THE proposed Labour Code on Wages Bill, 2015 is being brought in to replace four laws – the Payment of Wages Act, 1936, Minimum Wages Act, 1948, the Payment of Bonus Act, 1965 and the Equal Remuneration Act, 1976.

The Code on Wages takes away several existing rights:

1. Apprentice has been excluded from the definition of employee, whereas they are included under existing law. Evidently therefore they will not be entitled to any protection of the law on wages.

2. Criteria for fixing wages: This Code is purportedly being introduced with the intention of providing a national minimum wage to all workers. However the fundamental principles of fixing the minimum wage as brought about in the Indian Labour Conference and the Supreme Court directions are being completely ignored. The Supreme Court in Workmen Represented by Secretary v. Management of Raptakos Brett, laid down the following six criteria for minimum wage determination: (1) 3 consumption units for one earner; (2) Minimum food requirements of 2700 calories per average Indian adult; (3) Clothing requirements of 72 yards per annum per family; (4) Rent corresponding to the minimum area provided for under the Government Industrial Housing Scheme; (5) Fuel, lighting and other miscellaneous items of expenditure to constitute 20 percent of the total Minimum Wages; (6) Children, education, medical requirements, minimum recreation including festivals/ceremonies and provision for old age, marriage, etc. to constitute 25 percent of the total minimum wage). The Code has done away with all of this. Based on this formula even the Seventh Pay Commission recommendation of Rs. 18,000 as minimum wage, which the government accepted for central government employees, is not sufficient. However, when the same demand was made for all workers, the government, in fact, explicitly denied that it had any intention to fix a Rs 18,000 monthly national minimum wage. We should demand only Rs. 26,000 as minimum wage at the level of prices as on date.

3. Revision of wages: The Code sets five years as the standard time for wages to be revised, while currently five years is the maximum period for the revision of wages. However, several States have previously reduced this period to less than 5 years, for instance, in Tamil Nadu the law as it stands today, requires revision of minimum wages at least once in 3 years. Thus the proposed Code will defeat the benefits to workers especially in these States.

4. Removal of inspectors and bringing in of “facilitators”: One of the major changes by the proposed law is to remove the posts of inspectors and bring in “facilitators”. It allows a policy of self- certification which is heavily flawed. Further, the proposed Code makes it mandatory for the Facilitator to give an opportunity, to the employer to comply with the provisions of this Code by way of a written direction. If the employer complies with the direction within such period, the Facilitator shall not initiate such prosecution proceedings. This is nothing but a self-certification for loot and plunder of workers' sweat and blood.

5. Lighter Penalties: The Minimum Wages Act, 1948, the Payment of Bonus Act, 1965 and the Equal Remuneration Act, 1976 provide for fine and/or imprisonment as penalty. However, under the proposed Code, no penalty of imprisonment is provided. Further, the proposed Code does not propose any minimum penalty. Maximum penalty is only a fine of Rs. 50,000/- and the existing punishment of imprisonment is removed from the proposal. The proposed Code only provides for imprisonment on the second commission of offence. Further, a new section is introduced making the compounding of offence mandatory. This is a dangerous section that makes it mandatory to allow offending employers to go scot-free solely on the payment of a certain amount to the government, without even looking into compliance.

6. Watering down of the Equal Remuneration Act: The Equal Remuneration Act has been completely diluted by restricting it to gender discrimination only in respect of payment of wages, and excluding discrimination related to recruitment, conditions of service such as promotion, vocational training, transfer etc., which are provided under the existing Act. Further the Code does not provide for an advisory committee as provided for under the Equal Remuneration Act, 1976.

7. Working Hours and Overtime: Under Section 13 of the proposed Code, the government can fix the number of hours of work, which shall constitute a normal working day. But, several categories of workers are excluded from fixing normal working day. In the name of urgent work, preparatory work, intermittent work, timely work, etc., employees can be forced to work any number of hours. Effectively speaking 8-hour work day has become a matter of the past.

This means that the existing definition of overtime of work beyond 8 hours per day and 48 hours per week is being sought to be done away with. By removing a clear definition of overtime and allowing complimentary and intermittent work to exceed normal hours, the proposed bill opens the door to compulsory overtime without extra payment.

8. Dilution of the Payment of Bonus Act: The provision of exemption of new establishments in the Payment of Bonus Act, 1965, from paying bonus has been further expanded in the proposed Code by introducing many ambiguous terms. The definition now includes “trial running of any factory” and “prospecting stage of any mine.” Hence, not only are new establishments exempt from providing bonuses, but existing establishments can also escape liability by being on “trials runs” or at “prospective stages” in order to gain exemption from paying bonuses to their employees. There is no time limit for these “trial runs” or “prospective stages.” The codes also stipulate that the “audited accounts of companies shall not normally be questioned”, thereby removing the right of workers or their unions to question the accuracy of the balance sheet of a company or even demand clarifications in order to ascertain “surplus” while seeking bonus above the minimum level as mentioned in the Bonus Act.