Maximum penalty of Rs 10 lakh instead of Rs 50,000 for employers who pay less than the amount due to employees and consultation with states before fixation of National Minimum Wage by the central government are among some of the key recommendations proposed by the Standing Committee on Labour for ‘The Code on Wages, Bill, 2017’.
The Bill, tabled in Lok Sabha in August 2017 and subsequently referred to the Standing Committee, will provide for minimum wage applicable to all employments covering organised as well as unorganised sectors.
Following these recommendations by the Standing Committee, the Ministry of Labour and Employment is now expected to incorporate the changes and send it to the Union Cabinet for its approval, following which the Bill will be considered for passage by the Parliament. The first among the four labour codes proposed by the government, the Code on Wages will amalgamate the the four central labour laws relating to wages: The Payment of Wages Act, 1936, The Minimum Wages Act, 1948, The Payment of Bonus Act, 1965 and The Equal Remuneration Act, 1976.
The Standing Committee was also of the view that the use of the term ‘facilitator’ instead of ‘inspector’ in the Code looks like dilution of the enforcement mechanism and restricts inspection which is “the lifeline of enforcement” and has recommended substituting the word ‘facilitator’ by ‘inspector’ in line with ILO norms in certain clauses of the Code. As per the current version of the Code, Clause 51 defines the role of the facilitator who may supply information and advice to employers and workers concerning the most effective means of complying with the provisions of the Code and inspect the establishment based on inspection scheme, as would be notified by the government.
In their suggestions to the Standing Committee on penalty provisions, industry chambers ClI and ASSOCHAM suggested that the penal amount of Rs 50,000 was on “higher side”. Though the Ministry in its response to the committee claimed that the penalties have been “increased manifold” in the Code as compared to the same in the existing Minimum Wages Act, the Committee still felt that in the present context “the penalty amount proposed is not substantial enough to act as a deterrent”. “Hence, they have recommended that the Chapter VIII of the Code may be suitably modified to fix the penalty for offences by the employer from rupees fifty thousand to rupees ten lakh,” the Committee’s report said.
New Bill proposes national level minimum wage
The Standing Committee on Labour has finalised its recommendations for the ‘The Code on Wages Bill, 2017’ that was introduced in Lok Sabha in August last year. The Committee has recommended a hike in maximum penalty for first offence to Rs 10 lakh and suggested that states must be consulted before fixation of minimum wage by the central government. The first among the four labour codes proposed by the government, the Code on Wages proposes a national level minimum wage which will be applicable to all employments in organised and unorganised sectors.
At present, Clause 53 (1) of the Code states that any employer who pays to any employee less than the amount due shall be punishable with fine which may be extended to Rs 50,000 and having been convicted of an offence, if the employer is again found guilty of similar offence within five years from the date of the first offence, shall be punishable with imprisonment for a term which may extend to three months or with fine which may extend to Rs 1 lakh or with both.
The panel also felt that a clarification may be required to be given in the Code so that the concept of minimum wage is actually ‘the minimum wage at the time of entry/initial wage’ and that experience/loyalty/years of service are to be taken into account’ over and above the minimum wage along with the view that definition of ‘Wages’ given in the Code is lengthy and needs clarification.