Labour, Jobs and Employment – Harmonization of labour laws, gender gap, unemployment, etc.

Code on Wages 2019


From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2-Issues with the Code on the Wages

The article discusses the issues in the Code on Wages (yet to be notified) 2019 and how it fails to achieve what it seeks to achieve.

Code on Wages 2019

  • The Code on Wages, 2019 seeks to consolidate and simplify four pieces of legislation into a single code. These 4 legislations are-
  • 1) Payment of Wages Act, 1936.
  • 2) Minimum Wages Act, 1948.
  • 3) Payment of Bonus Act, 1965.
  • 4) Equal Remuneration Act, 1976.
  • Its object and reasons stated that even the Second National Commission on Labour- 2002 suggested consolidating all labour laws into four codes.

Issues with the consolidation

  • While the previous four pieces of legislation had a total of 119 sections, the new Code has 69 sections.
  • Any consolidation will impact the length of the sections.
  • Further, all requirements for enforcing the Act, have been relegated to the Rules.
  • As a result, the delegated pieces of legislation (Rules) will be bigger than the Code; this is no way to condense prior pieces of legislation.
  • All the four repealed pieces of legislation were enacted historically at different points in time and to deal with different situations.
  • The combining of asymmetrical laws into a single code is not an easy task and will only create its own set of new problems.
  • The central government will have the power to fix a “floor wage”.
  • Once it is fixed, State governments cannot fix any minimum wage less than the “floor wage”.
  •  The concept should be for a binding minimum wage and not have dual wage rates — a binding floor wage and a non-binding minimum wage.
  • Neither the Code nor the Rules (presently, draft Rules) prescribe the qualifications and experience required for appointment of competent authority.
  • Anew provision (Section 52) has been introduced where an officer will be notified with power to impose a penalty in the place of a judicial magistrate.
  • An essential judicial function is now sought to be vested with the executive in contravention of Article 50 of the Constitution.

Issue of MGNREGA wages

  • There were cases as to whether the Minimum Wages Act would have an over-riding effect over the provisions of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), 2005.
  • Several High Courts have placed the Minimum Wages Act to override MGNREGA.
  • That has been set to rest by excluding MGNREGA from the purview of the Code on Wages.
  • That has been set to rest by excluding MGNREGA from the purview of the Code on Wages.


The Code on Wages (yet to be notified) has neither succeeded in consolidation of laws nor will it achieve the expansion of the coverage of workers in all industries in the unorganised sector.

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