The Concept Of Minimum Wages Under The Code On Wages: An Analytical Study

Anup Koushik Karavadi and Kanishk Tiwari

Introduction

The concept of minimum wages is fundamental in ensuring fair remuneration for labour and upholding human dignity. In India, the regulation of minimum wages has undergone significant changes with the enactment of the Code on Wages, 2019, which seeks to consolidate and simplify wage-related laws. However, the amalgamation of the minimum wages concept under the Code on Wages has brought to the forefront certain challenges and uncertainties.

The Code on Wages integrates the provisions of four key labour statutes – the Payment of Wages Act of 1936, the Minimum Wages Act of 1948, Payment of Bonus Act of 1965, and the Equal Remuneration Act of 1976. While the objective behind this consolidation was to harmonize and streamline the legal framework governing wages, it has resulted in the introduction of ambiguity and vagueness in the concept of minimum wages.

One of the primary issues stemming from the amalgamation is the lack of clarity in defining the scope and applicability of minimum wages under the Code. The Code fails to provide a precise definition of minimum wages, leading to potential disputes and confusion among employers and employees. Additionally, the Code’s attempt to amalgamate the minimum wages provisions from different statutes has led to inconsistencies and contradictions, further complicating the understanding and implementation of minimum wages.

Another significant challenge posed by the Code on Wages is the ambiguity surrounding the determination of minimum wages. This ambiguity has created uncertainty among stakeholders and may hinder the effective implementation of minimum wage laws.

In light of these challenges, the author of the research paper deems it essential to undertake an analytical study of the concept of minimum wages under the Code on Wages. This study aims to not only analyze the provisions relating to minimum wages under the Code but also to critically evaluate the implications of amalgamating the minimum wages concept under four different labour statutes. By identifying the ambiguities and challenges associated with the concept of minimum wages under the Code on Wages, this study seeks to provide a critical academic overview of the renovated concept of Minimum Wages under the Code, and wishes to have the identified lacunae resolved through policymakers’ intervention to ensure effective implementation and enforcement of minimum wage laws in India.

Objectives of the Study

1. To evaluate the concept of Minimum Wages in general under the Code of Wages 2019.
2. To understand how the amalgamation of the minimum wages concept under the Code on Wages has affected the clarity and effectiveness of minimum wage regulations in India.
3. To identify and analyze the inconsistencies and contradictions resulting from the amalgamation of minimum wages provisions from different statutes.

Research Questions

1. How has the amalgamation of the minimum wages concept under the Code on Wages impacted the clarity and effectiveness of minimum wage regulations in India?
2. What are the key challenges and ambiguities in defining the scope and applicability of minimum wages under the Code on Wages, and how do they affect employers and employees?
3. How do the inconsistencies and contradictions resulting from the amalgamation of minimum wages provisions from different statutes complicate the understanding and implementation of minimum wage laws in India?
4. What are the implications of the ambiguity surrounding the dSection 3: Fixing of minimum rates of wages – (1) The appropriate Government shall, in the manner hereinafter provided,- (a) fix the minimum rates of wages payable to employees employed in an employment specified in Part I or Part II of the ScheduleSection 3: Fixing of minimum rates of wages – (1) The appropriate Government shall, in the manner hereinafter provided,- (a) fix the minimum rates of wages payable to employees employed in an employment specified in Part I or Part II of the Scheduleetermination of minimum wages under the Code on Wages, and how does it affect stakeholders involved in wage regulation and social welfare?

Research Methodology

This research method used in writing this paper is doctrinal in nature by the way of analyzing and interpreting legal sources such as statutes, cases, and regulations, to develop a deep understanding of the complex and evolving body of Labour Laws. The primary data sources will be Subject Matter Commentaries, Research Journals, and case laws, supplemented by the knowledge the researcher possesses as an academic researcher of Labour Laws.

Scope and Limitations

The scope of the research is restricted primarily because of the fact that the constraints of time pose a significant challenge to this study, particularly given the vast yet complex nature of Labour Laws jurisprudence surrounding interplay between different statutes concerning meaning and scope of the concept of Minimum Wages to workmen/employees. While every effort will be made to provide a thorough analysis of the topic so as to provide justice to the time spent on research over the topic, the limited time frame inevitably restricts the depth and breadth of the investigation.

Analysis

Meaning of Wage

The black’s law dictionary defines the term ‘wages’ as “The compensation agreed upon by a master to be paid to a servant, or any other person hired to do work or business for him.”¹ It is thus contemplated that whenever there exists an employer/employee relation with respect to the control exercised by the employer over the employee, a consideration for workdone in the form of wages are paid to the employee or workman on which the standard of living is determined. The Code on Wages defines wages generally as “all remuneration whether by way of salaries, allowances or otherwise, expressed in terms of money which would be in terms of employment, express or implied, where fulfilled, be payable to a person employed in respect of his employment and includes: i) Basic Pay; ii) Dearness Allowance; and iii) Retaining Allowance, if any. But does not include……..”²

There are different types of wages recognized under different labour statutes and now under one consolidated labour code that shall be discussed now. However, the elaboration and analysis shall be restricted to Minimum Wages as a type of wage under the code.

