New Labour Codes of India

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Prof. K D Raju
Rajiv Gandhi School of Intellectual Property Law
Indian Institute of Technology Kharagpur

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Lecture 21: The Code on Wages, 2019 – An Introduction
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• Highlights of Wage Code 2019
• Definition of Wages
• Definition of Contract Labour

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• Definition of Contractor
• Powers of Inspector-cum-Facilitator

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• Wages
• Contract Labour
• Contractor

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• Inspector-cum-facilitator

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The Code on Wages, 2019 - Introduction
• Under the Constitution of India, labour is a subject
in the Concurrent List of the 7th Schedule where
both the Central and State Governments are
competent to enact legislation.

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• The Central Government is empowered to fix the
Floor wages by taking into account the living

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standards of workers.

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The Code on Wages, 2019 - Introduction
• It may set different floor wages for different
geographical areas.
• The minimum wages decided by the central or state
governments must be higher than the floor wage.

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• The Floor wage may be revised every 5 years.
• The Floor wage will be decided in consultation

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with the Central Advisory Board and certain
state governments as the central government
deems necessary. N
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The Code on Wages, 2019 - Introduction
• It consolidates the provisions of 4 labour laws concerning wage and bonus
payments and makes universal the provisions for minimum wages and timely
payment of wages for all workers in India.
• The Code repeals and replaces

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• The Payment of Wages Act, 1936,
• The Minimum Wages Act, 1948,
• The Payment of Bonus Act, 1965, and

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• The Equal Remuneration Act, 1976
• The Code comprised of 69 Sections under IX Chapters.

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The Code on Wages, 2019 - Introduction
• Nothing contained in this Code shall be deemed to
affect the provisions of
• The Mahatma Gandhi National Rural
Employment Guarantee Act, 2005 and

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• The Coal Mines Provident Fund and
Miscellaneous Provisions Act, 1948,

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• Or of Any scheme made thereunder.

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The Code on Wages, 2019 - Introduction
• Swaraj Abhiyan-III v. Union of India, WP. No.857
of 2015.
• Sanjit Roy v. State of Rajasthan, AIR 1983 SC 328.
• The Court held that the Rajasthan Famine Relief Works

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Employees (Exemption from Labour Laws) Act, 1964 is
Constitutionally invalid as to the exclusion of the minimum

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wages act.
• Providing labour for less than the minimum wage amounts
to forced labour and as such violates Article 23 of the
Constitution.
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Draft Code on Wages (Central) Rules, 2020
• The draft rules, seeks to be in supersession of the:
i. Payment of Wages (Procedure) Rules, 1937;
ii. Payment of Wages (Nomination) Rules, 2009;
iii. Minimum Wages (Central) Rules, 1950;
iv. Minimum Wages (Central Advisory Board) Rules, 2011;

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v. Ease of Compliance to Maintain Register under various Labour
Laws Rules, 2017;
vi. Payment of Bonus Rules, 1975;

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vii. Equal Remuneration Rules, 1976; and
viii. Central Advisory Committee on Equal Remuneration Rules, 1991

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Draft Code on Wages (Central) Rules, 2020
• These Draft Rules will apply to all central sector establishments.
• These include:
• Railways, mines, oilfields, and banking companies and
• Establishments carried on by or under the authority of the
central government.

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• Some Highlights:
• Calculation of minimum wage
• Norms for fixing minimum wage

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• Revision of dearness allowance
• Calculation of floor wage
• Work hours
• Inspection Scheme N
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The Code on Wages, 2019 - Introduction
Objective:
• An Act to amend and consolidate the laws relating to wages and
bonus and matters connected therewith or incidental thereto.

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The Code on Wages, 2019 – Provisions Notified (up to April 2022)

• By Extraordinary Gazette No. 4041, Dated 18.12.2020, the following

provisions were notified:

Serial No. Provisions of the Code

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1 Section 42(1), 42(2), 42(3), 42(10), 42(11) (To the extent they
relate to the Central Advisory Board)

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2 Section 67(2)(s), 67(2)(t) (To the extent they relate to the
Central Advisory Board)
3 Section 69 (To the extent it relates to Section 7 & 9 (To the

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Extent they relate to the Central Government) and Section 8 of
the Minimum Wages Act, 1948)

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The Code on Wages, 2019 – Overview
Chapter I
2. Definitions
3. Prohibition of Discrimination on ground of gender
4. Decisions as to dispute, with regard to same or similar nature of work.
Chapter II – Minimum Wages

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5. Payment of minimum rate of wages
6. Fixation of minimum wages
7. Components of minimum wages

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8. Procedure for fixing and revising minimum wages
9. Power of Central Government to fix floor wage
10. Wages of employee who works for less than normal working day

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11. Wages for two or more classes of work
12. Minimum time rate wages for piece work
13. Fixing hours of work for normal working day
14. Wages for overtime work

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The Code on Wages, 2019 – Overview

Chapter III – Payment of Wages

15. Mode of payment of wages
16. Fixation of wage period
17. Time limit for payment of wages

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18. Deduction which may be made from wages
19. Fines
20. Deduction for Absence from duty

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21. Deductions for damage or loss
22. Deductions for services rendered

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23. Deductions for recovery of advances
24. Deductions for recovery of loans
25. Chapter not to apply to Government establishments

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The Code on Wages, 2019 – Overview
Chapter IV – Payment of Bonus
26. Eligibility for bonus, etc.
27. Proportionate reduction in bonus in certain cases
28. Computation of number of working days
29. Disqualification for bonus
30. Establishments to include departments, undertakings and branches.

