New Labour Code on Wages aims to safeguard workers, boost growth and jobs

New Delhi, Nov 23 (IANS/WISHAVWARTA) The new Code on Wages that has now come into effect, promotes fairness, equity, and inclusivity in India’s labour market. By ensuring uniform wage standards and social security, it safeguards both workers’ rights and employers’ interests. Overall, it strengthens economic justice, encourages formalisation, and enhances the dignity of labour, according to an official statement issued on Sunday.

Section 5 of the Code on Wages, 2019 establishes a statutory right to minimum wages for all employees, extending its coverage to every sector, both organised and unorganised. Earlier, the minimum wages applied only to scheduled employment, covering roughly 30 per cent of the workforce.

The Code ensures minimum pay for every employee, irrespective of industry, category, or nature of employment. It provides a uniform legal safeguard nationwide, reducing wage disparity and benefits vulnerable groups like casual employee, daily wagers, and migrant labourers, the statement explained.

It standardises definitions of key terms and streamlines procedures, reducing ambiguity and ensuring faster, time bound justice for employers. The bigger aim of the labour reforms is to drive economic growth through generation of decent employment opportunities for all, the statement explains.

The second National Commission on Labour had recommended that the existing Labour Laws should be broadly grouped into four or five Labour Codes on a functional basis. Consequently, the Code on Wages, 2019 is one of the four codes of the labour laws that has been enacted.

The Code safeguards employee interests through fair wages, social security, and protection against exploitation, ensuring dignity and stability at work. It supports women workers through equal pay and representation, fostering inclusive participation. By ensuring fair wages and social security for all workers, it drives productivity and labour welfare.

The Labour Reforms simplify the registration and licensing framework by introducing the concept of a Single Registration, Single License, and Single Return, thereby reducing the overall compliance burden to improve employment.

The Code on Wages, 2019 has reduced the number of rules from 163 to 58, number of forms from 20 to 6 and number of registers from 24 to 2.

The provision reduces regional wage disparities, provides social justice, prevents wage undercutting by states, and promotes equity across the country.

Section 9 read with Rule 11 of the Code introduces floor wages as a statutory provision. The baseline wages will be fixed by the Central government on the basis of minimum living standards of an employee including food, clothing etc. It will be revised at regular intervals. State governments must ensure their minimum wages are not lower than this floor level.

The code will reduce migration of labour from one state to another due to reduced wage differentials and prevents wage undercutting by states, and promotes equity and growth across the country.

Minimum wage rates for timework, piece work for different wage period i.e. by hours, day or by month to be fixed by the appropriate government. It will be based on the skill of employees, and geographical area and arduousness of work. The government shall revise the minimum rate of wages ordinarily at an interval not exceeding five years.

The code also imposes limits on working hours to safeguard employee health, prevent over-exploitation, promote work-life balance and improve productivity.

The provisions relating to timely payment of wages and un-authorised deductions from wages, which were earlier applicable only in respect of employees drawing wages up to Rs 24,000 per month, are now applicable to all employees irrespective of the wage ceiling. The provision ensures fairness in wages as every employer, regardless of salary and designation, is covered equally under the law.

Besides, the wage code stipulates that employers shall provide wage slips, electronically or in physical form, on or before wage payment, ensuring transparency and reducing disputes. This protection extends to employees in both organised and unorganised sectors including daily wagers and contracts employees.

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