Cabinet clears Wage Code Bill, 5 points which will explain its meaning

Exact one month after the government approved recommendations of 7th Pay Commission, Union Cabinet on Wednesday cleared Wage Code Bill and will now be tabled in ongoing Monsoon Session of Parliament. 

“Cabinet approved the wage code bill today to give the labour reform process further momentum,” said H. Samaraia, additional secretary in the labour and employment ministry.

The Wage Code Bill will impact nearly four crore employees in the country. 

Bandaru Dattatreya, the Minister of State (IC) for Labour & Employment, in a written reply to a question in Rajya Sabha said that the Second National Commission on Labour has recommended that the existing Labour Laws should be broadly grouped into four or five Labour Codes on functional basis. Accordingly, the Ministry has taken steps for drafting four Labour Codes on Wages; Industrial Relations; Social Security & Welfare; and Safety and Working Conditions respectively, by simplifying, amalgamating and rationalizing the relevant provisions of the existing Central Labour Laws.

What is Universal Wage Code Bill?

Labour Code on Wages Bill, 2015, states, "A BILL to consolidate and amend the law relating to wages and bonus and the matters connected there with or incidental thereto."

1. Legally, the Wage Code Bill seeks to empower the Centre to set a minimum wage across all sectors in the country and states will have to maintain that. However, states will be able to provide for higher minimum wage in their jurisdiction than fixed by the Centre.

2. If the proposed bill is passed it will subsume the current laws: Minimum Wages Act of 1948, the Payment of Wages Act of 1936, the Payment of Bonus Act of 1965 and the Equal Remuneration Act of 1976. 

3. Once the bill is passed, according to its features, minimum wage or remuneration will be provided irrespective of his/her employment status. Which means, the all the workers across all industries, will get a minimum wage even if that person is working or not. 

4. The minimum income guarantee also applies for those workers, who are earning more than Rs 18,000. 

5. 44 different labour laws will be condensed into 4 sections, which are: wages, industrial relations, social security and safety, health and working conditions.

According to a Financial Express report, the passage of the bill could bring bad news. The report mentioned that about 78% of Indian companies are smaller in size with less than 50 employees. 

Which means, these smaller companies may not be able to comply with the minimum wage rules particularly those firms which are based in economically backward regions. Also, considering the major announcements by the government like demonetisation, Goods and Service Tax migration, slowdown in economy has already shook the working of these small companies. 

Hence, passage of bill will again bring financial disruptions to them.