The Code on Wages, 2019 – CMA Inter Law and Ethics Study Material

The Code on Wages, 2019 – CMA Inter Business Laws and Ethics Study Material is designed strictly as per the latest syllabus and exam pattern.

The Code on Wages, 2019 – CMA Inter Law and Ethics Study Material

Descriptive Questions

Questions 1.
What is the time limit for payment of wages under the Code?
Answer:
The time limit for payment of wages Section 17-
1. The employer shall pay or cause to be paid wages to the employees, engaged on:

• daily basis, at the end of the shift;
• weekly basis, on the last working day of the week, that is to say, before the weekly holiday;
• fortnightly basis, before the end of the second day after the end of the fortnight;
• monthly basis, before the expiry of the seventh day of the succeeding month.

2. Where an employee has been:

• removed or dismissed from service; or
• retrenched or has resigned from service, or became unemployed due to closure of the establishment, the wages payable to him shall be paid within two working days of his removal, dismissal, retrenchment or, as the case may be, his resignation.

3. Notwithstanding anything contained in sub-section (1) or sub-section (2), the appropriate Government may provide any other time limit for payment of wages where it considers reasonable having regard to the circumstances under which the wages are to be paid.

4. Nothing contained in sub-section (1) or sub-section (2) shall affect any time limit for payment of wages provided in any other law for the time being in force.

Question 2.
How is the work wage and hours of work fixed under the Code?
Answer:
Fixing hours of work for normal working day:
1. Where the minimum rates of wages have been fixed under this Code, the appropriate Government may:

• fix the number of hours of work which shall constitute a normal working day inclusive of one or more specified intervals;
• provide for a day of rest in every period of seven days which shall be allowed to all employees or to any specified class of employees and for the payment of remuneration in respect of such days of rest;
• provide for payment for work on a day of rest at a rate not less than the overtime rate.

2. The provisions of sub-section (1) shall, in relation to the following classes of employees apply, only to such extent and subject to such conditions as may be prescribed, namely:

• employees engaged in any emergency which could not have been foreseen or prevented;
• employees engaged in work of the nature of preparatory or complementary work which must necessarily be carried on outside the limits laid down for the general working in the employment concerned;
• employees whose employment is essentially intermittent;
• employees engaged in any work which for technical reasons has to be completed before the duty is over; and
• employees engaged in a work which could not be carried on except at times dependent on the irregular action of natural forces.

3. For the purposes of clause (c) of sub-section (2), employment of an employee is essentially intermittent when it is declared to be so by the appropriate Government on the ground that the daily hours of duty of the employee, or if there be no daily hours of duty as such for the employee, the hours of duty normally include periods of inaction during which the employee may be on duty but is not called upon to display either physical activity or sustained attention.

The central or state government may fix the number of hours that constitute a normal working day. In case employees work in excess of a normal working day, they will be entitled to overtime wages, which must be at least twice the normal rate of wages.

Wages for overtime work:
Section 14 – Where an employee whose minimum rate of wages has been fixed under this Code by the hour, by the day or by such a longer wage period as may be prescribed, works on any day in excess of the number of hours constituting a normal working day, the employer shall pay him for every hour or for part of an hour so worked in excess, at the overtime rate which shall not be less than twice the normal rate of wages.

Mode of payment of wages:
Section 15- All wages shall be paid in current coin or currency flotes or by cheque or by crediting the wages in the bank account of the employee or by the electronic mode:
Provided that the appropriate Government may, by notification, specify the industrial or other establishments, the employer of which shall pay to every person employed in such industrial or other establishments, the wages only by cheque or by crediting the wages in his bank account.

Fixation of wage period.
Section 16- The employer shall fix the wage period for employees either as daily or weekly or fortnightly or monthly subject to the condition that no wage period in respect of any employee shall be more than a month: Provided that different wage periods may be fixed for different establishments.

Question 3.
How are deductions to the wages calculated under the Code?
Answer:
Section 18: Deductions which may be made from wages:
1. Notwithstanding anything contained in any other law for the time being in force, there shall be no deductions from the wages of the employee, except those as are authorised under this Code.

