Sunday, May 31, 2020


A note on 


The Code on Wages Bill 2017 has been introduced in Lok Sabha during last days of the Monsoon Session. This Bill seeks to combine four wage related legislations viz., Minimum Wages Act, Payment of Wages Act, Payment of Bonus Act and Equal Remuneration Act into one code. But the current Bill is just not an exercise of simple merger of the four abovementioned laws. This Bill, while combining the above four laws, has, in a most unscrupulous manner sought to dilute whatever pro-labour components were there in those four laws. In particular the Bill seeks to dilute the enforcement mechanism in order to empower the employers to evade the obligations under this wage-related Bill. 

The proposed legislation has 9 chapters with Chapter II, III & IV dealing with the main provisions of the four above-referred existing Acts. In other chapters some common features of the existing Acts have been incorporated. Everywhere there is an attempt to satisfy the employers. Had there been a pro-labour intention, there should have been some improvement in favour of the workers. Detailed analysis of the proposed Bill does not exhibit any such intention. Rather in many places anti-labour stand of the government has been exposed. It is aimed at converting the law virtually into a toothless piece of legislation making enforcement and implementation a casualty. 

Section 2 of the Bill deals with definitions and there are definitions of ‘workers’ as well as ‘employees’ both almost being the same with the exception that supervisory, managerial, administrative personnel are treated as ‘employee’ only while the skilled, semi-skilled or unskilled, manual, operational, technical or clerical personnel are treated as ‘worker’ as well as ‘employee’. The hidden motive behind this is to open avenue for the employers to misinterpret and also to discriminate between the workers and employees. Moreover, in the interests of fairness and propriety, the consensus recommendation of the 45th Indian Labour Conference (17-18 May 2013) for assigning workers status to all Scheme workers (Anganwadi, Mid-day-meal, ASHA, NCLP staff etc) entitling them for statutory minimum wage and social security benefits which was again consensually reiterated by 46th Indian Labour Conference (2015) should have been incorporated in the Bill as a concrete provision. But that has not been done; this is nothing but a betrayal by the government. 

While reformulating the wage related Bill in the form of present Code on Wages Bill, 2017, the Labour Ministry talks loudly in the media about the intention of the government to improve the Minimum Wage level by making provision for ‘National Minimum Wage’ below which no state government can decide the minimum wage. But, in reality, the Bill does not provide for a uniform national minimum wage for the entire country. Section 9(1) of the Bill clearly stipulates that ‘different national minimum wage may be fixed for different states or different geographical areas’. Hence such ‘National Minimum Wage’ as stipulated in the Bill ceases to be a ‘National Minimum’ but is made a ‘state level minimum wage’, making the whole concept of ‘National Minimum Wage’ a deceptive ploy to mislead the people. Even if the difference in price level in different states/geographical areas is taken into account, it can well be reflected in the rates of variable dearness allowances, as it exists now. There is no justification of making ‘national minimum’ of the basic minimum wage different for different states. Hence the provision of ‘national minimum wage’ being projected by the government as an improvement in the present Bill is rendered meaningless for the workers by the provision of the Bill itself. 

Secondly, in the matter of fixation of minimum wage, the government completely ignored the consensus recommendation of the 44th Indian Labour Conference (14-15 February 2012) about the formula for fixation of minimum wage as per consensus formulation of 15th Indian Labour Conference along with Supreme Court judgment in Raptakos and Brett case. The same consensus recommendation was again reiterated consensually by the 46th Indian Labour Conference (2015) inaugurated by Prime Minister Shri Narendra Modi. In the interests of fairness and propriety, that consensus formulation, to which the central government was also a party along with the state governments and employers’ organisations should have been incorporated in the Bill as it is. But that has not been done. The formulation of minimum wage has been kept under the sole discretion of the government. Although the provision of Advisory Board is there both at state and central level, the Bill does not make even the recommendation of the Advisory Board mandatory for the state and central governments while deciding minimum wage. 

The definition of ‘employer’ [Sec 2(k)] has also been so formulated that it makes difficult to identify the ‘Principal Employer. As per the earlier provision in Sec 2(e) of the Minimum Wages Act 1948 ‘Employer means any person who employs, whether directly or through another person, or whether on behalf of himself or any other person, one or more employees …..’ This has now been changed to ‘Employer’ means a person who employs one or more employees in his establishment …….’ in the new Bill. This changed provision totally ignores the reality of contract-working in any establishment, which has today become the general phenomenon everywhere. Through this it seeks to relieve or bail-out the principal employer of the establishment from its responsibility and obligation on contract workers. 