Types of Wages

There are numerous types of wages that are recognized across different jurisdictions,³ but for the present discussion, we are concerned with the ones recognized in India, that were defined by the Tripartite Committee also known as ‘The Committee on Fair Wages’⁴ (Strictly in order)

1. Ideal Wage
   The epitome of wages received in consideration of workdone by the employee wherein not only the essential needs but also the luxurious lifestyle demands can be fulfilled.
2. Living Wage
   The committee defined a living wage as “A living wage is one which should enable the earner to provide for himself and his family not only the bare essentials of food, clothing and shelter but a measure of frugal comfort including education for his children, protection against ill-health, requirements of essential social needs and a measure of insurance against the more important misfortunes including old age.”⁵ The idea of a living wage extends beyond the minimum wage. The industrial sector’s capacity to pay and the national income are taken into consideration when determining such a wage. The Committee also noted that the payment of a living wage was not supported by the national income. There should be three stages to its implementation. The salaries for all members of the working class were to be set and fixed during the first phase. Fair wages were to be established in the community and industry in the second phase. The working class was to receive the living wage in the last stage.
3. Fair Wage
   A fair wage is one that is higher than the minimum wage set by the government but lower than the living wage. The minimum wage clearly sets the lower limit of a fair wage; the capacity of the industry to pay determines the upper limit.
   Fair wage is therefore dependent on various factors that influence wage determination. These variables include employee productivity, prevailing wages, the volume and distribution of national income, and industry’s capacity to make payouts.
4. Minimum Wage
   This kind of wage is meant to cover workers’ basic needs or sufficient enough to support mere subsistence, such as an adequate standard of living that includes access to healthcare, education, and a sufficient degree of comfort.

In addition to the above-recognized types of wages, an additional recognized type introduced by the latest Code on Wages 2019 is ‘Floor Wage’. Briefly stated, the ‘labour’ as a subject is part of concurrent list under the Seventh Schedule of the Constitution allowing both Central and State Governments to come up with laws. In light of the same, the Central Government has set a floor limit for the states to follow wherein the state government even though discretionarily exercising powers to set ‘minimum wages’ cannot go below the set floor limit for payable wage as per the Central Government directive.
It is pertinent now to delve into the historical backdrop of Code on Wages and the concept of Minimum Wages envisaged in the latest code.

Code on Wages 2019 (Historical Backdrop)

With reference to the original Minimum Wages Act 1948, the first discussion in India regarding minimum wages followed its international counterpart, i.e., the Draft Convention⁶ adopted at the International Labour Conference, 1928, in the form of the Royal Commission on Labour.⁷ The Commission pointed out the need to adopt a structured wage system for the labourers. The question of wage-fixing machinery was again raised at the third and fourth meetings of the Standing Labour Committee held in 1943 and 1944 respectively. Lastly, the Minimum Wages Bill was introduced in 1946 and enacted in 1948.

Moving forward to the present times, consistent with the ambitious “reforms agenda,” which aims to combine several labour laws into four distinct laws to facilitate ease of doing business in India, in accordance with the recommendations of the Second National Commission on Labour 2002,⁸ the current NDA government, in its second term, determinedly implemented the Code on Wages. In the Lok Sabha, the Code on Wages was first presented in 2017. Nevertheless, this bill lapsed when the Sixteenth Lok Sabha session was dissolved. Following the Standing Labour Committee’s examination, the code was revised and reintroduced in July 2019 with the Committee’s recommendations taken into account.

It is to be taken into consideration that before the introduction of the code, there existed a minimum of 40 central and state laws which governed the functioning of industries and labour organizations.⁹ This led to confusion and complexities in processes. Therefore, as per the government, the main objective of the Code of Wages, 2019 is to streamline and simplify the complex procedures, terms, etc mentioned in the previous laws effectively impacting on a positive note, more than 150 million workers.¹⁰

To achieve universalization of minimum wages for workers in both organized as well as unorganized sectors, the Central Government came up with the Code on Wages in 2019, one of the four codes that replaced the four wage laws in place was drawn up by the government and thus is known as the Wage Code.

The following are the 4 legislations that are amalgamated in the code:

1. ‘the Minimum Wages Act, 1948;
2. the Payment of Wages Act, 1936;
3. the Payment of Bonus Act, 1965; and
4. the Equal Remuneration Act, 1976’

A vision of the government for enacting this law was reflected through the statement of objects and reasons which asserted that merger of these 4 statutes into a single law “will facilitate the implementation and also remove the multiplicity of definitions and authorities without compromising on the basic concepts of welfare and benefits to worker.”¹¹ Further, “widening the scope of minimum wages to all workers would be a big step for equity”.¹²

Minimum Wages (From Minimum Wages Act 1948 to Code on Wages 2019)

The Minimum Wages act 1948 was introduced with the objective of preventing employee exploitation and ensuring a decent living for a worker. The government’s involvement to effectuate the objective is paramount along with other relevant stakeholders.
The Act itself has not been free from encumbrances in the form of challenges to Constitutionality of the Act on the grounds of being violative of Article 14 and Article 19 of the Constitution.

In the case of Bijay Cotton Mills Ltd. v. State of Ajmer,¹³ a dispute concerning fixation of minimum wages led to a challenge to the validity of the Act on the ground of being violative of Article 19(1)(g) since the traders were not able to carry out business due to statutory compulsion of paying minimum wages. The Supreme Court, rejecting the contention of the employers, held that “the Minimum Wages Act, 1948, is not violative of the right to freedom of trade, as it has been implemented as a part of the Directive Principles of State Policy, specifically under Article 43 of the Constitution. While it may be difficult for certain employers to start their business while complying with the payment of minimum wages, the provisions of the Act have been adopted keeping the larger interests of people in mind.” Hence, the Act was held to be constitutional.

