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Code on Wages

Logo of telegram channel codeonwages2019 — Code on Wages C
Logo of telegram channel codeonwages2019 — Code on Wages
Channel address: @codeonwages2019
Categories: Loans, Taxes and Laws
Language: English
Subscribers: 119

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The latest Messages

2022-07-02 21:46:57
Plastic ban notifications
38 views18:46
Open / Comment
2021-10-10 23:15:59
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257 views20:15
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2021-09-11 10:33:55 The change in the definition of wage under the Code and the SS Code will require employers in certain cases to revamp the salary structure of the employees in such a way that the basic + DA + RA should construe 50 % of the total wages of the employees. As it may affect the contribution amounts.

Follow @mylegalcare to keep updated with all the news on legislations, notifications and amendments under a single channel.
298 views07:33
Open / Comment
2021-09-11 10:33:19 What is Wages under the new wage code?

The Code and the SS Code contains unified definition of ‘wage' which was earlier interpreted differently under different labour laws. For instance, special pay paid to the employees is part of wages for Employee Provident Fund (“EPF”) but not for gratuity and therefore the same term was defined differently under each labour legislations and hence caused confusion. The definition of basic wage under the Employees Provident Funds and Miscellaneous Provisions Act, 1952 (“EPF Act”) is defined as all emoluments which are earned by an employee while on duty, on leave or on holidays with wages in accordance with the terms of the employment contract and which are paid or payable in cash to the employee, but does not include— (i) the cash value of any food concession; (ii) any dearness allowance, house-rent allowance, overtime allowance, bonus commission or any other similar allowance payable to the employee in respect of his employment or of work done in such employment; (iii) any presents made by the employer.

The definition of basic wage was used as a loop hole by the employers to minimise the contributions payable towards the EPF defeating the purpose of the EPF Act. This issue was dealt by the Supreme Court in the case of The Regional Provident Fund Commissioner (II) West Bengal Versus Vivekananda Vidyamandir And Others where the Supreme Court held that all allowances which are universally, uniformly, necessarily and ordinarily paid to all employees would form a part of the basic wage, which shall be used for fund contribution to the provident fund. The exclusion of allowance from the basic wage can be permitted when the same is shown to be either a variable, or were linked to any incentive for production resulting in a greater output, or the allowance in question is not paid across the board, or paid especially to those who avail the opportunity.

The new definition of wage under the Code and the SS Code provides that the wage shall mean to include all remuneration whether by way of salaries, allowances or otherwise, expressed in terms of money or capable of being so expressed which would, if the terms of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment, and includes basic pay; dearness allowance (“DA”); and retaining allowance (“RA”), if any. The definition of wage specifically excludes – (a) any bonus payable under any law for the time being in force; (b) the value of any house-accommodation, or of the supply of light, water, medical attendance or other amenity; (c) contribution paid by the employer to any pension or provident fund, and the interest which may have accrued thereon; (d) any conveyance allowance or the value of any travelling concession; (e) any sum paid to the employed person to defray special expenses entailed on him by the nature of his employment; (f) house rent allowance; (g) remuneration payable under any award or settlement between the parties or order of a court or Tribunal; (h) any overtime allowance; (i) any commission payable to the employee; (j) any gratuity payable on the termination of employment; (k) any retrenchment compensation or other retirement benefit payable to the employee or any ex gratia payment made to him on the termination of employment:

In addition to this the Code and the SS Code also provides that the allowances provided under the heads ‘a' to ‘i' should not exceed 50% of the total remuneration paid to the employee. In case such allowances exceed 50% of the total remuneration, the excess amount paid to the employee will form part of the wages.

This change will impact the basis to calculate wage for the purpose of contribution towards certain benefits like EPF and Gratuity as now the same will have to be calculated on 50% of the total remuneration of an employee.
301 views07:33
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2021-08-28 16:21:55
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56 views13:21
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2021-08-28 16:06:04 The new Wage Code is likely to come into force from October and this will bring in significant changes to the lives of government employees. Earlier, the new Wage Code was due to be implemented from April 1, but due to non-receipt of draft rules from the state governments, it was put on hold.
61 views13:06
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2021-03-15 03:25:30 Employees' salary structure likely to change from April 1, those with high allowance may see pay cut.