Explanation: For the purpose of this subsection,
(a) any payment made by an employee to the employer or his agent shall be deemed to be a deduction from his wages;
(b) any loss of wages to an employee, for a good and sufficient cause, resulting from:

• the withholding of increment or promotion, including the stoppage of an increment; or
• the reduction to a lower post or time scale; or
• the suspension, shall not be deemed to be a deduction from wages in a case where the provisions made by the employer for such purposes are satisfying the requirements specified in the notification issued by the appropriate Government in this behalf.

2. Deductions from the wages of an employee shall be made in accordance with the provisions of this Code and may be made only for the following purposes, namely:-

• fines imposed on him;
• deductions for his absence from duty;
• deductions for damage to or loss of goods expressly entrusted to the employee for custody; or for loss of money for which he is required to account, where such damage or loss is directly attributable to his neglect or default;

(d) deductions for house accommodation supplied by the employer or by appropriate Government or any housing board set up under any law for the time being in force, whether the Government or such board is the employer or not, or any other authority engaged in the business of subsidising house accommodation which may be specified in this behalf by the appropriate Government by notification;

(e) deductions for such amenities and services supplied by the employer as the appropriate Government or any officer specified by it in this behalf may, by general or special order, authorise and such deduction shall not exceed an amount equivalent to the value of such amenities and services. Explanation.-For the purposes of this clause, the expression “services” does not include the supply of tools and raw materials required for the purposês of employment;

(f) deductions for recovery of:

• advances of whatever nature (including advances for travelling allowance or conveyance allowance), and the interest due in respect thereof, or for adjustment of overpayment of wages;
• loans made from any fund constituted for the welfare of labour, as may be prescribed by the appropriate Government, and the interest due in respect thereof;

(g) deductions for recovery of loans granted for house-building or other purposes approved by the appropriate Government and the interest due in respect thereof;

(h) deductions of income tax or any other statutory levy levied by the Central Government or State Government and payable by the employee or deductions required to be made by order of a court or other authority competent to make such order;

(i) deductions for subscription to, and for repayment of advances from any social security fund or scheme constituted by law including provident fund or pension fund or health insurance scheme or fund known by any other name;

(j) deductions for payment ot cooperative society subject to such conditions as the appropriate Government may impose;

(k) deductions made, with the written authorisation of the employee, for payment of the tees and contribution payable by him for the membership of any Trade Union registered under the Trade Unions Act, 1926;

(i) deductions for recovery of losses sustained by the railway administration on account of acceptance by the employee of counterfeit or base coins or mutilated or forged currency flotes;

(m) deductions for recovery of losses sustained by the railway administration on account of the failure of the employee to invoice, to bill, to collect or to account for the appropriate charges due to the railway administration whether in respect of fares, freight, demurrage, wharfage and cranage or in respect of sale of fool in catering establishments or in respect of commodities in grain shops or otherwise;

(n) deductions for recovery of losses sustained by the railway administration on account of any rebates or refunds incorrectly granted by the employee where such loss is directly attributable to his neglect or default;

(o) deductions, made with the written authorisation of the employee, for contribution to the Prime Minister’s National Relief Fund or to such other fund as the Central Government may, by notification, specify.

(p) Notwithstanding anything contained in this Code and subject to the provisions of any other law for the time being in force, the total amount of deductions which may be made under subsection (2) in any wage period from the wages of an employee shall not exceed fifty per cent of such wages.

3. Where the total deductions authorised under sub-section (2) exceed fifty per cent of the wages, the excess may be recovered in such manner, as may be prescribed.

4. Where any deduction is made by the employer from the wages of an employee under this section but not deposited in the account of the trust or Government fund or any other account, as required under the provisions of the law for the time being in force, such employee shall not be held responsible for such default of the employer.

Question 4.
How are Central Advisory Board and State Advisory Boards constituted?
Answer:
Advisory boards: The central and state governments will constitute advisory boards. The Central Advisory Board will consist of:

• employers,
• employees (in equal numbers as employers),
• independent persons, and
• five representatives of state governments. State Advisory Boards will consist of employers, employees, and independent persons. Further, one-third of the total members on both the central and state Boards will be women.