In another case of N.M. Wadia Charitable Hospital v. State of Maharashtra,¹⁴ the government did not accept the minimum wages prescribed by the committee but rather set up a higher wage. It was held by the court that different rates for different localities may be set by the government and that such an act of the government does not violate the Constitution.

We shall first discuss the procedure involved in setting up of minimum wages in general under the existing Minimum Wages Act 1948 since the procedural aspects and concept wise the new Code on Wages 2019 and Minimum Wages Act 1948 have remained pari materia. However, there are a number of additions in Code on Wages when it comes to expanding the scope of Minimum Wages and achieving universalization of wages, thus moving the country from minimum wage to living wage.¹⁵

Recognition and Procedure for Fixation of Minimum Wages

Some important definition to be taken into consideration before moving to the procedure for fixation of wages are as follows:

Appropriate Government (Section 2(b) of the Act; Section 2(d) of the Code) –

In relation to industries such as railways, oilfields, major ports, or any establishment under central legislation, the Central government is the appropriate government. In every other industry, the State government is the appropriate government for the purpose of the Act.

Cost of Living Index Number (Section 2(d) of the Act; not defined in Code) –

An index number as ascertained by the appropriate government in the Official Gazette in relation to the employees. Under the Act, the appropriate government determines the scheduled employment, in respect of which it notifies the minimum wages to be paid by the employer to the employees. The minimum wages are determined on the basis of the cost of living index number. The cost of living index number signifies the cost of a constantly changing standard of living.

Wages (Section 2(h) of the Act; Section 2(y) of the Code) –

Already enumerated above.

Employee (Section 2(i) of the Act; Section 2(k) of the Code) –

Defined broadly as “an employee as any person who is engaged to do any skilled or unskilled, manual or clerical work, in respect of which minimum rates of wages have been fixed.”¹⁶

With the above definition in mind, we can proceed to procedural part of determining the Minimum Wages.

Wage Fixation Procedure (Section 3 – 5 of the Act; Section 5 – 14 of the Code)

“Section 3: Fixing of minimum rates of wages – (1) The appropriate Government shall, in the manner hereinafter provided,- (a) fix the minimum rates of wages payable to employees employed in an employment specified in Part I or Part II of the Schedule
Provided……..
(b) review at such intervals as it may think fit, such intervals not exceeding five years, the minimum rates of wages so fixed and revise the minimum rates, if necessary
Provided…….”

Additionally, Sub-Section 1A provides that “the appropriate government may refrain from fixing minimum wages for any Scheduled Employment where the number of employees in the whole State is less than one thousand until such number remains less than one thousand.”¹⁷

Sub-Section (2) provides (Section 6 of the Code)
“The appropriate Government may fix,—

1. a minimum rate of wages for time work;
2. a minimum rate of wages for piece work.
3. Guaranteed time rate
4. overtime rate”

The above-defined work types can also be ‘in combination’.

Sub-Section (3) provides the power to the appropriate government to fix different rates of minimum wages for the following:

1. Different scheduled employments;
2. Different classes of work in the same scheduled employment;
3. Adults, adolescents, children and apprentices; and
4. Different localities

These minimum wages can be fixed either on an (i) hourly basis; (ii) by the day; (iii) by the month, or by any other time period as prescribed by the appropriate government.

Component of Minimum Wages (Section 4 of the Act; Section 7 of the Code)

“(a) a basic rate of wages and an allowance at a rate to be adjusted, at such intervals and in such manner as the appropriate Government may direct, to accord as nearly as practicable with the variation in the cost of living index number applicable to such workers (hereinafter referred to as the “cost of living allowance”); or
(b) a basic rate of wages with or without the cost of living allowance, and the cash value of the concessions in respect of supplies of essential commodities at concessional rates, where so authorised; or
(c) an all-inclusive rate allowing for the basic rate, the cost of living allowance and the cash value of the concessions, if any.”

For fixation of Minimum Wages based on the components mentioned above, the appropriate government is required to appoint committees based on recommendations of whom final decision as to fixation of minimum wages is to be taken.
The formal procedure and for appointment of committees and their composition has been provided under Section 5 of the Act and/or Section 8 of the Code, consisting of following persons:

1. Persons representing employers.
2. Persons representing employees proportional to the persons representing employers.
3. Independent persons not exceeding 1/3rd of total members (experts).

It is also to be noted that that proposals received by the committee are to be published not less than two months from notification when the proposals of the committee were considered, and once no objections are received, the notification shall come into force on the expiry of three months from the date of issue.

In the case of Standard Vacuum Refining Company v. Its Workmen, the Supreme Court held that the following shall be the guiding principles for the determination of minimum wages by all wage fixing authorities:

1. “A standard working-class family should contain 3 units for every earning member, in which the earnings of women, children, and adolescents must be disregarded;
2. Minimum food requirement must be calculated on the basis of net calorie intake;
3. Clothing must be calculated at the rate of 18 yards per person per annum;
4. With respect to housing, the rent corresponding to the minimum area provided for under the Government’s Industrial Housing Scheme should be taken into consideration; and
5. Fuel, lighting, and other miscellaneous items of expenditure must constitute 20% of the total minimum wage.”¹⁸

In the case of Reptakos Brett & Company’s¹⁹ the Court added another factor for fixing minimum wages. It was held that the education of the children, medical requirements, minimum recreation, including festivals, etc., and provision for old age, etc. should further constitute 25% of the total minimum wage. Further, in the case of Harilal Jechand Doshi Ghatkopar v. Maharashtra General Kamgar Union,²⁰ the Bombay High Court held that the total wages would comprise of basic wages and a dearness allowance. A similar observation was given by Supreme Court that “in cases where the minimum wages are linked with the cost of living index, the amount paid on the basis of dearness allowance is not to be taken as an independent component but rather has to be considered a part and parcel of the minimum wages.”²¹

What’s New in the Code? – Overhauled

At this juncture, it is pertinent to mention that the Supreme Court in the case of People’s Union for Democratic Rights v. Union of India²² held that right to get the minimum wages is covered by right to life under Article 21 of the Constitution.
In this section of the paper, we shall discuss the major changes introduced by the new Wage Code in the labour rights regime. However, the focus shall be primarily on the changes in respect of minimum wages.

