The Code on Wages, 2019 received the assent of the President of India on the 8th of August, 2019 and came into force on the 18th of December, 2020. The Code focuses on consolidating and simplifying the existing four Labour legislation i.e.

  1. The Payment of Wages Act, 1936
  2. The Minimum Wages Act, 1948
  3. The Payment of Bonus Act, 1965
  4. The Equal Remuneration Act, 1976

The Code aims at bringing uniformity in the definitions of various terms in order to nullify the ambiguity created due to different definitions assigned to the same term in different labour legislation, further it also focuses on reducing the burden of maintaining different registers under different Acts. For an instance, earlier the term Wages was assigned different definitions under different legislations, but now such confusion has been abrogated and the term Wages shall have a uniform definition, which is defined under Section 2(y) of Code on Wages, 2019.

The new code is consolidated labour welfare legislation which aims to regulate the matters with respect to the wages, remuneration paid to the workmen in the scope of their employment. Prior to this Code, the legislation that guarantees the payment of minimum wages to the workmen was the Minimum Wages Act, 1948. The object of the Code on Wages, 2019 is depicted as under:

“The amalgamation of the said laws will facilitate the implementation and also remove the multiplicity of definitions and authorities without compromising on the basic concepts of welfare and benefits to workers. The proposed legislation would bring the use of technology in its enforcement. All these measures would bring transparency and accountability which would lead to more effective enforcement. Widening the scope of minimum wages to all workers would be a big step for equity. The facilitation for ease of compliance of labour laws will promote in setting up of more enterprises thus catalysing the creation of employment opportunities”

Section 69 of the Code tends to repeal and further aims at saving anything done or the actions taken under the aforementioned legislation. It also incorporates the principle that the Minimum Wage is not a mere sustenance wage which only ensures the physical existence of the workmen; rather it should be such that to ensure preservance of the efficiency of the worker by providing some security to his families such as measures of education, medical requirements and other amenities ensuring overall development of his family.

Constitutional Mandate of the Act:

The Code on Wages, 2019 is a labour welfare legislation that tends to deal with the matters of the wages of the workmen. The code adheres to the Directive Principles of State Policy as contained in Article 43 of the Constitution of India; it is beyond doubt that the securing of living wages to labourers ensures not only bare physical subsistence but also maintenance of health and decency which is conducive to the general interest of the public. The Code also falls in line with Article 39(d) of the Constitution of India, which ensures that there should be equal pay for equal work for both men and women as Section 3 of the Code casts prohibition of discrimination on the ground of gender.

It has been held by the Apex Court that minimum wages are not contractual but statutory. If there is any failure to fix or revise or in the payment then it is not only a statutory violation but is a breach of a fundamental right in Article 23 of the Constitution of India. If a workman is paid less than the minimum wages, it can be legitimately presumed that he is acting under the force of some compulsion as he has no choice.

Central Government and State Government:

The minimum wages to the labourers is the subject matter contained in the Concurrent List of the Seventh Schedule of the Constitution of India. According to Article 246 of the Constitution of India, both the Central as well as State Government has the power to legislate with regard to the welfare and benefit of the labour.

Section 67of the Code on Wages, 2019 canvass about the powers of the appropriate government to make rules prescribing the manner, for the calculation of the wages of the workmen, the arduousness of the work to be taken into account while fixing the minimum rates of wages, the longevity of the wage period, etc.

What are the welfare provisions of the Code?

Section 5 of the Code provides a statutory guarantee to the workmen qua the minimum rates of wages. It casts an obligation upon the employer to make payment of wages not less than the minimum rates of wages as prescribed by the appropriate government.

Section 9 of the Code impose an obligation on the Central Government to fix the floor wages while taking into account the minimum standard of living of a worker as may be prescribed. It also states that the appropriate government shall fix the minimum rates of wages payable to the workmen which shall not be less than the floor wage fixed by the central government.

Section 6 of the Code provides for fixing of minimum wage in either way at:

  1. a) Time rate.
  2. b) Piece rate.
  3. c) Guaranteed time rate.

Further, the Section also provides that such minimum wage may be fixed by an hour, day and month.

It states that the appropriate government while fixing the minimum rates of wages shall take into consideration skills of the workers required under the category of employment i.e. unskilled, semi-skilled, highly skilled or geographical area or both. It also tends to take into account the arduousness of work like temperature or humidity which is normally difficult to bear.

What is the procedure for fixing Minimum Wages?

Section 8provides the procedure to be adopted by the appropriate government in the task of fixing or revising the minimum rates of wages under this Code. The appropriate government can appoint a number of committees and sub-committees seeking advice for such fixing or revision of the minimum rates of wages. Every Committee constituted by the appropriate government shall consist of persons representing employers, employees and independent persons. Further, the appropriate government is obligated to notify its proposal in the official gazette for providing information to the affected parties, as well as for receiving their objections, if any, within a period of not less than 02 months from the date of such notification; and after considering the advice of the committees constituted by it for the said purpose and all the objections received from the affected parties; the appropriate government shall fix or revise the minimum rate of wages by notification in the official gazette. It also states that the appropriate government shall fix or revise the minimum rates of wages after an interval of 05 years.

What is the mode of payment under the Code?

Section 15 prescribes the mode of payment of minimum wages. It states that the minimum wages payable under this shall be paid in current currency or by Cheque or by crediting the wages directly into the bank account of an employee. It further provides that the appropriate government may specify the industry or the establishment wherein the employers are required to be pay wages to their employees only by way of cheque or by crediting the wage amount into their bank account.

What is the outcome of breaching any of the provisions of the Code?

In the event of a breach of any provision of the Code, and if the workmen have a claim arising out of payment of less than the minimum rates of wages, or with respect to wages for the days of rest or from the wages for the overtime the appropriate government may appoint the authority to hear and decide the matter and such authority shall have all the powers of a Civil Court. Further Section 54 of the code provides the penalties and the punishments to be borne by an employer if he acts in contravention to the provisions of this Code.

Latest Development:

In the recent development, the Punjab Government has approved for the enhancement in the minimum rates of wages vide its notification dated 30.11.2021 through the Office of Labour Commissioner, Punjab. According to this, an enhancement in the minimum wages rate has been made to Rs. 415.89/-with retrospective effect. The revision in the minimum rates of wages was due from the 1st of March, 2020. The Punjab Government earlier revised the minimum wages vide its notification dated 01.05.2020, but later withdrew vide its notification dated 09.05.2020, citing the adverse economic situation due to the Pandemic of Covid-19.

It would not be inappropriate to suggest that this notification would have severe adversarial effects on the commerce and trade in the State of Punjab as already the MSME sector in Punjab is working under strained circumstances owing to various government schemes and especially taking into account the effects of the Pandemic Covid-19. The notification would be taking effect retrospectively while imposing a huge economic burden on the employers who are already working below their capacities. Although this notification could have progressive effects viewing the eve of election campaigns, surely proves to be detrimental to the trade and commerce of the state.


The Code on Wages, 2019 has been brought with the aim of improvement in the implementation of the labour welfare legislation and for ensuring the ease of doing business. However, these legislations in India require the active support of the Government, employers, workers, trade unions, and labour associations. It would also require sincerity on part of the Government and various labour departments in each state to determine the minimum wage rate on the basis of ethical and humanitarian concerns in order to ensure basic subsistence to workers in an unorganized sector.

Nitin Gupta

Associate, Aggarwals & Associates, S.A.S. Nagar, Mohali

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