The Boards will advise the respective governments on various issues including:

• fixation of minimum wages, and
• increasing employment opportunities for women.
• Chapter V of the Code talks about the advisory board.

Section 42 of the Code lays down that:
1. The Central Government shall constitute the Central Advisory Board which shall consist of persons to be nominated by the Central Government:

• representing employers;
• representing employees which shall be equal ¡n number of the members specified in clause (a);
• independent persons, not exceeding one-third of the total members of the Board; and
• five representatives of such State Governments as may be nominated by the Central Government.

2. One-third of the members referred to in sub-section (1) shall be women and a member specified ¡n clause (c) of the said sub-section shall be appointed by the Central Government as the Chairperson of the Board.

3. The Central Advisory Board constituted under sub-section (1) shall from time to time advise the Central Government on reference of issues relating to:

• fixation or revision of minimum wages and other connected matters;
• providing increasing employment opportunities for women;
• the extent to which women may be employed in such establishments or employments as the Central Government may, by notification, specify in this behalf;
• and any other matter relating to this Code, and on such advice, the Central Government may issue directions to the State Government as it deems fit in respect of matters relating to issues referred to the Board.

4. Every State Government shall constitute a State Advisory Board for advising the State Government:

• In fixation or revision of minimum wages and other connected matters;
• for the purpose of providing increasing employment opportunities for women;
• with regard to the extent to which women may be employed in such establishments or employments as the State Government may, by notification, specify in this behalf; and
• in any other matter relating to this Code, which the State Government may refer from time to time to the Board.

5. The State Advisory Board may constitute one or more committees or sub-committees to look into issues pertaining to matters specified in clauses (a) to (d) of sub-section (4).

6. The State Advisory Board and each of the committees and sub-committees thereof shall consist of persons: representing employers;
representing employees which shall be equal in number of the members specified in clause (a); and independent persons, not exceeding one-third of the total members of the Board or committee or subcommittee, as the case may be.

7. One-third of the members referred to in sub-section (6) shall be women and one among the members specified in clause of the said sub-section shall be:

• appointed by the State Government as the Chairperson of the Board;
• appointed by the State Advisory Board as the Chairperson of the committee or sub-committee, as the case ay be.

8. In tendering its advice in the matters specified in clause (b) or clause (c) of sub-section (4), the State Advisory Board shall have regard to the number of women employed in the concerned establishment, or employment, the nature of work, hours of work, suitability of women for employment, as the case may be, the need for providing increasing employment opportunities for women, including part-time employment, and such other relevant factors as the Board may think it.

9. The State Government may, after considering the advice tendered to it by the State Advisory Board and after inviting and considering the representations from establishment or employees or any other person which that Government thinks it. issue such direction as may be deemed necessary.

1o. The Central Advisory Board referred to in sub-section (1) and the State Advisory Board referred to in sub-section (4) shall respectively regulate their own procedure including that of the committees and subcommittees constituted by the State Advisory Board, in such manner as may be prescribed.

11. The terms of office of the Central Advisory Board referred to in subsection (1) and the State Advisory Board referred to in subsection (4) including that of the committees and sub-committees constituted by the State Advisory Board, shall be such as may be prescribed.

Chapter VI of the Code discusses about the payment of dues, claims and audits. Section 43 of the Code talks about:
Every employer shall pay all amounts required to be paid under this Code to every employee employed by him:
Provided that where such employer fails to make such payment in accordance with this Code, then, the company or firm or association or any other person who is the proprietor of the establishment, in which the employee is employed, shall be responsible for such payment.

Explanation: For the purposes of this section the expression “firm” shall have the same meaning as assigned to it in the Indian Partnership Act, 1932.