Uniformity in defining Wages

It has been discussed in the foregoing paras that so far as concerned the definition of ‘wage’, there were differences in what is to be included and excluded based on statute defining it. However, now the definition under Section 2(y) has been consolidated.

Increased Scope Minimum Wages (Floor Wage)

The modus operandi for purposes of minimum wages by the appropriate Government is in line with the requirements of the Minimum Wages Act. However, finally incorporating the recommendations of 15th Indian Labour Conference,²³ the government has introduced the new type of wage known as ‘Floor Wage’. In this regard Section 9 has been added to the code, the relevant part of which reads as follows:

“9. Power of Central Government to fix floor wage – (1) The Central Government shall fix floor wage taking into account minimum living standards of a worker in such manner as may be prescribed: Provided that different floor wage may be fixed for different geographical areas.
(2) The minimum rates of wages fixed by the appropriate Government under section 6 shall not be less than the floor wage and if the minimum rates of wages fixed by the appropriate Government earlier is more than the floor wage, then, the appropriate Government shall not reduce such minimum rates of wages fixed by it earlier.”²⁴

What is interesting to note is the fact that Central Government has taken up the exclusive power to set the floor wage and thus bringing a uniformity in terms of wages fixed by respective state governments in their jurisdictions.²⁵

This introduction of floor wage concept is considered as a landmark move aimed at curbing the disparities caused by unfettered discretion exercised by State Governments while fixing the wages.²⁶ Thus, Under no circumstances may the appropriate government set a minimum wage rate lower than the floor rate established by the union government. Furthermore, the Code suggests that the appropriate Government revaluate and modify the minimum wage rates within a maximum of five years.

The Code also makes it clear under Section 14 that in case a worker works on any day in surplus of the number of hours comprising a regular working day, the employer is to pay him for each hour or for part of an hour so worked in surplus, at the overtime rate which should not be less than double the regular rate of salary.²⁷

Code Applicable to ALL

An important feature in context of Minimum Wages is that Unlike the MW Act, as discussed above, which is only applicable to the scheduled employments set out therein, the Wages Code extends its coverage to all employments, irrespective of whether they are in the organized or the unorganized sector. (Refer to Section 5 of the Code that reads: “No employer shall pay to any employee wage less than minimum rate of wage notified by appropriate government”)²⁸

Parity in Payments Irrespective of Gender (Women Empowerment)

The Equal Remuneration Act 1976 contemplated that no discrimination is to be done between a male and female worker. But did not took into consideration ‘Gender’ that is also considered as a fluid concept. However, in a rather what can be said to be a landmark step, the government has introduced Section 3 to the new Code on Wages that explicitly prohibits discrimination on the basis of Gender. This section can be deemed to be in line with Article 15 of the Constitution.
Section 3 of the code reads:

“Prohibition of discrimination on ground of gender – (1) There shall be no discrimination in an establishment or any unit thereof among employees on the ground of gender in matters relating to wages by the same employer, in respect of the same work or work of a similar nature done by any employee…….”²⁹

Compatible with the Equal Remuneration Act, the Code, inter-alia, encompasses these necessities barring unfairness on basis of gender: (i) with respect to wages by employers, with respect to same labour or work of an analogous nature finished by employees and (ii) with respect to employment of employees for same labour or work of a comparable nature.³⁰ Further, it is pertinent to note that under the Equal Remuneration Act, the meaning of reimbursement was unfeasible to distinguish, and include basic wage or pay and any supplementary honorarium whatsoever billed in hard cash or kind to a human being in employment with respect to service or work done. Conversely, as per the Code, the mechanism comprises wages for the rationale of compensation of identical salary irrespective of gender, leaving little opportunity for mystification in this regard.³¹

In line with the unique new features introduced by the Code on Wages as discussed in the preceding headings, the government plans to shift from Minimum Wage guarantee once the universalization is achieved to Living Wage Guarantee by 2025.³²

It is regrettable to state but the new introduction as has been discussed are limited when compared to the critique and loopholes the Code presents in the current societal scenario. We shall now move to discuss the critique part of the new Code on Wages.

Critique – Problems too many?

The criticisms are many covering the various aspects of Code on Wages. However, for the present discussion, I intend to limit the discussion to criticisms that directly relate to Minimum Wages and not otherwise.

All but ‘not all’ covered

As ideal and game-changing as the provision under Section 5 of the Code on Wages may seem by dramatically ditching the Schedule/fix set of covered working class, and expanding the scope of the Act to all working class organized and unorganized, it does come with its own drawbacks.

