A Wage Code that is a Hasty Composition

Context: The Code on Wages (yet to be noti?ed) has not succeeded in the consolidation of laws and is a case of tall o?cial claims.

The labour codes: The government has consolidated the labour laws into four codes as follows:

1. The Code on Wages, 2019
2. The Code on Industrial Relations, 2020
3. The Code on Social Security, 2020
4. The Code on Occupational Safety and Working Conditions, 2020

Government’s rationale for the Code on Wages, 2019

• Would expand the coverage of workers in all industries in the unorganized sector as against the old Minimum Wages Act which covered only 30% of the total workforce.

• Reduction in slabs of wages: While there were 10,000 slabs of minimum wages that existed, they would now be reduced to 200 slabs. 

• Seeks to consolidate and simplify four pieces of legislation:

• Payment of Wages Act, 1936. 
• Minimum Wages Act, 1948.
• Payment of Bonus Act, 1965.
• Equal Remuneration Act, 1976. 
• Recommended by the Second National Commission on Labour (Ravindra Varma, 2002) to consolidate all labour laws into four codes.

Argument against the consolidation of laws under Code of Wages, 2019: 

• Impact on the length of the rules and regulations:  Consolidation of the laws will dilute the provisions concerning definitions, inspectors, penalties, a competent authority, an appellate authority, and rulemaking powers.

• Delegation of laws to rules: All requirements for enforcing the Act, have been relegated to the Rules. 
• Section 67 had authorized the framing of rules relating to as many as 38 provisions of the Act. 
• As a result, the delegated pieces of legislation (Rules) will be bigger than the Code; 
• Problems of Combining Asymmetrical laws into single Code: All the four repealed pieces of legislation were enacted historically at di?erent points in time and to deal with di?erent situations. 
• The Code retains almost all previous provisions: For E.g. 
• The procedure for ?xing minimum wage, 
• Limit for ?nes and deductions in wages, 
• Minimum and maximum bonus, 
• Calculation of allocable and available surplus as well as gender-neutral consideration in fixing wages. 

• Dilution in fixing the Minimum wage

• In the (erstwhile) Minimum Wages Act, to fix minimum wage in employment which has more than 1,000 workers is to be first included in the Schedule, and, thereafter, minimum wages will be fixed as per law. 
• The new Code has dispensed with the necessity of having a minimum number of workers and the inclusion of such employment into the schedule.
• Also, the Code will have the same definition of the term “worker”; but a person employed in a supervisory capacity drawing up to ?15,000 will also be considered a worker.

• Unwarranted provision of fixing a “floor” wage by the Centre:
• Once a “floor” wage is fixed, the state governments cannot fix a lesser minimum wage.
• It is unwarranted since many States always ?x minimum wages higher than the existing rates, depending upon the employment and workforce involved. 

• The concept should aim for a binding minimum wage and not have dual wage rates — a binding ?oor wage and a non-binding minimum wage. 

• Conflict of Wages with the provisions of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), 2005 :
• Against the Judiciary: Several High Courts have placed the Minimum Wages Act to override MGNREGA; however, The Code on Wages has excluded MGNREGA from its purview.
• Issues with the provisions of enforcements 

• Provisions: 

• An omnibus inspector-cum-facilitator: will act as per the inspection scheme framed by the government & may carry out inspections as may be as signed by the government (Section 51). 

• Claim mechanism: will be heard and determined by an authority who is not below the rank of a “Gazetted Officer”(Section 45).
• As against the decision of the Gazetted O?cer, one can prefer an appeal to an appellate authority who must be one rank higher than the competent authority (Section 49). 

• Issues: 

• No prescription of qualification and experience required for the appointment of the competent authority. 

• A government official without a legal and administrative background can hear such claims.

• Issues with Penalty Provisions: Penal provision never had an impact on the employer – 

• In People’s Union For Democratic Rights and Others vs Union Of India & Others, 1982 (Asiad case), the Supreme Court denigrated labour laws a paper tiger without any teeth or claws.

• Exemptions to the employers: Apart from providing for a compounding of o?ences (Section 56), the Code also exempts employers from penal provisions in certain cases.

• Violates Article 50: which mandates the State to separate the judiciary from the executives in public services.

• A new provision (Section 52) has been introduced where an o?cer (not below the rank of an under-secretary to the government) will impose a penalty in the place of a judicial magistrate. 

• A similar provision (Section 21 of the Bonded Labour System (Abolition) Act, 1976) which empowered revenue officers were struck down by the Madras High Court in 2014.
• By merging the judicial function in the executive, the basic structure of the Constitution is a?ected.