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Presently, there are around 40 state and central laws regulating different aspects of labour, such as resolution of industrial disputes, working conditions in factories, and wage and bonus payments. Over the years, some experts have recommended that these laws should be consolidated for easier compliance.[1] Since the current laws vary in their applicability, consolidation would also allow for greater coverage.
Following these recommendations, the Code on Wages was introduced in the Lok Sabha in August 2017. The Code consolidates four laws related to minimum wages, payment of wages and bonus, and a law prohibiting discrimination between men and women during recruitment promotion and wage payment.
The Code was subsequently referred to the Standing Committee on Labour for examination. The Committee has met some experts and stakeholders to hear their views. In this context, we explain the current laws, key provisions of the Code, and some issues to consider.
Who will be entitled to minimum wages?
Currently, the Minimum Wages Act, 1948 lists the employments where employers are required to pay minimum wages to workers. The Act applies to the organised sector as well as certain workers in the unorganised sector such as agricultural workers. The centre and states may add more employments to this list and mandate that minimum wages be paid for those jobs as well.[2] At present, there are more than 1700 employments notified by the central and state governments.[3]
The Code proposes to do away with the concept of bringing specific jobs under the Act, and mandates that minimum wages be paid for all types of employment – irrespective of whether they are in the organised or the unorganised sector.
The unorganised sector comprises 92% of the total workforce in the country.1 A large proportion of these workers are currently not covered by the Minimum Wages Act, 1948. Experts have noted that over 90% of the workers in the unorganised sector do not have a written contract, which hampers the enforcement of various labour laws.[4]
Will minimum wages be uniform across the country?
No, different states will set their respective minimum wages. In addition, the Code introduces a national minimum wage which will be set by the central government. This will act as a floor for state governments to set their respective minimum wages. The central government may set different national minimum wages for different states or regions. For example, the centre can set a national minimum wage of Rs 10,000 for Uttar Pradesh and Rs 12,000 for Tamil Nadu. Both of these states would then have to set their minimum wages either equal to or more than the national minimum wage applicable in that state.
The manner in which the Code proposes to implement the national minimum wage is different from how it has been thought about in the past. Earlier, experts had suggested that a single national minimum wage should be introduced for the entire country.1,[5] This would help in bringing uniformity in minimum wages across states and industries. In addition, it would ensure that workers receive a minimum income regardless of the region or sector in which they are employed.
The concept of setting a national minimum wage exists in various countries across the world. For instance, in the United Kingdom one wage rate is set by the central government for the entire country.[6] On the other hand, in the United States of America, the central government sets a single minimum wage and states are free to set a minimum wage equal to or above this floor.[7]
On what basis will the minimum wages be calculated and fixed?
Currently, the central government sets the minimum wage for certain employments, such as mines, railways or ports among others. The state governments set the minimum wage for all other employments. These minimum wages can be fixed based on the basis of different criteria such as type of industry or skill level of the worker. For example, Kerala mandates that workers in oil mills be paid minimum wages at the rate of Rs 370 per day if they are unskilled, Rs 400 if they are semi-skilled and Rs 430 if they are skilled.[8]
The Code also specifies that the centre or states will fix minimum wages taking into account factors such as skills required and difficulty of work. In addition, they will also consider price variations while determining the appropriate minimum wage. This process of fixing minimum wages is similar to the current law.
Will workers be entitled to an overtime for working beyond regular hours?
Currently, the central or state government define the number of hours that constitute a normal working day. In case an employee works beyond these hours, he is entitled to an overtime rate which is fixed by the government. As of today, the central government has fixed the overtime rate at 1.5 times normal wages in agriculture and double the normal wages for other employments.[9]
The Code proposes to fix this overtime rate at twice the prevailing wage rate. International organisations have recommended that overtime should be 1.25 times the regular wage.[10]
Does the Code prohibit gender discrimination between workers?
Currently, the Equal Remuneration Act, 1976 prohibits employers from discriminating in wage payments as well as recruitment of workers on the basis of gender. The Code subsumes the 1976 Act, and contains specific provisions which prohibit gender discrimination in matters related to wages. However, unlike in the 1976 Act, the Code does not explicitly prohibit gender discrimination at the stage of recruitment.
