Chapter II · Code on Wages
This chapter bars any employer from paying any employee less than the minimum rate of wages notified by the government. It sets out how those rates are fixed and revised, the Central floor wage that no rate can go below, and how pay works for short days, mixed work, piece work, weekly rest and overtime.
Key points
At a glance
In plain words
No employer may pay any employee less than the minimum rate of wages notified by the appropriate Government.
No employer shall pay to any employee wages less than the minimum rate of wages notified by the appropriate Government.
In plain words
The government fixes minimum rates for time work or piece work, and piece workers must also be secured a time-work minimum. Time rates can be set by the hour, day or month, with the method of calculation prescribed by rules. Rates are based mainly on skill category (unskilled, semi-skilled, skilled, highly-skilled), geographical area or both, and the government may also take into account arduous conditions such as hard-to-bear temperature or humidity, hazardous occupations or processes, or underground work, as it prescribes. The number of separate rates is to be kept as low as possible.
For the purposes of sub-section (1), the appropriate Government shall fix a minimum rate of wages––
for time work; or
for piece work.
Where employees are employed on piece work, for the purpose of sub-section (1), the appropriate Government shall fix a minimum rate of wages for securing such employees a minimum rate of wages on a time work basis.
The minimum rate of wages on time work basis may be fixed in accordance with any one or more of the following wage periods, namely:––
by the hour; or
by the day; or
by the month.
Where the rates of wages are fixed by the hour or by the day or by the month, the manner of calculating the wages shall be such, as may be prescribed.
For the purpose of fixation of minimum rate of wages under this section, the appropriate Government,—
shall primarily take into account the skill of workers required for working under the categories of unskilled, skilled, semi-skilled and highly-skilled or geographical area or both; and
may, in addition to such minimum rate of wages for certain category of workers, take into account their arduousness of work like temperature or humidity normally difficult to bear, hazardous occupations or processes or underground work as may be prescribed by that Government; and
the norms of such fixation of minimum rate of wages shall be such as may be prescribed.
The number of minimum rates of wages referred to in sub-section (6) may, as far as possible, be kept at minimum by the appropriate Government.
In plain words
A minimum wage can be a basic rate plus a cost of living allowance, a basic rate (with or without that allowance) plus the cash value of concessional supplies of essential commodities where authorised, or one all-inclusive rate. The allowance and the cash value are worked out by an authority the government appoints by notification.
Any minimum rate of wages fixed or revised by the appropriate Government under section 8 may consist of––
a basic rate of wages and an allowance at a rate to be adjusted, at such intervals and in such manner as the appropriate Government may direct, to accord as nearly as practicable with the variation in the cost of living index number applicable to such workers (hereinafter referred to as "cost of living allowance"); or
a basic rate of wages with or without the cost of living allowance, and the cash value of the concessions in respect of supplies of essential commodities at concession rates, where so authorised; or
an all-inclusive rate allowing for the basic rate, the cost of living allowance and the cash value of the concessions, if any.
The cost of living allowance and the cash value of the concessions in respect of supplies of essential commodities at concession rate shall be computed by such authority, as the appropriate Government may by notification, appoint, at such intervals and in accordance with such directions as may be specified or given by the appropriate Government from time to time.
In plain words
The government fixes or revises minimum wages either through committees of employers, an equal number of employee representatives and independent members (not more than one-third), or by publishing draft proposals and taking them up no sooner than two months later; when revising by the draft-proposal route it must also consult the Advisory Board. The final rate takes effect three months after notification unless the notification says otherwise, and rates are reviewed or revised ordinarily at intervals of not more than five years.
In fixing minimum rates of wages for the first time or in revising minimum rates of wages under this Code, the appropriate Government shall either —
appoint as many committees as it considers necessary to hold enquiries and recommend in respect of such fixation or revision, as the case may be; or
by notification publish its proposals for the information of persons likely to be affected thereby and specify a date not less than two months from the date of the notification on which the proposals shall be taken into consideration.
Every committee appointed by the appropriate Government under clause (a) of sub-section (1) shall consist of persons––
representing employers;
representing employees which shall be equal in number of the members specified in clause (a); and
independent persons, not exceeding one-third of the total members of the committee.
After considering the recommendation of the committee appointed under clause (a) of sub-section (1) or, as the case may be, all representations received by it before the date specified in the notification under clause (b) of that sub-section, the appropriate Government shall by notification fix, or as the case may be, revise the minimum rates of wages and unless such notification otherwise provides, it shall come into force on the expiry of three months from the date of its issue:
Provided that where the appropriate Government proposes to revise the minimum rates of wages in the manner specified in clause (b) of sub-section (1), it shall also consult concerned Advisory Board constituted under section 42.