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31. Payment of bonus out of allocable surplus
32. Computation of gross profits
33. Computation of available surplus

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34. Sums deductible from gross profits
35. Calculation of direct tax payable by employer
36. Set on and set off of allocable surplus
37. Adjustment of customary or interim bonus against bonus payable under this code

39. Time limit for payment of bonus N

38. Deduction of certain amounts from bonus payable

40. Application of this chapter to establishments in public sector in certain cases

41. Non-applicability of this Chapter

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The Code on Wages, 2019 – Overview
Chapter V – Advisory Board
42. Central Advisory Board and State Advisory Boards

Chapter VI – Payment of Dues, Claims and Audit

43. Responsibility for payment of various dues

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44. Payment of various undisbursed dues in case of death of employee
45. Claims under Code and procedure thereof

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46. Reference of disputes under this code.
47. Presumption about accuracy of balance sheet and profit and loss
account of corporation and companies

49. Appeal N
48. Audit of account of employers not being corporation or companies

50. Records, returns and notices

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The Code on Wages, 2019 – Overview
Chapter VII – Inspector-cum-Facilitator
51. Appointment of Inspector-cum-Facilitators and their powers

Chapter VIII – Offences and Penalties

52. Cognizance of offences

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53. Power of officers of appropriate Government to impose penalty in certain cases
54. Penalties for offences

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55. Offences by Companies
56. Composition of offences

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The Code on Wages, 2019 – Overview
Chapter IX – Miscellaneous
57. Bar of suits
58. Protection of action taken in good faith
59. Burden of proof
60. Contracting out

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61. Effect of laws agreements, etc., inconsistent with this code.
62. Delegation of powers

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63. Exemption of employer from liability in certain cases
64. Protection against attachments of assets of employer with Government
65. Power of Central Government to give directions
66. Saving
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67. Power of appropriate Government to make rules
68. Power to remove difficulties
69. Repeal and savings

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Important Definitions

• Wages
• Minimum wages
• Same work or work of a similar nature
• Direct Tax

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• Agricultural Income Tax Law
• Industrial Dispute
Employer

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•
• Employee
• Worker
•
•
Contractor
Contract Labour N
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The Code on Wages, 2019 - Definitions
 2(y) "wages" means all remuneration
 Whether by way of salaries, allowances or otherwise,
 Expressed in terms of money or capable of being so expressed,
 If the terms of employment, express or implied, were fulfilled,


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Which would be payable to a person employed in respect of his
employment or of work done in such employment, and includes—
i. Basic pay;

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ii. Dearness allowance; and
iii. Retaining allowance, if any,
 but does not include -

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Provision Continued

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The Code on Wages, 2019 - Definitions
 but does not include––
a) Any bonus payable under any law for the time being in force, which
does not form part of the remuneration payable under the terms of
employment;
b) The value of any house-accommodation, or of the supply of light,

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water, medical attendance or other amenity or of any service
excluded from the computation of wages by a general or special order
of the appropriate Government;

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c) Any 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;

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e) Any sum paid to the employed person to defray special expenses
entailed on him by the nature of his employment;

Provision Continued

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The Code on Wages, 2019 - Definitions
 but does not include––
f) House rent allowance;
g) Remuneration payable under any award or settlement
between the parties or order of a court or Tribunal;

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h) Any overtime allowance;
i) Any commission payable to the employee;
j) Any gratuity payable on the termination of employment;

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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:

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Provision Continued

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The Code on Wages, 2019 - Definitions
Where an employee is given in lieu of the
whole or part of the wages payable to him,
Any remuneration in kind by his employer,
The value of such remuneration in kind which

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does not exceed 15% of the total wages payable
to him, shall be deemed to form part of the

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wages of such employee.

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The Code on Wages, 2019 - Definitions

2(s) "minimum wage" means the wage fixed

under section 6 (Fixation of minimum
wages) of the Code on Wages, 2019;

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PT
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The Code on Wages, 2019 - Definitions
 2(v) "same work or work of a similar nature" means
 Work in respect of which the skill, effort, experience, and
responsibility required are the same when performed
under similar working conditions by employees and

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 The difference if any, between the skill, effort, experience,
and responsibility required for employees of any gender, are
not of practical importance in relation to the terms and

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conditions of employment;

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The Code on Wages, 2019 - Definitions

 2(j) ”Direct tax" means––

i. Any tax chargeable under the––
A. Income-tax Act, 1961;
B. Companies (Profits) Surtax Act, 1964;

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C. Agricultural income tax law; and
ii. Any other tax which, having regard to its nature or

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incidence, may be declared by the Central
Government, by notification, to be a direct tax for
the purposes of this Code;
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The Code on Wages, 2019 - Definitions