Section 5 refers to ‘employees’; the definition of employee under Section 2(k) of the Code specifically requires that ‘any person’ must be employed on wages by an ‘establishment’.³³ Further enquiry into the meaning of ‘establishment’ under Section 2(m) of the Code³⁴ would reveal that definition of establishment excludes wage earners in the household and agricultural sector from the scope of the coverage as the said definition is silent regarding inclusion of private households or owners of agricultural holdings under its ambit.³⁵

Not only this but one of the prominent research scholar argues by extending the above problem in the sense that the wage code also has a provision which exclude employers employing less than five workers for domestic and agricultural purposes from maintaining registers of employees, displaying notice boards relating to category wise wage rates and issuing wage slips to workers.³⁶ It just states that such employers shall able to produce ‘reasonable proof of payment of wages’, if demanded by the inspector-cum-facilitator, which will lead to vulnerable situation for these workers under a definition which is silent about their minimum wage coverage. Maintenance of registers and issuance of wage slips are central to effective implementation and used as reference documents to establish employment relationship in the event of a dispute. It merely specifies that these employers must be able to provide “reasonable proof of payment of wages” upon request from the inspector-cum-facilitator. This leaves these workers in a precarious situation because the definition makes no mention of their minimum wage coverage. In order to ensure proper implementation, it is essential to maintain registers and issue wage slips, which serve as reference documents to establish employment relationships in the event of a dispute. Thus, their replacement with an establishment-based definition of an employee and a clause requiring reasonable proof of paying wages without defining “a reasonable proof” even in the wage rules amounts to increasing the risk of vulnerable workers slipping outside the scope of the universal coverage. Due to their difficulties in establishing an employment relationship, millions of domestic, home, and agricultural workers as well as other workers employed by households may be excluded from the wage code’s practical implementation. The gendered nature of the domestic and agricultural sectors has a big impact on women workers too.

New Emergent Workforce not Recognized

The code focuses on traditional employer-employee relations, and neglects the upcoming non-traditional form of employer-employee relations like new categories of workers such as ‘gig and platform workers, out-workers, contract workers, etc., are also largely not recognized by the code though they are sizeable in amount for example the delivery persons employed by food platforms like Zomato or Swiggy. Although I believe that the term employees under the broadened scope may very well cover these type of employees, but the question as to establishing an employer-employee relationship remains a tough task. Notwithstanding the foregoing argument, the release of notification by the GoI implementing the Labour Codes including Code on Wages mentions that now the definition under the Code includes Gig Workers, Platform Work, and Aggregators, putting an end to social security and benefits concern of gig platform workers.³⁷

No Gender Discrimination allowed – Is it practical?

Section 3 of the Act prohibits gender-based discrimination. Further, it goes on to prohibit any discrimination in employing based on sex of the employee. Thus, targeting the gender pay gap existing in the industry. However, arguments are raised as to the practicality and feasibility of this provision in the societal structure we are currently living in. Though, I personally believe that keeping aside enforcement part of this provision, it was need of the hour that such provision in line with our Constitutional Provisions is Introduced.

Employee or Workman – Difference Created

It was the case before the enactment of this Code on Wages that there practically existed no difference between a workman and an employee except that the former is associated with unorganized sector while the latter with organized sector with a proper employment contract in place. However, the legislature has deliberately made 2 beneficiaries under the code distinguishing a worker (under Section 2(z)) and an employee (under Section 2(k))
The definitions have been reproduced below for further discussion:

“Section 2(z) – “worker” means any person (except an apprentice as defined under clause (aa) of section 2 of the Apprentices Act, 1961) employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, whether the terms of employment be express or implied, and includes—……”³⁸
“Section 2(k) – “employee” means, any person (other than an apprentice engaged under the Apprentices Act, 1961), employed on wages by an establishment to do any skilled, semi-skilled or unskilled, manual, operational, supervisory, managerial, administrative, technical or clerical work for hire or reward, whether the terms of employment be express or implied, and also includes a person declared to be an employee by the appropriate Government, but does not include……”³⁹

From the very basis that the code distinguishes between the two, the benefits extended to the working class automatically differ, no more preserving the universal characteristics of wages claimed by the legislature. On various heads the difference in benefits extending to an employee as compared to a workman can be seen including but not limited to cases of calculation of wages where certain benefits are only workers and not to managers and supervisors when these post holders are employees.⁴⁰

Other problems also arise due to such classification, example the minimum wage as notified by the government shall be paid by the employers to an employee under Sec 5, where the appropriate government (state government) shall fix the rate as prescribed under Sec 6. Until this point, the obligation to receive minimum wage is not contingent upon a person’s designation, roles, responsibilities, present wage, or type of establishment where s/he is employed, or the kind of work/employment s/he performs. But Sec 6(6), lays down specific criteria for state government, viz., the skill, working conditions, and geographic area of a worker to fix minimum wages.⁴¹

It could imply that when the government determines the minimum wage rate for workers exclusively, three factors—skill, working conditions, and geographical area—will be taken into consideration. There shall be no such criteria for employees. It might also imply that the government will set minimum wages exclusively for “workers,” which is untrue given that the Labour Secretary stated in an interview that minimum wages will be paid to all those covered by the Code, including workers and employees.⁴²

Minimum Wage Determination Anomaly

The method adopted for calculating the minimum wage was at the centre of controversy for a long. A set of standard criteria was first established many years ago during the tripartite proceedings of the Indian Labour Conference. This set of criteria was subsequently broadly approved by the Supreme Court of India in several cases, including Standard Vacuum Refining Co. of India v. Its Workmen,⁴³ Standard Newspapers (P) Ltd. v. Union of India,⁴⁴ and Workmen Represented by Secretary v. Management of Reptakos Brett. & Co. Ltd.⁴⁵

As per the guidelines charted out in the number of judgements, minimum wage brought together the minimum expenses on food with non-food items like clothing and housing. The code claims a universal minimum wage to be implemented, however, at the same time varying factors are also equally given importance under Section 6 of the Code like the skillset of the worker, geographical area. However, Section 9 provides that central government may fixed floor wage limit. Now considering the varying factors depending on skillset and different geographical conditions it is largely infeasible that a fixed national floor wage may be set by the central government for different states. Thus, there cannot be practically a single national floor wage as envisioned by the government.