Employees can expect a major change in their salary structures if the government notifies the new wage code. The rules are likely to kick in from April 1.

The government's notification on Code on Wages 2019 may reduce the take-home pay of employees. 
Under the new rules, allowances would be a maximum of 50 per cent of the total salary. This will result in mandatory changes in an employee's salary structure.
 
Employees whose basic salary is already 50 per cent or more will not be affected. But those with basic salary less than 50 per cent will see a change in their take-home salary.
In addition to this, there may be significant changes in the provident fund (PF) and gratuity.

Due to the increase in basic salary, the share towards PF will also increase, since it is calculated on the basis of basic salary.

𝗧𝗵𝗲 𝗻𝗲𝘄 𝗿𝘂𝗹𝗲𝘀 𝘄𝗶𝗹𝗹 𝗹𝗶𝗸𝗲𝗹𝘆 𝗮𝗳𝗳𝗲𝗰𝘁 𝘁𝗵𝗲 𝘀𝗮𝗹𝗮𝗿𝘆 𝘀𝘁𝗿𝘂𝗰𝘁𝘂𝗿𝗲 𝗼𝗳 𝗵𝗶𝗴𝗵-𝗽𝗮𝗶𝗱 𝗲𝗺𝗽𝗹𝗼𝘆𝗲𝗲𝘀 𝘄𝗶𝘁𝗵 𝗮 𝗵𝗶𝗴𝗵 𝗮𝗹𝗹𝗼𝘄𝗮𝗻𝗰𝗲 𝗰𝗼𝗺𝗽𝗼𝗻𝗲𝗻𝘁. Increasing PF and gratuity could also increase the cost of companies as their contribution towards these would increase proportionately.

There could also be a change in working hours for employees. The maximum working hours in offices could be increased to 12 hours.
388 views00:25
Open / Comment
2021-03-02 22:17:15 𝗕𝗲𝗻𝗲𝗳𝗶𝘁𝘀 𝗼𝗳 𝘁𝗵𝗲 𝗡𝗲𝘄 𝗪𝗮𝗴𝗲 𝗖𝗼𝗱𝗲:

>Standard Wage Definition

The single most considerable change being introduced by the labor code is a standard, unified definition of ‘wages’ for the Code on Wages and the Code on Social Security. The interpretation of the term ‘wages’ has been a contentious issue for employers for years. However, with the new labor code's enforcement, employers will now have a simplified and unified definition. The new ‘wage’ definition comprises three parts: an inclusion part, specified exclusions, and conditions. It also includes components like basic pay, dearness allowance, retaining, and special allowances. 

>Universal Minimum Wage

As per the current laws, the Minimum Wage Law is applicable to employees working in scheduled employment. However, the amended code will expand the ambit by including all employees, irrespective of their employment’s nature. The government will set a Minimum Floor Wage depending on the geographical area. Workers belonging to both organized and unorganised sectors will be covered under ESI (Employee State Insurance). Furthermore, an increased contribution to gratuity and PF will help workers lead a pleasant, stress-free life after retirement by offering them enough money to meet their daily expenses.

>A Halt on Exploitation

The new labor code prevents employers from exploiting innocent workers. It will act as a warning sign for companies who have been exploiting employees by deducting their salaries for unnecessary reasons. Also, employers will have to calculate wages considering both the inclusions and the exclusions. However, if the value of exclusion exceeds 50% of the total wages, the excess amount will eventually be included in wages. If the employee’s remuneration is paid in kind, then 15% of the value of compensation paid in kind will be included in wages. The government under the new code has also specified that the salary deduction in various forms, including housing rent, loan, or fines, should not exceed 50% of wages to prevent employees’ exploitation.