At the same time, definition of ‘Contractor’ as prevalent in the Contract Labour (Regulation & Abolition) Act 1970 has been inserted in such manner in Sec 2(f) of the Bill as to suit the employers’ interests in respect of outsourcing requirement and legalise and legitimise employment of contract workers in perennial jobs. There may be some other hidden agenda behind this. 

Definition of ‘wages’ [Sec 2(x)] is quite confusing. It is lengthy enough consisting of some 61 lines. It is difficult to determine what wage is as per the definition. Somewhere it has been told that wage includes overtime wage, house rent allowance etc, But for bonus calculation it is not so. 

The concept of schedule employment, schedule of industries/establishments has been done away with in the proposed bill. In the Minimum Wages Act 1948, definition/mention of schedule employment was there in sections 2(g), 2(i), 3(1A), 3(2A), 3(3)(a)(i) & (ii), 4, 5, 12, 13, 18(2) and 27. The definition of ‘Schedule employment’ having been omitted from the Definition chapter of the proposed Bill, its mention has also been removed from the definition of ‘Worker’ [Sec 2 (y) & ‘Employee’ (Sec 2 (j)]. There is no mention of ‘Schedule employment’ in Chapter II Sec 5, 6, 7, 8 of the proposed Bill which are virtually reproduction of the existing Sections 12, 3, 4 & 15 of the Minimum Wages Act 1948 except the sections pertaining to schedule employment. Further in the new Bill, there is no existence of the Part I and Part II of the Schedule dealing with the trades / employment as is available in the existing Minimum Wages Act 1948 (the Schedule Part I & Part II mentioned at the end of the Act as per Sections 2(g) and 27). Does it mean that the minimum wages, to be decided by either state or central government, will be the same for all industries? There is no answer. Rather this is a ploy to empower employers to suppress the wages in the establishments/industries in the erstwhile schedules where wage level was higher than the others. All for ensuring ‘ease of doing business’ in an unscrupulous manner. 

In Sec 18 dealing with deductions which may be made from wages, there is a mention that deduction of income-tax or ‘any other tax’ levied by the central or the state government can be made. Mention of ‘any other tax’ is a new one and it can be apprehended that such attack i.e. imposition of some other taxes on the workers is forthcoming. Provision of salary deduction for payments to co-operative societies approved by the state government or of premium of any insurance as authorised by the employee as provided in Sec 7 (2) (j) & (k) of the Payment of Wages Act, 1936 has been done away with. 

Recovery of losses sustained by employer from the wages was so far restricted to railways only which have now been generalised. While in the Payment of Wages Act, 1936, provision for recovery of losses sustained by a railway administration on account of acceptance of the employed person of counterfeit or base coins or mutilated or forged currency notes [Sec 7(4)(m)] or losses sustained on account of the failure of the employed person to invoice, to bill , to collect [Sec 7(4)(n)] or to account for the appropriate charges or the losses on account of any rebates or refunds incorrectly granted by the employed person [Sec 7(4)(o)] were there, the same has now been generalised by replacing the word, ‘a railway administration’ by ‘an employer’ in Section 18(l), (m) & (n) respectively of the proposed Bill, thereby authorising all classes of employers to effect such deductions from the salary of an employee/worker. The tyranny of the employer’s class is well known and this is yet an attempt to further empower the already powerful employers to do anything they like to suppress and harass the workers. 

The draconian provision for deducting eight days wages for one-day strike has been retained in the proposed bill [Sec 20(2)], if the strike is declared illegal by the government. And, no strike can ever be legal, if the proposals made in the Labour Code on Industrial Relations are enacted. 

The Equal Remuneration Act has been totally diluted by restricting it to gender discrimination only in respect of payment of wages, doing away with other types of discrimination related to recruitment, conditions of service such as promotion, vocational training, transfer etc. While there was legal binding on the duty of the employer to stop gender discrimination on the question of recruitment, promotions, training or transfer vide Sec 5 of the existing Equal Remuneration Act, 1976. Providing increasing employment opportunity for women has however been made a point for consideration of the Central Advisory Board [Sec 42(3)(b) & (c)] and State Advisory Board [Sec 42(4)(b) & (c)], but purposefully restricting their powers only to advise the central and state governments only. 