There are number of other issues dealing with different dynamics of Code on Wages. However, the discussion on critiquing this law must be brought to a rest limiting the analysis to cover issues pertaining to Minimum Wages under the Code. We can now move ahead to discuss some relevant judicial precedents that have been recently delivered by the Supreme Court, furthering the development of jurisprudence in the realm of Labour Wages.

Recent Judicial Trends (Labour Wage Jurisprudence)

I intend to cover some interesting cases that plays a contributory role in the extensively developed Labour Wages jurisprudence.
Arvind Kumar Pandey v. Girish Pandey⁴⁶ – The case although concerned a claim under Motor Vehicle Act 1988 wherein a homemaker was deceased, observed that “it goes without saying that the role of a homemaker is as important as that of a family member whose income is tangible as a source of livelihood for the family. The activities performed by a home-maker, if counted one by one, there will hardly be any doubt that the contribution of a home-maker is of a high order and invaluable.” However, when deciding on the deemed monthly income of the homemaker, the court connected the situation to employment and observed that “Assuming that the deceased was not employed, it cannot be disputed that she was a homemaker. Her direct and indirect monthly income, in no circumstances, could be less than the wages admissible to a daily wager in the State of Uttarakhand under the Minimum Wages Act.” Hence, the inference of principles and law outlined in Minimum Wages Act was extended to determining claims under MVA 1988.

Assistant Provident Fund Commissioner v. M/S G4s Security Services (India) Ltd.⁴⁷ – The court while dealing with a matter pertaining to Employee Provident Fund 1952 specifically with regard to payment toward the provident fund wherein discrepancy by the way of treating reduced wage as basic wage to avoid actual payment of contribution in Provident Fund was alleged. The court observed that “when the term ‘basic wage’ has been described under Section 2(b) of the Employee Provident Fund Act 1952, there is no need to make a reference to definition of ‘minimum rate of wages’ under Section 4 of the Minimum Wages Act, 1948 to give it a more expansive meaning.”

Md. Imran Ahmad v. Government of NCT of Delhi⁴⁸ – In this instance, the petitioner sought the issuance of a writ of mandamus by filing a Public Interest Litigation under Article 226 of the Constitution against the Government of the National Capital Territory of Delhi. There are several job openings advertised on the Delhi government’s employment portal. The petitioner contended that the employment opportunities listed on the platform did not adhere to the Minimum Wage Act of 1948 or the notifications issued by the Delhi government on the minimum wage. The Court ordered the Government of the National Capital Territory of Delhi to prohibit any ads that do not adhere to the 1948 Minimum Wages Act.

Hindustan Sanitaryware and Industries Ltd. v. The State of Haryana⁴⁹ – In accordance with Section 5 of the Minimum Wages Act, 1948, the Haryana government issued a notice setting the minimum wages. The criteria for classifying unskilled labour as semi-skilled and semi-skilled labour as skilled based on experience level was outlined in the aforementioned notification.

The notification in question was contested before the P&H High Court where the legitimacy of the notification was affirmed. Hindustan Sanitaryware and Industries Ltd. filed an SLP. The Supreme Court ruled that classifying employees according to their experience level would violate their employment contracts, which are beyond the jurisdiction of the government.

Conclusion

It can be stated from the foregoing intended extensive analysis of Minimum Wages under the Code on Wages 2019, that wages are not just monetary compensation for labour; they are the essential for a worker’s livelihood, dignity, and economic well-being. The Code on Wages, 2019, marks a significant milestone in the evolution of wage laws in India, aiming to simplify and streamline the complex web of regulations governing wages. However, while the Code introduces several progressive reforms, it also brings to light certain challenges and ambiguities that need to be addressed for effective implementation.

The Code’s emphasis on uniformity in defining wages and ensuring gender parity in payments reflects a positive step towards creating a more equitable and inclusive workforce. The inclusion of a floor wage provides a safety net for workers, ensuring that their wages do not fall below a certain threshold. These provisions, if implemented effectively, have the potential to uplift millions of workers and their families, contributing to overall social and economic development.

Despite these positive aspects, the Code faces criticism for its limitations. Ironically as the analysis suggests, that these criticisms emanate out of the very changes that are praised for being introduced through the new Wage Code. These criticism include but are not limited to exclusion of certain categories of workers and the lack of recognition for the new emergent workforce raising concerns about inclusivity and fairness. Moreover, the practicality of enforcing a blanket prohibition on gender discrimination in wages remains to be seen, given the deeply entrenched social and cultural norms.

Recent judicial trends in labour wage jurisprudence indicate a growing awareness and sensitivity towards issues of wage discrimination and exploitation. Courts have played a crucial role in interpreting and expanding the scope of minimum wages, ensuring that the legislative intent behind wage laws is upheld.

Looking ahead, India’s ambitious vision to become a truly socialist country with everlasting prosperity hinges on the effective implementation of wage laws that balance the interests of workers and employers. It is imperative for policymakers to address the challenges and ambiguities in the Code on Wages through continuous dialogue and consultation with stakeholders. By ensuring that wage laws are progressive, inclusive, and reflective of the changing nature of work, India can pave the way for a more equitable and prosperous future for all its citizens.

