Analysing the new labour codes
Labour Codes with the objectives of promoting labour welfare by way of “universalisation of wages and social security, ensuring safe and healthy workplace, formalisation of employment, higher female labour force participation, skill development of workers, portability of benefits for migrant workers” and other means. While not yet notified, the Labour Codes replace over 30 central legislations to simplify and modernise labour laws in India, with an emphasis on ease of doing business. I have briefly summarised the Codes below:
Code on Wages, 2019 (Wages Code)
The Wages Code replaces four legislations including the Payment of Wages Act, Payment of Bonus Act, Equal Remuneration Act and Minimum Wages Act.
The Wages Code seeks to bring uniformity across all the previous laws, however, many substantive aspects of the law are very similar to the extant laws. Key changes include a uniform definition of «wages”, “employees” have been defined to include managerial/supervisory employees and there is now an obligation on an employer for timely payment of wages, etc.to to all “employees”.
Employers will now need to ensure that the CTC breakup of allowances should not exceed 50% of wages – any excess of this percentage is now included as part of the wages, with a corollary impact on computation of payouts linked to “wages”, such as retrenchment, gratuity, etc. Payment for overtime is introduced, which cannot be less than twice the normal wages.
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