 2(q) ”Industrial dispute" means,—

i. Any dispute or difference
 Between employers and employers, or
 Between employers and workers or

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 Between workers and workers
 Which is connected with the employment or
 Non-employment or

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 The terms of employment or
 With the conditions of labour, of any person; and

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ii. Any dispute or difference
 Between an individual worker and an employer
 Connected with, or arising out of, discharge,
dismissal, retrenchment or termination of such worker;

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The Code on Wages, 2019 - Definitions
• 2(l) “Employer” means a person who employs
• Whether directly or through any person, or on his behalf or on behalf
of any person,
• One or more employees
• In his establishment and

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• For an establishment carried on by Central Government or the
State Government, the authority specified, or where no authority is

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specified: the head of the department and in relation to an
establishment carried on by a Local authority, the CEO of that
authority
and Includes -
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The Code on Wages, 2019 - Definitions
and Includes-
i. In relation to a factory, the occupier of the factory or, a manager of the
factory
ii. In relation to any other establishment, the person/authority who has
ultimate control over the affairs of the establishment or a manager or

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managing director
iii. Contractor; and

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iv. Legal representative of a deceased employer

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The Code on Wages, 2019 - Definitions

• 2(k) “Employee” means, any person (other than an apprentice

engaged under the Apprentices Act, 1961)
• Employed on wages
• By an establishment

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• To do any skilled, semi-skilled or unskilled, manual, operational,
supervisory, managerial, administrative, technical or clerical work
• For hire or reward,

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• Whether the terms of employment be express or implied

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But does not include any member of the Armed Forces of the Union

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The Code on Wages, 2019 - Definitions
• 2(z) “Worker” means any person (other than an apprentice
engaged under the Apprentices Act, 1961)
• Employed in any industry
• To do any manual, unskilled, skilled, technical, operational,
clerical or supervisory work

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• For hire or reward
• Whether the terms of employment be express or implied

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• Includes : Working Journalists and Sales Promotion Employees
• Includes any person who has been dismissed, discharged or
retrenched or otherwise terminated In connection with, or as a

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consequence of, that dispute, or whose dismissal, discharge or
retrenchment has led to that dispute
• But does not include -

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The Code on Wages, 2019 - Definitions
• But does not include-
a) Any person who is subject to Air Force Act, 1950, or Army
Act, 1950, or Navy Act, 1957; or
b) Who is employed in the Police service or Officer/Employee of a
Prison; or

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c) Who is employed mainly in a Managerial or Administrative
capacity; or
d) Who is employed in a Supervisory Capacity drawing ₹15,000/-

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per month or an amount as notified by Central Government.

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 The Code on Wages, 2019 - Definitions

• 2(f) “Contractor”, in relation to an establishment, means a person,

who

i. Undertakes to produce a given result for the establishment,

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other than a mere supply of goods or articles of manufacture to
such establishment, through contract labour; or

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ii. Supplies contract labour for any work of the establishment as
mere human resource and includes a sub-contractor;

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The Code on Wages, 2019 - Definitions
• 2(g) “Contract Labour” means a worker
• Who shall be deemed to be employed in or in connection
with the work of an establishment
• When he is hired in or in connection with such work
• By or through a contractor,

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• With or without the knowledge of the principal employer
and

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• Includes Inter-State migrant worker
• Includes Part-time Employee

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• But does not include a worker who ––

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The Code on Wages, 2019 - Definitions
But does not include a worker who ––
i. Is regularly employed by the contractor for any activity of his
establishment and
• His employment is governed by mutually accepted
standards of the conditions of employment (including

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engagement on permanent basis), and

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ii. Gets Periodical Increment in the pay, social security coverage
and other welfare benefits
• in accordance with the law

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• for the time being in force in such employment

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 EL
Inspector-cum-Facilitator

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51. Inspector-cum-Facilitator
• The appropriate Government may, by notification, Appoint
Inspector-cum-Facilitators
• Who shall exercise the powers
• Throughout the State or
• Such geographical limits assigned in relation to one or

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more establishments situated in such State or geographical
limits or

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• In one or more establishments, irrespective of
geographical limits
• The appropriate Government may, lay down an inspection

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scheme, which may provide for generation of a web-based
inspection and calling of information relating to the inspection
electronically.

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51. Inspector-cum-Facilitator
• Every Inspector-cum-Facilitator shall be deemed
to be a public servant.
• The Inspector-cum-Facilitator may-
a) Advice to employers and workers relating to

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compliance of this Code;
b) Inspect the establishments, subject to the

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instructions or guidelines issued.

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51. Inspector-cum-Facilitator
• The Inspector-cum-Facilitator may-
a) Examine any person who is found in any premises of the establishment,
whom the Inspector-cum-Facilitator has reasonable cause to believe, is a
worker of the establishment;
b) Require any person to give any information, which is in his power to

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give with respect to the names and addresses of the persons;
c) Search, seize or take copies of such register, record of wages or notices
or portions thereof as the Inspector-cum-Facilitator may consider

PT
relevant in respect of an offence under this Code and which the Inspector-
cum-Facilitator has reason to believe has been committed by the
employer;

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d) Bring to the notice of the appropriate Government defects or abuses not
covered by any law for the time being in force; and
e) Exercise such other powers.