Bibliography

I Printed Sources

Books

• O.P. MALHOTRA, THE LAW OF INDUSTRIAL DISPUTES, (6th ed. 2001).
• SURESH C SHRIVASTAVA, INDUSTRIAL RELATIONS AND LABOUR CODES, (6th ed. 2012).
• DR. HK SAHARAY, TEXTBOOK ON LABOUR AND INDUSTRIAL LAW, (7th ed. 2017).

Articles

• Abhishek Sharma Padmanabhan & Pavan Vinayak, Will The Dream Of Fair Wages Be Secured By Code On Wages, 2019 In India – Hope/Despair For Employees?,27 MADHYA PRADESH JOURNAL OF SOCIAL SCIENCES 113, 115 (2022).
• Vaishnavi Eshwar & Sawant Singh, Wage Code – A Step In The Right Direction, MONDAQ (2019), https://www.mondaq.com/india/employee-benefits-compensation/839894/wage-code–a-step-in-the-right-direction.
• Bhoomija Pandey & Jigyasa Kumar, Unraveling the Multi Dimensional Aspects Of 2019 Wage Code, 1 ILE LLR 11, 14 (2022).
• Anoop Satpathy et al., Wage code and rules – Will they improve the effectiveness of minimum wage policy in India?, SSRN 1, 5 (2020).
• Santanu Sarkar, The 2019 Code on Wages: Truth versus Hype, 57 INDIAN J. IND. RELAT. 1, 4 (2021).
• Shreya Kapoor, A Critical Analysis of the Code of Wages 2019: Need for Right to Minimum Wage, 2 INDIAN J.L. & LEGAL RSCH. 1, 7 (2021).

Reports

• Ministry of Labour and Employment, Note on Wages Law, GOI (2022), https://labour.gov.in/en/introduction-1
• ILO, THIRD PERIODICAL REPORT ON THE WORKING OF THE MINIMUM WAGE FIXING MACHINERY CONVENTION, 1928 (NO. 26): DRAFT / GOVERNING BODY OF THE INTERNATIONAL LABOUR OFFICE 1, 2 (1960), https://labordoc.ilo.org/discovery/delivery/41ILO_INST:41ILO_V2/1211858408000267.
• ILO, INTERNATIONAL LABOUR OFFICE, RECORD OF PROCEEDINGS : INTERNATIONAL LABOUR CONFERENCE, 11TH SESSION, GENEVA, 1928, INTERNATIONAL LABOUR OFFICE, (1928), https://labordoc.ilo.org/discovery/fulldisplay/alma994691303402676/41ILO_INST:41ILO_V2.
• Ravindra Vema, SECOND NATIONAL COMMISSION OF LABOUR 2002, GOI 1, 1338 (2002), https://labour.gov.in/sites/default/files/39ilcagenda_1.pdf#page=1.00&gsr=0.
• Labour Bureau, REPORT ON MINIMUM WAGES ACT, 1948 FOR THE YEAR 2019, GoI (2023), https://labourbureau.gov.in/uploads/pdf/MWA_Report_2019.pdf.

II Online Sources

• The Law Dictionary, WAGES Definition & Legal Meaning, BLACK’S LAW DICTIONARY (2020), https://thelawdictionary.org/wages/#:~:text=The%20compensation%20agreed%20upon%20by,work%20or%20business%20for%20him.
• Rinaily Bonifacio, Type of Wages: Everything You Need To Know, SHIFTBASE (2024), https://www.shiftbase.com/glossary/type-of-wages#Different+types+of+wages+and+examples+of+jobs+that+offer+them.
• Law Pedia, Concept of minimum wages fair wage and living wage and need based minimum wages, TIMES OF INDIA (2023), https://timesofindia.indiatimes.com/readersblog/lawpedia/concept-of-minimum-wages-fair-wage-and-living-wage-and-need-based-minimum-wages-51504/.
• Vaishnavi Eshwar & Sawant Singh, Wage Code – A Step In The Right Direction, MONDAQ (2019), https://www.mondaq.com/india/employee-benefits-compensation/839894/wage-code–a-step-in-the-right-direction.
• Yogima Sharma, Minimum wage hike may be deferred this year, ECONOMIC TIMES (2020), https://economictimes.indiatimes.com/news/company/corporate-trends/minimum-wage-hike-may-be-deferred-this-year/articleshow/75983391.cms.
• Shivangini, India to shift from minimum wage to living wage system by 2025: Know what it means for the country, LIVEMINT (2024), https://www.livemint.com/economy/india-to-shift-from-minimum-wage-to-living-wage-system-by-2025-know-what-it-means-for-the-country-11711504784820.html.
• TOI Business Desk, Government to replace minimum wage with living wage by 2025, TIMES OF INDIA (2024), https://timesofindia.indiatimes.com/business/india-business/government-to-replace-minimum-wage-with-living-wage-by-2025/articleshow/108762357.cms.

