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TMI BlogCODE ON WAGES (CENTRAL) RULES, 2020 – DRAFTX X X X Extracts X X X X X X X X Extracts X X X X ..... CODE ON WAGES (CENTRAL) RULES, 2020 – DRAFT - By: - Mr. M. GOVINDARAJAN - Other Topics - Dated:- 16-7-2020 - - Introduction Vide Notification No. 432(E), dated 07.07.2020, the Central Government published a draft rules on Code of Wages. The draft is put on the public domain for public comments, objections, if any within 45 days from the date of publication of this draft rule i.e., from 07.07.2020. The Central Government will consider the objections, suggestions received from the public and will finalize the rules. This Rule consists of IX Chapters with 58 Rules, 6 forms and five schedules. This Rule is in supersession of the following- Payment of Wages (Procedure) Rules, 1937; Payment of wages (Nomination) Rules, 2009; Minimum Wages (Central) Rules, 1950; Minimum Wages (Central Advisory Board) Rules, 2011; Maintaining registers under- Equal Remuneration Act, 1976; Minimum Wages Act, 1948; Payment of Wages Act, 1936; Payment of Bonus Rules, 1975; Equal Remuneration Rules, 1976; and Central Advisory Committee on Equal Remuneration Rules, 1991. Chapters Chapter I Preliminary (Rule 1 and 2); Chapter II Min ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imum wages; Chapter III Floor wages; Chapter IV Payment of wages; Chapter V Payment of Bonus (Rule 21 to 27); Chapter VI Central Advisory Board (Rule 28 to 45); Chapter VII Payment of dues and claims (Rule 46 to 48); Chapter VIII Forms, Registers and Wage slips (Rule 49 to 54) Chapter IX Miscellaneous (Rule 55 to 58). Forms and Schedules The following are the forms provided in the Rules- Form I Register of wages, overtime, fine, deduction for damages and loss; Form II - Single application to be filed before the Authority; Form III Appeal before Appellate Authority; Form IV Employee Register; Form V Wage slip; Form VI Application for composition of offence. The following are the schedules to this Rule- Schedule A Calculation of bonus including set off and set on; Schedule B Computation of gross profits of banking company; Schedule C Computation of gross profits other than banking company; Schedule D Deductions; Schedule E Unskilled, semi skilled, skilled and highly skilled employees. Calculation of minimum wages The Minimum wages will be fixed based on the follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing criteria- The standard working class family including a spouse and 2 children apart from the earning worker an equivalent of three adult consumption units; A net intake of 2700 calories per day per consumption unit; 66 meters cloth per year per standard working class family; Housing rent expenditure - to constitute 10% of food and clothing expenditure; Fuel, electricity and other miscellaneous items of expenditure to constitute 20% minimum wage; Expenditure for Children, medical requirement, recreation and expenditure on contingencies to constitute 25% of minimum wage. On fixing the rate of wages per day is fixed, the hourly wage is deduced by dividing it by 8. The monthly wage is calculated multiplying the daily wage into 26. While calculating the hourly wages or monthly wage the fraction half and more than half is to be rounded off to the next rupee and less than half it should be ignored. Timely payment of wages Where the employees are employed in an establishment through contractor, then, the company or firm or association or any other person who is the proprietor of the establishment shall pay to the contractor the amount payabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to him or it, as the case may be, before the date of payment of wages so that payment of wages to the employees shall be made positively. Categories of workers The Central Government shall divide the geographical area into- Metropolitan area; Non metropolitan area; and Rural area. The workers are against categorized into- Unskilled workers; Semi skilled workers; Skilled workers; High skilled workers. Schedule E contains the list of workers in the above categories. Rule 2(v) defines the expression unskilled occupation as an occupation which in its performance requires the applications of the simply operating experience and no further skill requires. Rule 2(t) defines the expression semi skilled occupation as an occupation which in its performance requires the application of the skill gained by the experience on the job which is capable of being applied under the supervision or guidance of a skilled employee and includes supervision over the unskilled occupation. Rule 2(u) defines the expression skilled occupation as an occupation which involves skill and competence in its performance through experience on the job or thro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh training as an apprentice in a technical or vocational institute and the performance of which calls for initiating and judgment. Rule 2(j) defines the expression highly skilled occupation as an occupation which calls in its performance a specific level of perfection and required competence acquired through intensive technical or professional training or practical occupational experience for a considerable period and also requires of an employee to assume full responsibility for his judgment or decision involved in the execution of such occupation. Dearness allowance The worker is entitled, in addition to his basic wages, the dearness allowance which is calculated as per the existing cost of living allowance. The Rule provides that the dearness allowance shall be computed once before 1 st April and before 1 st October every year. Working hours in a day The normal working day shall comprise of 8 hours of work and one or more intervals of rest which in total shall not exceed one hour. The working day of an employee shall be so arranged that inclusive of the intervals of rest, if any, shall not spread over more than 12 hours on any day. In respect of agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icultural employees the Central Government shall determine the above working hours subject to modifications from time to time. These provisions are not applicable to Factories Act, 1948. Weekly rest Every employee is entitled to weekly rest that too in Sunday. The employer may fix rest day other than Sunday as required by him. An employee shall be entitled to one day weekly rest if he works continuously six days under the same employer. The employee shall be informed by the employer about his rest day. If there is any change in the rest day the same shall be informed to the employee and the said change has to be found place in the notice board in the premises as