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POLICY WATCH : DRAFT CODE ON WAGES


1. INTRODUCTION


Ministry of Labour & Employment has put up the preliminary draft rules under section- 67 of the code on wages.

Apart from the formula calculating minimum wage rate and norms for bonus payments the draft recommends 9 hours working days with 1 day rest every week.

Its in line with govt. Objective to simplify and rationalize various central labour laws into 4 codes.

• Code on Wages

• Code on social security

• Code on occupational safety, health and working conditions.

• Code on Industrial relations.


2. INSIGHTS


• It intends to compile 44 labour laws into 4 codes mentioned above to simplify them.

• There are different definitions of ‘wage’ in different scenarios. In the draft there is single uniform definition of wage. In order to eliminate the ambiguity regarding its meaning.

• It also puts light on ways of payment of wages. There is confusion in the market regarding cash and account transfer.

• It also talks abiut overtime what exactly constitutes over time, what is the ceiling and talks about working hours as well.

• The whole idea is to look after the interest of the workman without harming the employee.

Global Standards recommends 8 hours working day. According to ILO convention of 1954

• But this aspect has become a complex issue owing to part time workers and millennials stepping in GIG Economy.

• One idea according to the experts behind increasing working hours to 9 is to increase productivity of labour. But experts also suggest that with 9 hours a day working days should be reduced to 5 instead of 6 per week.

2 • Legally speaking, this provision of working hours in draft code contradicts the Factories Act because –

Rule 6(4) says “ Nothing in this rule shall be deemed to effect the provision of the “Factories Act””(FA)

• And Section 51 of FA says “ No worker shall be allowed to work in a factory for more than 48 hours in a week.

• It clearly creates a different working conditions of people working in a factory and others working elsewhere in commercial establishments.

• It seeks to set a Floor wage as well. Because minimum wage tends to differ from state to state on the basis of different geographical conditions prevailing in different states.

• Floor wage according to experts is nothing but assured minimum wage.

• The Draft code has divided geographical area in 3 parts.

▪ Metropolitan ( above 40 lakhs population)

▪ Non- Metropolitan (10-40 lakhs)

▪ Rural ( less than 10 lakhs)

• It also seeks to estb a Central Advisory Body (CAB) to decide wages.

It will consist the following.

• 1 Chairperson

• 12 Members from employee side

• 12 members from employer side.

• 3 Members of Parliament.

• 5 officers from Dpt. Of labour Different states on the rotational basis.

• 1 member Secretary Ministry of Labour and employment.

Presently, the employer has to pay wages to their employees within 10 days after expiry of the wage period, in case the establishment has more than 1000 employees. This will now change.

The Code makes it compoulsary for the employer to pay within seven days from expiry of the wage period. Doesnt matter whats the size of the establishment.

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