©KDR/RGSOIPL/Labour Codes -2022 39

• Specific definition of “wages” removes any ambiguity.
• Specific definition of Employee, Employer and Worker, Contractor, Contract
Labour clarifies the role, status and protection of law for these people.
• Specific declaration of the rights and powers of Inspector-cum-facilitator

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helps to ascertain the legality of actions taken by him.

PT
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• The Code on Wages, 2019
• The Code on Wages (Central Advisory Board) Rules, 2021
• The Code on Wages (Central) Rules, 2020 (Draft)

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PT
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 EL
PT
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©KDR/RGSOIPL/Labour Codes -2022 42
 New Labour Codes of India
Prof. K D Raju

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Rajiv Gandhi School of Intellectual Property Law
Indian Institute of Technology Kharagpur

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Lecture 22: Minimum Wages, Floor Wages, Central
N and State Advisory Board

©KDR/RGSOIPL/Labour Codes -2022 1

• Minimum Wages
• Fixation of Minimum Wages
• Floor Wage

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• Central Advisory Board
• State Advisory Board

PT
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©KDR/RGSOIPL/Labour Codes -2022 2
• Minimum Wages
• Floor Wages
• Advisory Board

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PT
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Minimum Wages

• In 1943, the Standing Labour Committee and Indian

Labour conference constituted a labour inquiry
committee to inquire into matters relating to working

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conditions and minimum wages of workers.
• Ghosh and Nandan, the report which was submitted by
the Standing Labour Committee, became the basis for

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Implementing India’s minimum wage policy.

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A.43 of the Indian Constitution

• The State shall endeavour to secure, by suitable

legislation or economic organisation or in any other way,
to all workers, agricultural, industrial or otherwise, work,

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a living wage, conditions of work ensuring a decent
standard of life and full enjoyment of leisure and social
and cultural opportunities…………………

PT
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The Code on Wages, 2019 - MNREG
 Mahatma Gandhi National Rural Employment Guarantee
Act is a scheme that guarantees employment for 100 days
at a rate of wage of INR 120 per day (determined in 2009).
 These benefits can be secured by any family, whether they

EL
are below the national poverty line or above.
 The Central Government removed the MNREGA wage
rates from the state’s lowest minimum wage rates in

PT
January 2009 when states such as Uttar Pradesh,
Rajasthan, and Maharashtra revised and increased their
minimum wage rates.
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MNREGE
• Swaraj Abhiyan-III v. Union of India, WP. No.857
of 2015. – MNREGA Exempted
• Sanjit Roy v. State of Rajasthan, AIR 1983 SC 328.
• The Court held that the Rajasthan Famine Relief Works

EL
Employees (Exemption from Labour Laws) Act, 1964 is
Constitutionally invalid as to the exclusion of the minimum

PT
wages act.
• Providing labour for less than the minimum wage amounts
to forced labour and as such violates Article 23 of the
Constitution.
N
©KDR/RGSOIPL/Labour Codes -2022 7
MNREGEA
• Different states with different rates:
• Kerala – MW – Rs.490/day – MNREGEA –
Rs.311/-
• West Bengal – MW-Rs.342/- MNREGEA –

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Rs.213/-

PT
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 EL
PT
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©KDR/RGSOIPL/Labour Codes -2022 9
 EL
PT
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Source: Business Insider -
2016 ©KDR/RGSOIPL/Labour Codes -2022 10
Minimum Wages Act, 1948 - Repealed
Objective:
An Act to provide for fixing minimum rates of wages in
certain employments.
[Link] allot Fixed minimum wages in scheduled employment.

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[Link] the Government to take steps regarding the
fixation of wages and to revise them every five years.
[Link] prevent exploitation of workers.

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[Link] provide appointment of Advisory Committee and boards
having an equal number of representatives of both
employers and workers. N
[Link] apply this law to the majority in the organized sector.

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The Code on Wages, 2019
Objective:
 An Act to amend and consolidate the laws relating to wages
and bonus and matters connected therewith or incidental
thereto.
 The Code on Wages, 2019, also known as the Wage Code, is an

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Act of the Parliament that consolidates the provisions of four
labour laws concerning wage and bonus payments and makes

PT
universal the provisions for minimum wages and timely payment
of wages for all workers in India.
 The Code repeals and replaces the Payment of Wages Act, 1936,
N
the Minimum Wages Act, 1948, the Payment of Bonus Act, 1965,
and the Equal Remuneration Act, 1976.