directed by Inspector-cum-facilitator in this behalf. The employee may not work on his stipulated rest day unless a rest day is fixed five days before or after the stipulated rest day. No employee shall be allowed to work continuously for 10 days without rest. Night Shift Where an employee in an employment works on a shift which extends beyond midnight, then- a rest day for the whole day, in this case means a period of 24 consecutive hours beginning from the time when his shift ends; and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he following day in such a case shall be deemed to be the period of 24 hours beginning from the time when such shift ends, and the hours after midnight during which such employee was engaged in work shall be counted towards the previous day. Wages for the rest day An employee shall be granted for rest day wages calculated at the rate applicable to the next preceding day. If the employee works on the rest day and has been given a substituted rest day then he shall be paid wages for the rest day on which he worked, at the over time rate and wages for the substituted rest day at the applicable to the next preceding day. The employee shall not be paid rest wages- if the minimum rate of the employee has been worked out by dividing the minimum monthly rate of wages by 26; or the actual daily rate of wages of the employee has been worked out by dividing the monthly rate of wages by 26 and such actual daily rate of wages is not less than the notified minimum daily rate of wages of the employee. If the employee works on the rest day and has been given a substituted rest day, then, he shall be paid, only for the rest day on which he worked, an amount equal to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wages payable to him at the overtime rate. In case of an employee governed by a piece-rate system, the wages for the rest day, or the substituted rest day, as the case may be, shall be such as the Central Government may, from time to time determine having regard to the minimum rate of wages fixed under the Code, in respect of the employment. If there is any dispute on the computation of wages on rest day the same may be applied to Chief Labor Commissioner/Deputy Labor Commissioner (Central) and he may decide the dispute after giving reasonable opportunity of being heard to the parties concerned. In case an employee gets more favorable terms in this regards, in accordance with any other law for the time being in force or in accordance with the award, agreement or contract of service then this provisions will not applicable to such employee. The above said method of calculating wages on rest day shall apply to the extent and subject to conditions for the following employees- engaged in any emergency which could not have been foreseen or prevented; engaged in work of the nature of preparatory or complementary work which must necessarily be carried on outside the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imits laid down for the general working in the employment concerned; whose employment is essentially intermittent; engaged in any work which for technical reasons has to be completed before the duty is over; and engaged in a work which could not be carried on except at times dependent on the irregular action of natural forces. The above is subject to conditions that- the spread over of the hours of work of the employee shall not exceed 16 hours in any day; and the actual hours of work excluding the intervals of rest and the periods of inaction during which the employee may be on duty but is not called upon to display either physical activity or sustained attendance shall not exceed 9 hours in any day. Longer wage period The longer wage period for the purposes of minimum rate of wages shall be by the month. Floor wage The Central Government shall fix the floor price. Before fixing the floor price the Central Government shall consult the Board in regard to fixing the minimum wages. The advice given by the Board shall be circulated to all State Governments and the views of the State Governments are obtained. After considering all the Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government shall fix the floor price. Once in five years the floor prices shall be revised by the Central Government taking into consideration of all aspects and in consultation with the Board. Deduction from wages The deduction in the wage of an employee shall not exceed 50% of the total wages. If the due is in excess of 50% the excess may be carried forward the next month. The employer shall make intimation of such deduction to the Inspector-cum-Facilitator having jurisdiction within 10 days from the date of such deduction explaining therein the reason of such deduction. The Inspector-cum-Facilitator shall examine such intimation and if he finds that the explanation given therein is in contravention of any provision of the Code or the rules made there under, he shall initiate appropriate action under the Code against the employer. The employee, before deduction from wages, shall- explain to the employee personally and also in writing the damage or loss of goods expressly entrusted to the employee for custody or for loss of money for which he is required to account and how such damages or loss is directly attributable to the neglect or default of the employee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; and thereafter, give the employee an opportunity to offer any explanation and deduction for any damages or loss, if made, shall be intimated to the employee within 15 days from the date of such deduction. Recovery of advances The employer may recover the advance money given by him to the employee after his employment or advance of wages from the wages of the employee in installments as determined by the employer keeping in mind that such deduction shall not exceed 50% of the wages of the employee. The employer is to maintain register in Form I to record the deductions. Recovery of loans Deductions for recovery of loans granted for house building or other purposes approved by the Central Government, and the interest due in respect thereof shall be, subject to any direction made or circular issued by the Central Government from time to time regulating the extent to which such loans may be granted and the rate of interest shall be payable thereon. Fines The Deputy Chief Labor Commissioner (Central) having jurisdiction is the authority to impose fine on the employee. A notice specifying such acts and omissions shall be exhibited at the conspicuous plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es in the premises of the work place in which the employment is carried on, so that every concerned employee