Having ratified ILO convention no 111 it is obligatory for the government of India to end discrimination in respect of wages and conditions of service between different sets of workers doing same or equal value of work. In the face of massive contractorisation at the workplaces, this issue is most crucial for the hundreds of lakhs of contract workers across the country. The wage code bill should have made provisions for ending such discrimination. Instead, the government is going ahead just in the opposite direction to legalise contract work in perennial jobs on the one hand and bailing out Principal Employers of their obligations on contract workers on the other, making enabling provisions for the both in the present Code on Wages Bill through section 2(k) and 2(f), as mentioned above. Amendments to Contract Labour (R&A) Act in the same lines as has been done by Rajasthan and other state governments has already been legalised denying the coverage of almost all labour laws to all contract workers in the private sector and large sections in PSUs. The employees in more than 80% of factory establishments and more than 90% workforce in the services sector will be totally under the tyranny of the employers’ class. 

The right of the workers or their unions to question the accuracy of the balance sheet of the company or demand clarifications, to ascertain ‘allocable surplus’ while bargaining for bonus above the minimum level, which is available in the present Bonus Act is totally done away with in the proposed labour code on wages as per section 31(2) wherein it has been stated that ‘Audited accounts of companies shall not normally be questioned’. It also empowers the employers not to enclose any information contained in the balance sheet, if they so want. This is nothing but abrogation of workers’ right to collective bargaining in respect of bonus by the government. 

Section 46 of the Bill specifies that fixation of bonus or eligibility for payment of bonus or application of the Code in respect of bonus to an establishment in public sector shall be deemed to be an industrial dispute within the meaning of I.D. Act, 1947 meaning thereby that disputes regarding payment of wages, minimum wages or say gender discrimination etc. which this code deals with, shall not be termed as industrial dispute. 

The concept of inspection for the purpose of enforcement has been given a go-bye as inspectors will be replaced by facilitators (Chapter VII). The facilitators shall conduct inspection only in accordance with the scheme notified by the appropriate government from time to time in accordance with the web-based inspection schedule generated by such schemes. The experience of the web-portal based inspection scheme launched by the Modi government under its Shrameva Jayate Scheme, providing for inspection of 10% cases based on randomised selection of establishments among those captured/recorded in such web-portal, shows that inspection is limited to a very small section of establishments. The data captured and recorded in such web-portals itself is hardly 30% of the total number of establishments in the central sector. 

Thus the binding character of the provisions of inspection/enforcement mechanism is totally diluted making other provisions of the law practically meaningless to workers. The funniest part of this is, the facilitator who shall be a government appointee and shall be a public servant within the meaning of section 21 of the IPC and is authorised to search or seize documents from the employer as per various provisions of IPC & code of criminal procedure shall not have any power to take action against the defaulting employer. Rather he, like the aggrieved employee or trade union has to file application before the authority for fructifying the claim. Thus realisation of any legitimate claim will not be encumbrance free at all. 

Chapter VIII deals with ‘Offenses and Penalties’. Penalty for offenses by the employer vary from Rupees Ten Thousand to Rupees One lakh only. One can easily imagine how benevolent the government is towards offending employers. 

Section 60 of the Bill seems to be dangerous. It says ‘the provisions of this code shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in the terms of any award, agreement, settlement or contract of service’. Does it mean that bipartite/tripartite negotiations etc will no longer exist or will have binding effect? 

In reality, the Code on Wages Bill, while formally amalgamating the four wages related legislations has diluted the pro-labour components of the existing legislations, just to the advantage of the employers’ class. 

This is a betrayal to the consensus recommendations of the successive Indian Labour Conferences on Minimum Wage formulation and Scheme workers rights and entitlement. 

By thoroughly diluting the enforcement mechanism and in particular extremely restricting the inspection which is the life line of enforcement, the Bill has made other provisions on minimum wages, payment of wage and bonus etc practically meaningless. This Bill will promote more violation of its provisions than implementation. 

The Code on Wages Bill is a documentation of shameless desperate bid by the government to promote ‘ease of doing Business’ in the form of ‘ease of looting and suppressing the workers’ under the deceptive slogan of ‘Shrameva Jayate’. 

This exercise in deception and fraud on workers must be exposed. This Bill must be opposed and confronted through united struggle. 

September 2017


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