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Minimum Wages Act, 1948– Overview
3. Fixing of minimum rates of wages
4. Minimum rate of wages
5. Procedure for fixing and revising minimum wages
11. Wages in kind
12. Payment of minimum rates of wages

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13. Fixing hours for a normal working day, etc.
14. Overtime

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15. Wages of worker who works for less than normal working day
16. Wages for two or more classes of work
17. Minimum time rate wages for piece work

7. Advisory Board
8. Central Advisory Board
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31. Validation of fixation of certain minimum rates of wages

9. Composition of committees, etc.

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The Code on Wages, 2019 – Overview
Chapter I
2. Definitions
3. Prohibition of Discrimination on ground of gender
4. Decisions as to dispute, with regard to same or similar nature of work.
Chapter II – Minimum Wages

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5. Payment of minimum rate of wages
6. Fixation of minimum wages
7. Components of minimum wages

PT
8. Procedure for fixing and revising minimum wages
9. Power of Central Government to fix floor wage
10. Wages of employee who works for less than normal working day

N
11. Wages for two or more classes of work
12. Minimum time rate wages for piece work
13. Fixing hours of work for normal working day
14. Wages for overtime work

©KDR/RGSOIPL/Labour Codes -2022 14

Minimum Wages Act, 1948 - Repealed
 2(h) “Wages” means all remuneration,
 Capable of being expressed in terms of money,
 Which would be payable to a person employed in respect of his employment or of work
done in such employment
 If the terms of employment, express or implied, were fulfilled,
 and Includes house rent allowance
 But does not include

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 The value of –
 Any house-accommodation, supply of light, water, medical attendance, or
 Any other amenity or any service excluded by general or special order

PT
 Any contribution paid by the employer to any Pension Fund or Provident Fund or
other scheme
 Any travc1ling allowance or traveling concession;


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Any sum paid to defray special expenses or
Any gratuity payable on discharge;

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Minimum Wages Act, 1948 – constitutional validity
 “ V. Unichonoy vs State of Kerala,1962, SC12. it
was held that:
 “Fixation of minimum wages is for the
preservation of public order, and if no minimum

EL
wage is fixed then it shall lead to arbitrariness by
the employers and that shall lead to clashes of

PT
interest between employer and labour which shall
cause friction in society”.
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©KDR/RGSOIPL/Labour Codes -2022 16
Minimum Wages Act, 1948 – constitutional validity
 Gulmuhommad Tarasaheb a bidi factory by its
proprietors Shamrao vs State Of Bombay, court
that :
 “The restrictions, though they interfere to some

EL
extent with the freedom of trade or business
guaranteed under Article 19(1)(g) of the

PT
Constitution, are reasonable and being imposed
on the general interest of the general public, are
N
protected by the terms of clause (6) of the Article
19.”

©KDR/RGSOIPL/Labour Codes -2022 17

The Code on Wages, 2019 - Definitions
 2(y) "wages" means all remuneration
 Whether by way of salaries, allowances or otherwise,
 Expressed in terms of money or capable of being so expressed,
 If the terms of employment, express or implied, were fulfilled,


EL
Which would be payable to a person employed in respect of his
employment or of work done in such employment, and includes—
i. Basic pay;

PT
ii. Dearness allowance; and
iii. Retaining allowance, if any

N
©KDR/RGSOIPL/Labour Codes -2022 18
The Code on Wages, 2019 - Definitions
Wage does not include––
a) Any bonus payable under any law for the time being in force, which does
not form part of the remuneration payable under the terms of
employment;
b) The value of any house accommodation, or of the supply of light, water,

EL
medical attendance or other amenity or of any service excluded from the
computation of wages by a general or special order of the appropriate
Government;

PT
c) Any 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)
N
Any sum paid to the employed person to defray special expenses entailed
on him by the nature of his employment;

©KDR/RGSOIPL/Labour Codes -2022 19

The Code on Wages, 2019 – not include
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;

EL
i) Any commission payable to the employee;
j) Any gratuity payable on the termination of employment;
k) Any retrenchment compensation or other retirement

PT
benefit payable to the employee or any ex gratia payment
made to him on the termination of employment:
N
©KDR/RGSOIPL/Labour Codes -2022 20
The Code on Wages, 2019 - Definitions

 2(s) "minimum wage" means the wage fixed under section 6

(Fixation of minimum wages) of the Code on Wages, 2019;
Chapter II of the Act deals with minimum wages.
Section 5: Payment of minimum rate of wages

EL
No employer shall pay to any employee wages less than the
minimum rate of wages notified by the appropriate Government
Section 6: Fixation of minimum wages

PT
The appropriate Government shall fix a minimum rate of wages––
(a) for time work; or (b) for piece work.

N
©KDR/RGSOIPL/Labour Codes -2022 21
The Code on Wages, 2019 - Definitions
 2(v) "same work or work of a similar nature" means
 Work in respect of which the skill, effort, experience and responsibility
required are the same, when performed under similar working conditions
by employees and
 The difference if any, between the skill, effort, experience and responsibility

EL
required for employees of any gender, are not of practical importance in
relation to the terms and conditions of employment;

PT
N
©KDR/RGSOIPL/Labour Codes -2022 22
Non-Discrimination on the ground of Gender in the matters of Wages
1. There shall be no discrimination
• 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.

EL
• No employer shall,—
i. For complying with the above sub-section(1), reduce the

PT
rate of wages of any employee; and
ii. Make any discrimination on the ground of sex while
recruiting any employee for the same work or work of
N
similar nature and in the conditions of employment, except
where women in such work is prohibited or restricted by
law.