would be able easily to read the contents of the notice. A copy of the notice shall be sent to the inspector-cum-facilitator having jurisdiction. The employer shall give intimation in writing specifying therein the detailed particulars for obtaining the approval of the imposition of fine to the Deputy Chief Labour Commissioner (Central) who shall, before granting or refusing the approval, give opportunity of being heard to the employee and the employer concerned. Wage slip Every employer shall issue wage slips, electronically or otherwise to the employees in Form V on or before payment of wages. Payment of Bonus The Code of Wages indicated the detailed procedure in making payment of bonus. The Rules prescribe only the procedure computation of profits, set off under section 26, 32, 34 and 36 of the Code. For the sixth accounting year, set on or set off, shall be made under clause (i) of sub-section (7) of section 26, in the manner illustrated in Schedule A, taking into account the excess or deficiency, if any, as the case may be, of the allocable s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urplus set on or set off in respect of the fifth and sixth accounting years. For the seventh accounting year, set on or set off, as the case may be, shall be made under clause (ii) of sub-section (7) of section 26, in the manner illustrated in Schedule A, taking into account the excess or deficiency, if any, as the case may be, of the allocable surplus set on or set off in respect of the fifth, sixth and seventh accounting years. The gross profits derived by an employer from an establishment in respect of the accounting year shall in the case of banking company, be calculated in the manner specified in Schedule B. The gross profits derived by an employer from an establishment in respect of the accounting year in a case other than banking company, be calculated in the manner specified in Schedule C. The further sums as are specified in respect of the employer in Schedule D shall be deducted from the gross profit as prior charges. Where for any accounting year, the allocable surplus exceeds the amount of maximum bonus payable to the employees in the establishment then, the excess shall, subject to a limit of 20% of the total salary or wage of the employees employed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the establishment in that accounting year, be carried forward for being set on in the succeeding accounting year and so on up to and inclusive of the fourth accounting year to be utilized for the purpose of payment of bonus in such manner as illustrated in Schedule A. Where for any accounting year, there is no available surplus or the allocable surplus in respect of that year falls short of the amount of minimum bonus payable to the employees in the establishment under section 26, and there is no amount or sufficient amount carried forward and set on under rule 26 which could be utilized for the purpose of payment of the minimum bonus, then, such minimum amount or the deficiency, as the case may be, shall be carried forward for being set off in the succeeding accounting year and so on up to and inclusive of the fourth accounting year in such manner illustrated in Schedule A. Responsibility for payment of minimum bonus Where in an establishment, the employees are employed through contractor and the contractor fails to pay minimum bonus to them, then, the company or firm or association or other person shall, on the written information of such failure, given by the employe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es or any registered trade union or unions of which the employees are members and on confirming such failure, pay such minimum bonus to the employees. Payment of dues, claims etc. After the death of the employee or whereabouts of the employees is not known, the employee shall keep the dues payable to such employee for three months. If the same could not be disbursed the employer shall deposit such amount with the Deputy Chief Labor Commissioner (Central) having jurisdiction, who will disburse the same to the nominated by the employee after ascertaining his identity within 2 months from the date of deposit of the amount by the employer. Where any amount payable to an employee remains undisbursed because either no nomination has been made by such employee or for any other reason, such amounts could not be paid to the nominee of employee until the expiry of 6 months from the date the amount had become payable, all such amounts shall be deposited by the employer with the Deputy Chief Labour Commissioner (Central) having jurisdiction before the expiry of the 15 th day after the last day of the said period of 6 months. The said amount will be invested by the Deputy Chief L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... abor Commissioner either in fixed deposit or in Government securities. The Deputy Chief Labor Commissioner shall exhibit a notice containing such particulars at least 15 days in the notice board and also publish such notice in any two newspapers being circulating in the language commonly understood in the area in which undisbursed wages were earned. The Deputy Chief Labor Commissioner may decide and disburse the amount to the nominee or to the person who claimed such amount after giving reasonable opportunity to the concerned person. If the amount is not payable up to 7 years then the same shall be dealt with in the manner as directed by the Central Government from time to time in this behalf. Central Advisory Board Chapter VI of the Rules provides for the establishment of Central Advisory Board. The Board shall consist the representatives of the employer, employees and the independent Members nominated by the Central Government, representations from State Governments. The independent Members shall not exceed one third strength of the total Board. One third Members of the Board shall be the women. The Rules provides for the functions that are to be carried out b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Board, terms of the members, resignation, removal of members, procedure for conducting the Board meeting etc. Committees The Central Government may constitute as many committees as it considers necessary for the purposes specified in that clause. Claims The Code gives the detailed procedure for the employee to get a claim which is in dispute or not paid before the Authority concerned. The Rule prescribes Form I in which the claim can be filed before the Authority having jurisdiction and also prescribes Form III for filing appeal to the Appellate Authority having jurisdiction. - - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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