>Boost to Contractual Employees

The employers will now have to pay in advance to the contract employees. This step is taken to ensure that the contractor's contractual employees receive their wages in time. Furthermore, suppose the contractor defaults or fails to pay the minimum bonus to contractual employees. In that case, the primary employer will be liable to pay the employees upon receipt of a written complaint. Thus, the new wage code will further ensure that the employees hired on a contract basis are not exploited by the contractor. The new wage code will also ensure that any arbitrariness, vagueness, and malpractices during labor inspection are minimised. 

There is a plan to set up an online inspection portal that requires the inspectors to randomise checks focusing on specific geographical areas. Remote inspections will replace physical inspections to ensure that all the required information is kept in records by employers.

>Empowering Women along with Non-discrimination

The new labor law will ensure that no discrimination occurs on the grounds of gender during employee hiring. Furthermore, it provides that women can work in all kinds of trade. It also has a provision allowing women to take up night shifts if they wish to. The new wage code will ensure that organisations hire employees based on their talents and what they can bring to the table if hired rather than giving preference to a particular gender. This will, in turn, ensure healthy competition among suitable candidates applying for a specific job role.

>Flexible Working Hours

With its new labor law, the Indian government is seen transiting to a 4-day-week work policy fixing the total working hours a week to 48. The employees will be allowed to choose between three shifts, including 4-days a week wherein they’ll work for 12 hours a day, 5-days a week wherein they’ll work 9.5 hours a day, and 6-days a week working 8 hours a day. Thus, employees will have the advantage of choosing the work culture they prefer as pe
388 views19:17
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2021-02-23 22:15:19 𝗟𝗼𝘄𝗲𝗿 𝘁𝗮𝗸𝗲-𝗵𝗼𝗺𝗲 𝗽𝗮𝘆 𝘁𝗼𝗱𝗮𝘆, 𝗳𝗼𝗿 𝗮 𝗹𝗮𝗿𝗴𝗲𝗿 𝗿𝗲𝘁𝗶𝗿𝗲𝗺𝗲𝗻𝘁 𝗰𝗼𝗿𝗽𝘂𝘀 𝘁𝗼𝗺𝗼𝗿𝗿𝗼𝘄.

The Parliament has approved the code of wages in 2019, to rationalize 44 central labour laws. As per the new wage code, allowances given to an employee should not exceed 50 per cent of the cost to company (CTC). So, the basic pay has to be 50 per cent or more of the CTC from April 2021.

Under the current dispensation, employers structure wages in such a way the employees get more money as allowances and less as basic wages. This ensures more take home salary and less contribution towards the social security schemes as contribution to the provident fund and gratuity is calculated as a percentage of the basic salary.
335 views19:15
Open / Comment
2021-02-14 23:43:41 𝗟𝗮𝗯𝗼𝘂𝗿 𝗠𝗶𝗻𝗶𝘀𝘁𝗿𝘆 𝗳𝗶𝗻𝗮𝗹𝗶𝘀𝗲𝘀 𝗷𝗼𝗯 𝗿𝘂𝗹𝗲𝘀 𝘂𝗻𝗱𝗲𝗿 𝟰 𝗰𝗼𝗱𝗲𝘀, 𝗿𝗲𝗳𝗼𝗿𝗺 𝘁𝗼 𝗯𝗲 𝗮 𝗿𝗲𝗮𝗹𝗶𝘁𝘆 𝘀𝗼𝗼𝗻.

The Ministry of Labour and Employment has finalised rules under the four labour codes paving the way for making reforms a reality by notifying those for implementation soon.

The four broad Codes on Wages, Industrial Relations, Social Security and Occupational Safety, Health & Working Conditions (OSH) have already been notified after getting the President's assent. But for implementing these four codes, the rules need to be notified.

Now the ministry has completed the process of consultation on draft rules on the four codes and firmed up those for notification.

Talking to PTI, Labour Secretary Apurva Chandra said, "We have finalised the rules under the four codes which are required to implement the four labour codes. We are ready to notify these rules. The states are doing their work to firm up rules under the four codes."
363 views20:43
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