Question 5.
Do employers have a responsibility for payment of various dues under the Code?
Answer:
Section 44 lays down provisions relating to payment of various undisbursed dues in case of death of employee.
1. Subject to the other provisions of this Code, all amounts payable to an employee under this Code shall, if such amounts could not or cannot be paid on account of his death before payment or on account of his whereabouts not being known:

• be paid to the person nominated by him in this behalf in accordance with the rules made under this Code; or
• where no such nomination has been made or where for any reasons such amounts cannot be paid to the person so nominated, be deposited with the such authority, as may be prescribed, who shall deal with the amounts so deposited in the manner as may be prescribed.

2. Where in accordance with the provisions of sub-section (1), all amounts payable to an employee under this Code:

• are paid by the employer to the person nominated by the employee; or
• are deposited by the employer with the authority referred to in clause
• of sub-section (1), then, the employer shall be discharged of his liability to pay those amounts.

Question 6.
Does the Code provide for appointment of Inspector-cum-Facilitators and what are their powers?
Answer:
Section 51 specifically talks about the appointment of Inspector-cum Facilitators and their powers. It lays down that:
1. The appropriate Government may, by notification, appoint Inspector-cum-Facilitators for the purposes of this Code who shall exercise the powers conferred on them under sub-section (4) throughout the State or such geographical limits assigned in relation to one or more establishments situated in such State or geographical limits or in one or more establishments, irrespective of geographical limits, assigned to him by the appropriate Government, as the case may be.

2. The appropriate Government may, by notification, lay down an inspection scheme which may also provide for generation of a web-based inspection and calling of information relating to the inspection under this Code electronically.

3. Without prejudice to the provisions of sub-section (2), the appropriate Government may, by notification, confer such jurisdiction of randomised selection of inspection for the purposes of this Code to the Inspectorcum-Facilitator as may be specified in such notification.

4. Every Inspector-cum-Facilitator appointed under sub-section (1) shall be deemed to be public servant within the meaning of section 21 of the Indian Penal Code.

5. The Inspector-cum-Facilitator may:

• advice to employers and workers relating to compliance with the provisions of this Code;
• inspect the establishments as assigned to him by the appropriate Government, subject to the instructions or guidelines issued by the appropriate Government from time to time.

6. Subject to the provisions of sub-section (4), the Inspector-cum-Facilitator may:

• examine any person who is found in any premises of the establishment, whom the Inspector-cum Facilitator has reasonable cause to believe, is a worker of the establishment;
• require any person to give any information, which is in his power to give with respect to the names and addresses of the persons;
• search, seize or take copies of such register, record of wages or notices or portions thereof as the Inspector-cum-Facilitator may consider relevant in respect of an offence under this Code and which the inspector-cum-Facilitator has reason to believe has been committed by the employer;
• bring to the notice of the appropriate Government defects or abuses not covered by any law for the time being in force; and
• exercise such other powers as may be prescribed.

7. Any person required to produce any document or to give any information required by an Inspector-cum Facilitator under sub-section (5) shall be deemed to be legally bound to do so within the meaning of section 175 and section 176 of the Indian Penal Code.

8. The provisions of the Code of Criminal Procedure, 1973 shall, so far as may be, apply to the search or seizure under sub-section (5) as they apply to the search or seizure made under the authority of a warrant issued under section 94 of the said Code.

The present code talks about provisions relating to offences and their corresponding penalties. The Code specifies penalties for offences committed by an employer, such as:

• paying less than the due wages, or
• for contravening any provision of the Code.
• Penalties vary depending on the nature of offence, with the maximum penalty being imprisonment for three months along with a fine of up to one lakh rupees.

Question 7.
What are the powers of officers of appropriate Government to impose penalty in certain cases under the Code?
Answer:
Section 53 talks about the power of officers of appropriate Government to impose penalty in certain cases. It lays down that:
1. Notwithstanding anything contained ¡n section 52, for the purpose of imposing penalty under clauses (a) and (c) of sub-section (1) and sub-section (2) of section 54 and sub-section (7) of section 56, the appropriate Government may appoint any officer not below the rank of Under Secretary to the Government of India or an officer of equivalent rank in the State Government, as the case may be, for holding enquiry in such manner, as may be prescribed by the Central Government.

