Ministry of Labour and Employment issues the Code on Wages Bill, 2017

With a view to facilitate compliance with labour laws without compromising on the basic concepts of welfare and benefits to workers, the Ministry of Labour and Employment has issued the Code on Wages Bill, 2017 (“Bill”). It was introduced in the Lok Sabha on 10.08.2017.


The Second National Commission on Labour, which submitted its report in June, 2002 had recommended that the existing set of labour laws should be broadly amalgamated into the following groups, namely:

(a) industrial relations;

(b) wages;

(c) social security;

(d) safety; and

(e) welfare and working conditions.

The Bill was drafted in pursuance of the recommendations of the said Commission and the deliberations made in the tripartite meeting comprising of the GovernmentEmployers’ and Industry Representatives. The Bill intends to amalgamate, simplify and rationalise the relevant provisions of the following four central labour enactments relating to wages, namely: 

(a) Payment of Wages Act, 1936;

(b) Minimum Wages Act, 1948;

(c) Payment of Bonus Act, 1965; and

(d) Equal Remuneration Act, 1976.

Key highlights of the Code on Wages Bill, 2017:

  1. The Bill provides for all essential elements relating to payment of wages, equal remuneration and bonus.
  1. The provisions of the Bill will be applicable to all types of employments in organised as well as un-organised sectors.
  1. The power to fix minimum wages will continue to be vested in the Central Government and State Governments in their respective spheres.
  1. The provisions relating to timely payment of wages and authorised deductions from wages, which are presently applicable only in respect of employees drawing wages upto Rs. 18,000 (Rupees Eighteen Thousand) per month, shall be made applicable to all employees irrespective of wage ceiling.
  1. The Bill provides that the wages to employees may also be paid by cheque or through digital or electronic mode or by crediting it in the bank account of the employee. However, the appropriate Government has been empowered to specify the industrial or other establishments, where the wages have to be paid only by cheque or through digital or electronic mode or by crediting the wages in the bank account of the employee.
  1. The Bill also provides for fixation of national minimum wage by the Central Government for different geographical areas so as to ensure that no State Government fixes the minimum wage below the national minimum wage, notified for that area by the Central Government.
  1. In order to remove the arbitrariness and malpractices in inspection, the Bill seeks to empower the Appropriate Government to appoint Facilitators in the place of Inspectors, who will supply information and advice the employers and workers about the most effective means of complying with the provisions of the proposed legislation. It has also been provided that the inspections shall be carried out through a transparent/ web based inspection scheme.
  1. The Bill seeks to empower the appropriate Government to determine the ceiling of wage limit for the purpose of eligibility of bonus and calculation of bonus.
  1. It also provides that where a claim has been filed for non-payment of remuneration or bonus or less payment of wages or bonus or on account of making deduction not authorised by the proposed legislation, the burden shall lie on the employer to prove that the said dues have been paid to the employee.
  1. The Bill provides for graded penalty for contraventions of the provisions of the Bill.
  1. The Bill also proposes to enhance the period of limitation for filing of claims by a worker to 3 years as against the existing time period which varies from 6 months to 2 years, to provide a worker more time to settle claims.

Source: Ministry of Labour and Employment

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