©KDR/RGSOIPL/Labour Codes -2022 23

Determination – “same or similar nature of work”

• If there is any dispute as to whether a work is of same or similar

nature, the dispute shall be decided by such authority as notified by
the appropriate Government.

EL
PT
N
©KDR/RGSOIPL/Labour Codes -2022 24
Fixation of Minimum Wages – By Appropriate Government
• The appropriate Government shall fix the minimum rate of wages.
• A minimum rate of wages––
a. For time work -
1. By the hour; or

EL
2. By the day; or
3. By the month
b. For piece work - For employees employed on piece work

PT
basis, a minimum rate of wages on a time work basis shall
be fixed.

N
©KDR/RGSOIPL/Labour Codes -2022 25
Fixation of Minimum Wages – By Appropriate Government
• Factors to be taken into account by appropriate Government for the purpose of
fixation of minimum rate of wages
a) The skill of workers required for working under the categories of
unskilled, skilled, semi-skilled and highly-skilled or geographical area
or both; and

EL
b) Arduousness of work like temperature or humidity normally difficult to
bear, hazardous occupations or processes or underground work

PT
c) The norms of such fixation of minimum rate of wages

N
©KDR/RGSOIPL/Labour Codes -2022 26
Fixation of Minimum Wages – Components
• Any minimum rate of wages fixed or revised may consist of––
• (a) a basic rate of wages and an allowance adjusted at intervals
according as nearly as practicable the cost of living index number
or
• (b) a basic rate of wages with or without the cost of living

EL
allowance, and the cash value of the concessions of essential
commodities, where so authorised; or

PT
• (c) an all-inclusive rate allowing for the basic rate, the cost of
living allowance and the cash value of the concessions, if any.

N
©KDR/RGSOIPL/Labour Codes -2022 27
 EL
PT
N
©KDR/RGSOIPL/Labour Codes -2022 28
Duty of Employer

• No employer shall pay to any employee wages less than the minimum
rate of wages notified by the appropriate Government.

EL
PT
N
©KDR/RGSOIPL/Labour Codes -2022 29
Fixation of Floor Wages – By Central Government - Procedure
• The Central Government shall fix floor wage (different floor
wage for different geographical areas) taking into account
minimum living standards of a worker.

EL
• Any minimum rates of wages fixed by appropriate Government
shall not be less than the floor wage and if minimum rates of
wages are higher than the floor wage, then, the appropriate

PT
Government shall not reduce such minimum rates of wages fixed
by it earlier.

N
©KDR/RGSOIPL/Labour Codes -2022 30
 EL
PT
N
©KDR/RGSOIPL/Labour Codes -2022 31
Wages of employee who works for less than normal working day

• If an employee whose minimum rate of wages has been fixed by the day
• Works less than the requisite number of hours constituting a normal
working day,
• He shall be entitled to receive wages in respect of work done on that

EL
day, as if he had worked for a full normal working day.
• But he shall not be entitled to receive wages for a full normal working
day

PT
1. His failure to work is caused by his unwillingness to work; and
2. In other cases and circumstances, as may be prescribed.

N
©KDR/RGSOIPL/Labour Codes -2022 32
Wages for 2 or more classes of work

• Where an employee does 2 or more classes of work

• Each of which has a different minimum rate of wages applicable
• The employer shall pay proportionately different minimum wages

EL
according to the time occupied in such class of works.

PT
N
©KDR/RGSOIPL/Labour Codes -2022 33
Minimum Time Rate Wages for Piece Work

• Where a person is employed on piece work for which minimum time

rate is fixed under this Code and
• The employer shall pay to such person wages at not less than the
minimum time rate.

EL
PT
N
©KDR/RGSOIPL/Labour Codes -2022 34
Fixation of Normal Working Hours of a day – By Appropriate Government
• For the following classes of employees apply, different working
hours may be applicable-
1. Employees engaged in any emergency not foreseen or
preventable;
2. Employees engaged in work of the nature of preparatory

EL
or complementary work which must necessarily be
carried on outside the general working;

PT
3. Employees whose employment is essentially intermittent;
4. Employees engaged in any work which for technical
reasons has to be completed before the duty is over; and

N
5. Employees engaged in a work which could not be carried on
except at times dependent on the irregular action of
natural forces.

©KDR/RGSOIPL/Labour Codes -2022 35

Wages for Overtime Work
• An employee whose minimum rate of wages has been fixed
• By the hour,
• By the day or
• By such a longer wage-period
• Works on any day in excess of the number of hours constituting

EL
a normal working day
• The employer shall pay him for every hour or for part of an hour

PT
so worked in excess,
• At the overtime rate which shall not be less than twice the normal
rate of wages.

N
©KDR/RGSOIPL/Labour Codes -2022 36
Union of India and Ors. vs. CPWD Mazdoor Union and Ors.
(19.10.2015 - DELHC)
• Whether workmen entitled to Overtime wages at Double
the rate of ordinary wages?
• Held: Director general and employees of the union had
entered into an agreement that for overtime work

EL
employees would be paid double wages with reference to
wages received for normal work

PT
• Entitlement of workmen would be flowing out of the
agreement and not the Minimum Wages Act.