2. While holding the enquiry, the officer referred to in sub-section (1) shall have the power to summon and enforce attendance of any person acquainted with the facts and circumstances of the case to give evidence or to produce any document, which in the opinion of such officer, may be useful for or relevant to the subject matter of the enquiry and if, on such enquiry, he is satisfied that the person has committed any offence under the provisions referred to in sub-section (1), he may impose such penalty as he thinks fit in accordance with such provisions.

This Chapter Includes

Payment of wages	Deductions
Floor wage	Determination of bonus
Fixing the minimum wage	Gender discrimination
Overtime	Advisory boards
Payment of wages	Penalties for offences.

The Code on Wages, 2019 CMA Inter Law, and Ethics Notes

The new definition of wage under the Code specifically excludes

• any bonus payable under any law for the time being in force;
• the value of any house accommodation, or of the supply of light, water, medical attendance or other amenity;
• contribution paid by the employer to any pension or provident fund, and the interest which may have accrued thereon;
• any conveyance allowance or the value of any travelling concession;
• any sum paid to the employed person to defray special expenses entailed on him by the nature of his employment;
• house rent allowance
• remuneration payable under any award or settlement between the parties or order of a court or Tribunal; (h) any overtime allowance;
• any commission payable to the employee;
• any gratuity payable on the termination of employment;
• any retrenchment compensation or other retirement benefit payable to the employee or any ex gratia payment made to himThn the termination of employment.

The social purpose of the Code that it seeks to achieve is to avoid all kinds of gender-based discrimination. Section 3 of the Code states that
1. There shall be no discrimination in an establishment or any unit thereof among employees on the grounds of gender in matters relating to wages by the same employer, in respect of the same work or work of a similar nature done by any employee.

2. No employer shall –

• for the purposes of complying with the provisions of sub-section (1), reduce the rate of wages of any employee; and
• make any discrimination on the grounds of sex while recruiting any employee for the same work or work of similar nature and in the conditions of employment, except where the employment of women in such work is prohibited or restricted by or under any law for the time being in force.

Mode of payment of wages:

• Section 15- All wages shall be paid in current coin or currency notes or by cheque or by crediting the wages in the bank account of the employee or by the electronic mode:
• Provided that the appropriate Government may, by notification, specify the industrial or other establishment, the employer of which shall pay to every person employed in such industrial or other establishment, the wages only by cheque or by crediting the wages in his bank account.

Fixation of wage period:
Section 16- The employer shall fx the wage period for employees either as daily or weekly or fortnightly or monthly subject to the condition that no wage period in respect of any employee shall be more than a month: Provided that different wage periods may be fixed for different establishments.

Section 40 of the Code lays down that:
1. If in any accounting year an establishment in public sector sells any goods produced or manufactured by it or renders any services, in corn petition with an establishment in private sector, and the income from such sale or services or both, is not less than twenty per cent. of the gross income of the establishment in public seçtor for that year, then, the provisions of this Chapter shall apply in relation to such establishment in public sector as they apply in relation to a like establishment in private sector.

2. Save as otherwise provided in subsection (1), nothing in this Chapter shall apply to the employees employed by any establishment in public sector.

Section 46 lays down provisions relating to reference of disputes under this Code. It lays down that notwithstanding anything contained in this Code, where any dispute arises between an employer and his employees with respect to:

• fixation of bonus or eligibility for payment of bonus under the provisions of this Code; or
• the application of this Code, in respect of bonus, to an establishment in public sector, then, such dispute shall be deemed to be an industrial dispute within the meaning of the Industrial Disputes Act, 1947.

Section 52 talks about cognizance of offences. The provisions lays down that
1. No court shall take cognizance of any offence punishable under this Coder save on a complaint made by or under the authority of the appropriate Government or an officer authorised in this behalf, or by an employee or a registered Trade Union registered under the Trade Unions Act, 1926 or an Inspector-cum- Facilitator.

2. Notwithstanding anything contained in the Code of Criminal Procedure, 1973, no court inferior to that of a Metropolitan Magistrate or Judicial Magistrate of the first class shall try the offences under this Code.