Budget 2019: FM proposes to streamline labour laws into a single wages code

Finance minister Nirmala Sitharaman on July 5, 2019 conveyed the government’s intent to bring in the much-awaited labour reforms.

Proposing a uniform code on wages, Nirmala Sitharaman said, “Government has proposed to streamline multiple labour laws into a set of four labour codes. This will ensure the process of registration and filing of returns gets standardised and streamlined. With labour definitions getting standardised, it is expected that there will be less disputes.”

In April 2015, the government had first proposed major reforms including plans to reduce 44 labour laws to four broad codes, as part of a strategy to overhaul India’s archaic labour laws, make these more contemporary and compatible with current needs of the labour markets.

Four of these proposed laws –the Industrial Relations Code Bill, Wage Code Bill, the Small Factories (Regulation of Employment and Conditions of Services) Bill, and Employees Provident Fund and Miscellaneous Provisions (Amendment) Bill —would deal with wages, social security and welfare, safety and industrial relations.

The first of these labour codes– Wage Code Bill –will likely be enacted in the ongoing budget session, paving the way for benchmarking minimum wage for different regions.

A Parliament’s Select Committee, which is currently examining the draft Code on Wages Bill 2017, is expected to submit its report in the current session. The Code on Wages Bill 2017 was introduced in Parliament in August 2017, after which it was referred to a select committee.

The labour ministry will likely push for Bill’s passage in the Parliament’s current session.

The bill seeks to combine Payment of Wages Act, 1936, the Minimum Wages Act, 1949, the Payment of Bonus Act, 1965, and the Equal Remuneration Act, 1976 into one code.

The Bill has proposed the concept of a statutory National Minimum Wage for different geographical areas. Once enacted, no state will be able to fix the minimum wage below the benchmark decided by the Centre for that region.

Also, the proposed legislation seeks to widen the scope of minimum wage beneficiaries, bringing in its ambit more workers. The applicability of the existing Minimum Wages Act and the Payment of Wages Act both these Acts is restricted to scheduled employments/establishments, making a large number of workers ineligible for minimum wages. 

The Bill also provides for an appellate authority for speedier dispute resolution.

The code also provides for setting up of national minimum wage. The central government can set separate minimum wages for different regions or states.

The draft law also says that the minimum wages would be revised every five years.

Last month, following an inter-ministerial meeting chaired by Home Minister Amit Shah, Labour Minister Santosh Gangwar had said his ministry would push for the passage of the bill in the current session of Parliament.

The meeting was also attended by Finance Minister Nirmala Sitharaman and Commerce and Railway Minister Piyush Goyal.