N
©KDR/RGSOIPL/Labour Codes -2022 37
Penalties for Offences
• Any employer who—
a. Pays to any employee less than the amount due; fine upto
₹50,000/-
b. Having been convicted of an offence under clause(a) is again
found guilty of similar offence under this clause, within 5

EL
years, be punishable with imprisonment upto 3 months or
fine upto ₹1,00,000/-, or both

PT
c. Contravenes any other provision of this Code or any rule
shall be punishable with fine upto ₹20,000/-
d. Having been convicted of an offence under clause(c) is again

N
found guilty of similar offence under this clause, within 5
years, be punishable with imprisonment upto 1 month or
fine upto ₹40,000/-, or both.

©KDR/RGSOIPL/Labour Codes -2022 38

Penalties for Offences committed by Companies
• If the person committing an offence is a company,
• Every person, at the time of offence, in charge of and responsible,
• As well as the company
• Shall be deemed to be guilty of the offence and
• Shall be liable to be proceeded against and punished

EL
• Unless such person can prove that the offence was committed without

PT
his knowledge or that he exercised all due diligence to prevent the
commission of such offence.

N
©KDR/RGSOIPL/Labour Codes -2022 39
Penalties for Offences committed by Companies
• If the offence has been committed with the consent or connivance of or is
attributable to any neglect to any director, manager, secretary or other
officer of the company, such person shall also be deemed to be guilty of that
offence and shall be liable to be proceeded against and punished
accordingly.

EL
• “company” means any body corporate and includes—

PT
i. A firm or
ii. A limited liability partnership or
iii. Other association of individuals; and

N
• “director” in relation to a firm means a partner in the firm.

©KDR/RGSOIPL/Labour Codes -2022 40

 EL
Central Advisory Board and State Advisory Boards

PT
N
©KDR/RGSOIPL/Labour Codes -2022 41
Central Advisory Board

• The Central Government shall constitute the Central Advisory Board

• Shall consist of persons nominated by the Central Government—
a) Representing Employers;

EL
b) Representing Employees(equal in number of employers); and
c) Independent persons(not exceeding 1/3rd of total members)

PT
d) 5 representatives of such State Governments as nominated.
• 1/3rd of the members shall be women
N
• A member shall be appointed as the Chairperson of the Board.

©KDR/RGSOIPL/Labour Codes -2022 42

 Central Advisory Board
• Central Advisory Board may advise Central Govt. on reference of
issues relating
a) Fixation or revision of minimum wages and other connected
matters;

EL
b) Providing increasing employment opportunities for women;

PT
c) Specify the extent to which women may be employed in such
establishments or employments; and

N
d) Any other matter relating to this Code
• Central Government may issue directions to the State Government
on such advise as it deems fit.

©KDR/RGSOIPL/Labour Codes -2022 43

State Advisory Board
• Every State Government shall constitute a State Advisory Board
for advising the State Government—
a) Fixation or revision of minimum wages and other
connected matters;
b) Providing increasing employment opportunities for
women;

EL
c) Specify the extent to which women may be employed
in such establishments or employments; and
d) Any other matter relating to this Code.

PT
• The State Advisory Board may constitute 1 or more committees
or sub-committees

N
• The State Advisory Board shall consist of persons––
a) Representing employers;
b) Representing employees (in equal number);
c) Independent persons(not exceeding 1/3rd of total members).

©KDR/RGSOIPL/Labour Codes -2022 44

 State Advisory Board
• 1/3rd of the members shall be women and one among the members
shall be––
a) Chairperson of the Board;
b) Chairperson of the committee or sub-committee, as the case may
be.

EL
• In tendering its advice, the State Advisory Board shall have regard
to
• The number of women employed in the concerned establishment, or employment,

PT
• The nature of work,
• Hours of work,
• Suitability of women for employment,
•
•

•
The need for providing
N
Increasing employment opportunities for women, including part time employment,
and
Other relevant factors

©KDR/RGSOIPL/Labour Codes -2022 45

• Specific definition of “wages” removes any ambiguity.
• The fixation of minimum wages procedure is clear and does not leave any
scope for ambiguity.
• The constitution of Central and State Advisory Board is likely to fix a Floor

EL
wage which would be a welcome step.
• The Advisory Board is also likely to take steps to promote women
empowerment.

PT
N
©KDR/RGSOIPL/Labour Codes -2022 46
• The Code on Wages, 2019
• The Code on Wages (Central Advisory Board) Rules, 2021
• The Code on Wages (Central) Rules, 2020 (Draft)

EL
PT
N
©KDR/RGSOIPL/Labour Codes -2022 47
 EL
PT
N
©KDR/RGSOIPL/Labour Codes -2022 48
 New Labour Codes of India
Prof. K D Raju

EL
Rajiv Gandhi School of Intellectual Property Law
Indian Institute of Technology Kharagpur

PT
Lecture 23: Payment of Wages, Deductions and
N Recovery, Fines

©KDR/RGSOIPL/Labour Codes -2022 1

• Payment of Wages
• Deductions
• Recovery

EL
• Fines

PT
N
©KDR/RGSOIPL/Labour Codes -2022 2
• Payment of Wages
• Deductions

EL
PT
N
©KDR/RGSOIPL/Labour Codes -2022 3
The Payment of Wages, 1936 - Repealed
Objective:
• An Act to regulate the payment of wages of certain classes to
employed persons.

