance between the ease of doing business and protecting the labour sector by initiating labour reforms.
• The national minimum wage and mandating states to set the minimum wages not below the national minimum wage would aid in bringing uniformity across the states with due consideration to local circumstances.
• Merging of the four existing laws would also aid in ease of governance for the government and ease of compliance for the private sector. Thus upholds the motto of minimum government and maximum governance.
• It seeks to do away with multiple number of definitions and authorities that only add to difficulty in compliance. At the same time it will not compromise with the wage and social security of the labourers.

Issues about the bill

• The Equal Remuneration Act, 1976, prohibits employers from discriminating in wage payments as well as recruitment of employees based on gender.  While the Code prohibits gender discrimination on wage-related matters, it does not include provisions regarding discrimination during recruitment.
• Labour being in concurrent list the effective implementation of the provisions will also be a daunting task.
• The Bill takes away the current flexibility with the states in revising minimum wages, as long as it is not more than five years.

Stringent and complex labour laws are often leading to menace of inspector raj adversely affecting the ease of doing business. The draft bill can be of great aid to protect the interests of labourers.