References

1. The Law Dictionary, WAGES Definition & Legal Meaning, BLACK’S LAW DICTIONARY (2020), https://thelawdictionary.org/wages/#:~:text=The%20compensation%20agreed%20upon%20by,work%20or%20business%20for%20him.
2. Minimum Wages Act, 1948, §2(h); Code on Wages, 2019, §2(y).
3. Rinaily Bonifacio, Type of Wages: Everything You Need To Know, SHIFTBASE (2024), https://www.shiftbase.com/glossary/type-of-wages#Different+types+of+wages+and+examples+of+jobs+that+offer+them.
4. Ministry of Labour and Employment, Note on Wages Law, GOI (2022), https://labour.gov.in/en/introduction-1; Law Pedia, Concept of minimum wages fair wage and living wage and need based minimum wages, TIMES OF INDIA (2023), https://timesofindia.indiatimes.com/readersblog/lawpedia/concept-of-minimum-wages-fair-wage-and-living-wage-and-need-based-minimum-wages-51504/.
5. See Id.
6. ILO, THIRD PERIODICAL REPORT ON THE WORKING OF THE MINIMUM WAGE FIXING MACHINERY CONVENTION, 1928 (NO. 26) : DRAFT / GOVERNING BODY OF THE INTERNATIONAL LABOUR OFFICE 1, 2 (1960), https://labordoc.ilo.org/discovery/delivery/41ILO_INST:41ILO_V2/12118584080002676.
7. ILO, INTERNATIONAL LABOUR OFFICE, RECORD OF PROCEEDINGS : INTERNATIONAL LABOUR CONFERENCE, 11TH SESSION, GENEVA, 1928, INTERNATIONAL LABOUR OFFICE, (1928), https://labordoc.ilo.org/discovery/fulldisplay/alma994691303402676/41ILO_INST:41ILO_V2.
8. Ravindra Vema, SECOND NATIONAL COMMISSION OF LABOUR 2002, GOI 1, 1338 (2002), https://labour.gov.in/sites/default/files/39ilcagenda_1.pdf#page=1.00&gsr=0.
9. Vaishnavi Eshwar & Sawant Singh, Wage Code – A Step In The Right Direction, MONDAQ (2019), https://www.mondaq.com/india/employee-benefits-compensation/839894/wage-code–a-step-in-the-right-direction.
10. Yogima Sharma, Minimum wage hike may be deferred this year, ECONOMIC TIMES (2020), https://economictimes.indiatimes.com/news/company/corporate-trends/minimum-wage-hike-may-be-deferred-this-year/articleshow/75983391.cms.
11. Code on Wages Bill, 2019, Bill No. 184 of 2019, Statement of Objects and Reasons.
12. See Id. at 30.
13. 1955 AIR 33.
14. (1993) IIILLJ 541 Bom.
15. Shivangini, India to shift from minimum wage to living wage system by 2025: Know what it means for the country, LIVEMINT (2024), https://www.livemint.com/economy/india-to-shift-from-minimum-wage-to-living-wage-system-by-2025-know-what-it-means-for-the-country-11711504784820.html.
16. Minimum Wages Act, 1948, §2(i); Code on Wages, 2019, §2(k).
17. See Id.
18. Standard Vacuum Refining Company v. Its Workmen, 1960 AIR 948.
19. Workmen v. Reptakos Brett & Co. Ltd., 1992 AIR 504.
20. 2000 (1) BOM CR 620.
21. Airfreight Ltd. v. State of Karnataka, 1999 AIR SCW 2608.
22. 1982 3 SCC 235.
23. Abhishek Sharma Padmanabhan & Pavan Vinayak, Will The Dream Of Fair Wages Be Secured By Code On Wages, 2019 In India – Hope/Despair For Employees?, 27 MADHYA PRADESH JOURNAL OF SOCIAL SCIENCES 113, 115 (2022).
24. Code on Wages, 2019, §9.
25. Bhoomija Pandey & Jigyasa Kumar, Unraveling the Multi Dimensional Aspects Of 2019 Wage Code, 1 ILE LLR 11, 14 (2022).
26. Labour Bureau, REPORT ON MINIMUM WAGES ACT, 1948 FOR THE YEAR 2019, GoI (2023), https://labourbureau.gov.in/uploads/pdf/MWA_Report_2019.pdf.
27. Code on Wages, 2019, §14.
28. See Id. §5.
29. See Id. §3.
30. Abhishek Sharma, supra note 23, at115.
31. See Id.
32. TOI Business Desk, Government to replace minimum wage with living wage by 2025, TIMES OF INDIA (2024), https://timesofindia.indiatimes.com/business/india-business/government-to-replace-minimum-wage-with-living-wage-by-2025/articleshow/108762357.cms.
33. Code on Wages, 2019 §2(k).
34. See Id. §2(m).
35. Anoop Satpathy et al., Wage code and rules – Will they improve the effectiveness of minimum wage policy in India?, SSRN 1, 5 (2020).
36. Code on Wages, 2019, §50(4).
37. Ministry of Labour and Employment, GoI, (November 21, 2025), https://labour.gov.in/sites/default/files/pib2192463.pdf.
38. Code on Wages, 2019, §2(z).
39. See Id. §2(k).
40. Santanu Sarkar, The 2019 Code on Wages: Truth versus Hype, 57 INDIAN J. IND. RELAT. 1, 4 (2021); Shreya Kapoor, A Critical Analysis of the Code of Wages 2019: Need for Right to Minimum Wage, 2 INDIAN J.L. & LEGAL RSCH. 1, 7 (2021).
41. Code on Wages, 2019, §6(6).
42. Shantanu supra note 39, at 5.
43. 1960 AIR 948.
44. (1986) 1 SCC 133.
45. 1992 AIR 504.
46. SLP(C) No.-020918 / 2022.
47. Civil Appeal No. 9284 OF 2013.
48. W.P.(C) 1922/2023.
49. Civil Appeal Nos. 2539 of 2010 and 4454 of 2019.