• The Union Cabinet approved the new wage code bill which will ensure a minimum wage across all sectors by integrating four labour related laws.
• The proposed legislation is expected to benefit over 4 crore employees across the country.
• The Labour Code on Wages Bill will consolidate the Minimum Wages Act, 1948; the Payment of Wages Act, 1936; the Payment of Bonus Act, 1965; and the Equal Remuneration Act, 1976.

Important highlights:

• The Code will apply to all employees. The central government will make wage-related decisions for employments such as railways, mines, and oil fields, among others. State governments will make decisions for all other employments.
• Wages include salary, allowance, or any other component expressed in monetary terms. This does not include bonus payable to employees or any travelling allowance, among others.
• According to the Code, the central government will fix a floor wage, taking into account living standards of workers.  Further, it may set different floor wages for different geographical areas.  Before fixing the floor wage, the central government may obtain the advice of the Central Advisory Board and may consult with state governments.  
• The minimum wages decided by the central or state governments must be higher than the floor wage. In case the existing minimum wages fixed by the central or state governments are higher than the floor wage, they cannot reduce the minimum wages.
• The Code prohibits employers from paying wages less than the minimum wages.  Minimum wages will be notified by the central or state governments.  This will be based on time, or number of pieces produced.  The minimum wages will be revised and reviewed by the central or state governments at an interval of not more than five years.  While fixing minimum wages, the central or state governments may take into account factors such as: (i) skill of workers, and (ii) difficulty of work.
• The central or state government may fix the number of hours that constitute a normal working day.  In case employees work in excess of a normal working day, they will be entitled to overtime wage, which must be at least twice the normal rate of wages.  
• The Code prohibits gender discrimination in matters related to wages and recruitment of employees for the same work or work of similar nature.  Work of similar nature is defined as work for which the skill, effort, experience, and responsibility required are the same. 
• The central and state governments will constitute advisory boards.  The Central Advisory Board will consist of: (i) employers, (ii) employees (in equal number as employers), (iii) independent persons, and (iv) five representatives of state governments.  State Advisory Boards will consist of employers, employees, and independent persons.  Further, one-third of the total members on both the central and state Boards will be women.  The Boards will advise the respective governments on various issues including: (i) fixation of minimum wages, and (ii) increasing employment opportunities for women.

Analysis:

• The labour laws in India are a complex maze of over 40 central laws and more than 100 state laws.
• Just the concept of ‘wages’ has 11 definitions under the various laws, with each labour legislation requiring maintenance of a separate register and submission of annual returns to the authority designated in the Act and its rules.
• The minimum wage system has also exploded over the past 70 years, with nearly 1,915 minimum wages for various job categories across states. The complexities make complying higher than the cost of violations and keep the ‘inspector raj’ alive.
• This act aimed at reducing the number of laws and introducing uniformity in standards, the Code on Wages now subsumes four central labour laws: The Payment of Wages Act 1936, the Minimum Wages Act 1948, the Payment of Bonus Act 1965 and the Equal Remuneration Act 1976.