How is the Code going to be enforced?
The four Acts being subsumed under the Code specify that inspectors will be appointed to ensure that the laws are being enforced properly. These inspectors may carry out surprise checks, examine persons, and require them to give information.
The Code introduces the concept of a ‘facilitator’ who will carry out inspections and also provide employers and workers with information on how to improve their compliance with the law. Inspections will be carried out on the basis of a web-based inspection schedule that will be decided by the central or state government.
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[1]. Report of the National Commission on Labour, Ministry of Labour and Employment, 2002, http://www.prsindia.org/uploads/media/1237548159/NLCII-report.pdf.
[2]. Entries 22, 23 and 24, List III, Seventh Schedule, Constitution of India.
[3]. Report on the Working of the Minimum Wages Act, 1948, Ministry of Labour and Employment, 2013, http://labourbureaunew.gov.in/UserContent/MW_2013_final_revised_web.pdf.
[4]. Report on Conditions of Work and Promotions of Livelihood in the Unorganised Sector, National Commission for Enterprises in the Unorganised Sector, 2007, http://nceuis.nic.in/Condition_of_workers_sep_2007.pdf.
[5]. Report of the Working Group on Labour Laws and other regulations for the Twelfth five-year plan, Ministry of Labour and Employment, 2011, http://planningcommission.gov.in/aboutus/committee/wrkgrp12/wg_labour_laws.pdf.
[6]. Section 1(3), National Minimum Wage Act, 1998, http://www.legislation.gov.uk/ukpga/1998/39/pdfs/ukpga_19980039_en.pdf.
[7]. Section 206(a)(1), The Fair Labour Standards Act, 1938, https://www.dol.gov/whd/regs/statutes/FairLaborStandAct.pdf.
[8]. G.O. (P) No.36/2017/LBR, Labour and Skills Department, Government of Kerala, 2017, https://kerala.gov.in/documents/10180/547ca516-c104-4b31-8ce7-f55c2de8b7ec.
[9]. Section 25(1), Minimum Wages (Central) Rules, 1950
[10]. C030-Hours of Work (Commerce and Offices) Convention (No. 30), 1930,http://www.ilo.org/dyn/normlex/en/f?p=NORMLEXPUB:12100:0::NO::P12100_INSTRUMENT_ID:312175.
There have been articles in the media on the future passage of the Women's Reservation Bill stating that the Bill will have to be ratified by state legislatures before it is signed into law by the President. Our analysis indicates that ratification by state legislatures is not required. We state the reasons below: This Bill amends the Constitution. It (a) amends Article 239AA, Article 331, and Article 333, and (b) inserts Article 330A, Article 332A, and Article 334A. In doing so the Bill:
Article 368 regulates the procedure for amending the Constitution. It states that the ratification of the state legislatures to a constitutional amendment is required in the following cases: a. If there is a change in the provisions regarding elections to the post of the President of India. b. If there is a change in the extent of the executive power of the centre or the state governments. c. If there is any change in the provisions regarding the Union judiciary or the High Courts. d. If the distribution of legislative powers between the centre and the states is affected. e. If any of the Lists in the Seventh Schedule is affected. f. If the representation of the states in the Rajya Sabha is changed. g. Lastly, if Article 368 itself is amended. None of these provisions are attracted in the case of the Women's Reservation Bill. The Parliament recently extended the reservation of seats for SCs, STs and Anglo-Indians in Lok Sabha and Legislative Assemblies by another ten years. Article 334 was amended to state that such reservation "will cease to have effect on the expiration of a period of seventy years from the commencement of the Constitution." The 109th Amendment Bill was passed by both Houses of Parliament and did not require the ratification of the states before being signed into law by the President. It follows that if Bills amending provisions for reserving seats for SCs and STs don't need ratification by state legislatures, a bill reserving seats for women does not need ratification either. Thus Article 368 very clearly lays down situations in which state legislatures have to ratify a piece of legislation before it can receive the assent of the President.