The appropriate Government shall review or revise minimum rates of wages ordinarily at an interval not exceeding five years.
In plain words
The Central Government fixes a floor wage based on a worker's minimum living standards, in the manner prescribed by rules, and it may differ by area. Before fixing it, the Centre may take the Central Advisory Board's advice and consult State Governments. No minimum wage can be set below the floor, and a rate already above the floor cannot be reduced.
The Central Government shall fix floor wage taking into account minimum living standards of a worker in such manner as may be prescribed:
Provided that different floor wage may be fixed for different geographical areas.
The minimum rates of wages fixed by the appropriate Government under section 6 shall not be less than the floor wage and if the minimum rates of wages fixed by the appropriate Government earlier is more than the floor wage, then, the appropriate Government shall not reduce such minimum rates of wages fixed by it earlier.
The Central Government may, before fixing the floor wage under sub-section (1), obtain the advice of the Central Advisory Board constituted under sub-section (1) of section 42 and consult State Governments in such manner as may be prescribed.
In plain words
A daily-rated employee who works less than a normal working day still gets a full day's wages, unless the shortfall is due to the employee's own unwillingness to work (not the employer's failure to provide work) or falls in another case prescribed by rules.
If an employee whose minimum rate of wages has been fixed under this Code by the day works on any day on which he was employed for a period of less than the requisite number of hours constituting a normal working day, he shall, save as otherwise hereinafter provided, be entitled to receive wages in respect of work done on that day, as if he had worked for a full normal working day:
Provided that he shall not be entitled to receive wages for a full normal working day,—
in any case where his failure to work is caused by his unwillingness to work and not by the omission of the employer to provide him with work; and
in such other cases and circumstances, as may be prescribed.
In plain words
When an employee does two or more kinds of work with different minimum rates, the employer must pay at least the minimum rate of each kind for the time spent on it.
Where an employee does two or more classes of work to each of which a different minimum rate of wages is applicable, the employer shall pay to such employee in respect of the time respectively occupied in each such class of work, wages at not less than the minimum rate in force in respect of each such class.
In plain words
Where only a minimum time rate, not a piece rate, is fixed for piece work, the piece worker must be paid at least the minimum time rate.
Where a person is employed on piece work for which minimum time rate and not a minimum piece rate has been fixed under this Code, the employer shall pay to such person wages at not less than the minimum time rate.
In plain words
Where minimum wages are fixed, the government may set the hours of a normal working day including breaks, provide a paid day of rest in every seven days, and require at least overtime-rate pay for work on a rest day. For emergency work, preparatory or complementary work, essentially intermittent work, work that must be finished for technical reasons, and work dependent on natural forces, these rules apply only to the extent and on the conditions prescribed.
Where the minimum rates of wages have been fixed under this Code, the appropriate Government may —
fix the number of hours of work which shall constitute a normal working day inclusive of one or more specified intervals;
provide for a day of rest in every period of seven days which shall be allowed to all employees or to any specified class of employees and for the payment of remuneration in respect of such days of rest;
provide for payment for work on a day of rest at a rate not less than the overtime rate.
The provisions of sub-section (1) shall, in relation to the following classes of employees apply, only to such extent and subject to such conditions as may be prescribed, namely:—
employees engaged in any emergency which could not have been foreseen or prevented;
employees engaged in work of the nature of preparatory or complementary work which must necessarily be carried on outside the limits laid down for the general working in the employment concerned;
employees whose employment is essentially intermittent;
employees engaged in any work which for technical reasons has to be completed before the duty is over; and
employees engaged in a work which could not be carried on except at times dependent on the irregular action of natural forces.
For the purposes of clause (c) of sub-section (2), employment of an employee is essentially intermittent when it is declared to be so by the appropriate Government on the ground that the daily hours of duty of the employee, or if there be no daily hours of duty as such for the employee, the hours of duty normally include periods of inaction during which the employee may be on duty but is not called upon to display either physical activity or sustained attention.
In plain words
An employee whose minimum wage is fixed by the hour, day or a longer wage-period prescribed by rules, and who works beyond the normal working day, must be paid for every hour or part of an hour of overtime at not less than twice the normal rate of wages.
Where an employee whose minimum rate of wages has been fixed under this Code by the hour, by the day or by such a longer wage-period as may be prescribed, works on any day in excess of the number of hours constituting a normal working day, the employer shall pay him for every hour or for part of an hour so worked in excess, at the overtime rate which shall not be less than twice the normal rate of wages.
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