The Code on Wages, 2019 is an extremely important upcoming legislation, as it affects all Indian companies regardless of their nature of activity and requires key changes to be brought into the processes to ensure due compliance with this upcoming law. Corrida Legal is equipping companies with processes for ensuring due compliance through audits and implementation and this article provides the precise set of key compliances under the Code on Wages, 2019.
Organisations have already started complying with the provisions of this new law and given that this code provides for graded penalties for different types of contraventions, with the maximum penalty being imprisonment for up to three months along with a fine of up to INR 1 lakh, all Indian companies must ensure adequate compliance.
Key compliances under the Code on Wages, 2019
- Coverage: The Code on Wages, 2019 (“Code”) applies to all employees irrespective of their wage ceiling or type of employment. The wages are to be fixed by the State Government.
- Floor Wage: Floor wage to be fixed by the Central Government for different geographical areas after taking into account minimum standards of living;
- Nomination process: The process for payment of various dues in case of an employee’s death. This absolves the employer of liability post-payment;
- Register: Employers are required to maintain a register containing the details of persons employed, muster roll, and wages in the manner to be prescribed;
- Notice requirement: Employer to display a notice at a prominent place containing the abstract of the Code, category-wise wage rates of employees, wage period, day or date and time of payment of wages, and the name and address of the Inspector-cum Facilitator having jurisdiction. A notice specifying acts and omissions, which entail a fine, to be exhibited in such manner as may be prescribed, on the official premises;
- Wage slip format: The format of wage slips to be prescribed by the appropriate government;
- Bonus disqualification: Bonus disqualification to include a conviction for sexual harassment as a ground;
- Written authorization for cheque/ wire transfers: No written authorization is now required for salary payments via cheques or wire transfers;
- Deductions: The Code prescribes the purposes for which the deductions may be made from the wages of an employee;
- Payments by of succeeding month: Compulsory payment by the 7th day of the succeeding month, irrespective of the number of employees;
- Payment of wages to leaving employees: Wages must be paid within two working days of the employee’s dismissal or resignation;
- Overtime: The government to fix the number of hours that constitute a normal working day. The employees who work more than a normal working day will be entitled to overtime wages, which must be at least twice the normal rate of wages;
- No prosecution on initial non-compliance: No prosecution if the employer complies with Inspector-cum-Facilitator’s instructions;
- Graded Penalty: The Code provides for graded penalties for different types of contraventions with the maximum penalty being imprisonment of up to three months along with a fine of up to INR 1 lakh; and
- Prohibition against gender discrimination: The Code prohibits gender-based discrimination in wages, recruitment, and conditions of employment.
About Us:
Corrida Legal is a boutique corporate & employment law firm serving as a strategic partner to businesses by helping them navigate transactions, fundraising-investor readiness, operational contracts, workforce management, data privacy, and disputes. The firm provides specialized and end-to-end corporate & employment law solutions, thereby eliminating the need for multiple law firm engagements. We are actively working on transactional drafting & advisory, operational & employment-related contracts, POSH, HR & data privacy-related compliances and audits, India-entry strategy & incorporation, statutory and labour law-related licenses, and registrations, and we defend our clients before all Indian courts to ensure seamless operations.
We keep our client’s future-ready by ensuring compliance with the upcoming Indian Labour codes on Wages, Industrial Relations, Social Security, Occupational Safety, Health, and Working Conditions – and the Digital Personal Data Protection Act, 2023. With offices across India including Gurgaon, Mumbai, and Delhi coupled with global partnerships with international law firms in Dubai, Singapore, the United Kingdom, and the USA, we are the preferred law firm for India entry and international business setups. Reach out to us on LinkedIn or contact us at contact@corridalegal.com/+91-8826680614 in case you require any legal assistance. Visit our publications page for detailed articles on contemporary legal issues and updates.