EL
PT
N
©KDR/RGSOIPL/Labour Codes -2022 4
The Code on Wages, 2019
Objective:
• An Act to amend and consolidate the laws relating to wages and
bonus and matters connected therewith or incidental thereto.

EL
PT
N
©KDR/RGSOIPL/Labour Codes -2022 5
The Payment of Wages, 1936 – Overview
3. Responsibility for payment of wages
4. Fixation of wage-periods
5. Time of Payment of wages
6. Wages to be paid in current coin or currency notes or by cheque or
crediting in bank account

EL
7. Deduction which may be made from wages
8. Fines

PT
9. Deduction for absence from duty
10. Deduction for damage or loss
11. Deductions for services rendered

N
12. Deductions for recovery of advances
12A. Deductions for recovery of loans
13. Deductions for payments to co-operative societies and insurance
schemes

©KDR/RGSOIPL/Labour Codes -2022 6

The Code on Wages, 2019 – Overview

Chapter III – Payment of Wages

15. Mode of payment of wages
16. Fixation of wage period
17. Time limit for payment of wages

EL
18. Deduction which may be made from wages
19. Fines
20. Deduction for Absence from duty

PT
21. Deductions for damage or loss
22. Deductions for services rendered

N
23. Deductions for recovery of advances
24. Deductions for recovery of loans
25. Chapter not to apply to Government establishments

©KDR/RGSOIPL/Labour Codes -2022 7

The Payment of Wages Act, 1936 - Repealed
• 2(vi) “wages” means all remuneration (whether by way of salary,
allowances, or otherwise)
• Expressed in terms of money or capable of being so expressed
• Which would, be payable to a person employed in respect of his
employment or of work done in such employment

EL
• If the terms of employment, express or implied, were fulfilled and
includes-

PT
• (a) any remuneration under award or settlement or order of a Court;
• (b) any entitled remuneration such as overtime work or holidays or any leave
period;
• (c) any additional remuneration payable (whether called a bonus or other name);
•
• N
(d) any sum which by reason of the termination of employment
(e) any other sum to which the person employed is entitled
• But does not include -

©KDR/RGSOIPL/Labour Codes -2022 8

The Payment of Wages Act, 1936 - Repealed

• But does not include –

1. Any bonus
2. The value of any house-accommodation, or of the supply of
light, water, medical attendance or other amenity or of any

EL
service excluded
3. Any contribution paid to pension or provident fund, and the
interest thereon;

PT
4. Any travelling allowance or travelling concession;
5. Any sum to defray special expenses
6. Any gratuity
N
©KDR/RGSOIPL/Labour Codes -2022 9
The Code on Wages, 2019 - Definitions
2(y) "wages" means all remuneration
Whether by way of salaries, allowances or otherwise,
Expressed in terms of money or capable of being so expressed,
If the terms of employment, express or implied, were fulfilled,


EL
Which would be payable to a person employed in respect of his
employment or of work done in such employment, and includes—
i. Basic pay;

PT
ii. Dearness allowance; and
iii. Retaining allowance, if any
 But does not include-

N
©KDR/RGSOIPL/Labour Codes -2022 10
The Code on Wages, 2019 - Definitions
 but does not include––
a) Any bonus payable under any law for the time being in force, which
does not form part of the remuneration payable under the terms of
employment;
b) The value of any house-accommodation, or of the supply of light,

EL
water, medical attendance or other amenity or of any service
excluded from the computation of wages by a general or special order
of the appropriate Government;

PT
c) Any 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;

N
e) Any sum paid to the employed person to defray special expenses
entailed on him by the nature of his employment;

©KDR/RGSOIPL/Labour Codes -2022 11

The Code on Wages, 2019 - Definitions
 but does not include––
f) House rent allowance;
g) Remuneration payable under any award or settlement
between the parties or order of a court or Tribunal;

EL
h) Any overtime allowance;
i) Any commission payable to the employee;
j) Any gratuity payable on the termination of employment;

PT
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:

N
©KDR/RGSOIPL/Labour Codes -2022 12
Applicability of the provisions of this Chapter(Payment of Wages)

• The provisions of this Chapter shall not apply to the Government

establishments unless the appropriate Government, by notification, applies
such provisions to the Government establishments specified in the said
notification.

EL
PT
N
©KDR/RGSOIPL/Labour Codes -2022 13
Payment of Wages

• Mode of Payment of Wages:

• Shall be in current coin or currency notes or by cheque or by crediting in the
bank account of the employee or by the electronic mode (such as NEFT,
RTGS, IMPS, UPI)

EL
PT
N
©KDR/RGSOIPL/Labour Codes -2022 14
Payment of Wages

• Fixation of Wage Period & Time Limit for Payment Thereof

• By the Employer
• Daily – At the end of the shift
• Weekly – On the Last working day of the week(Before

EL
the weekly Holiday)
• Fortnightly – Before the End of the Second day after the
end of the Fortnight

PT
• Monthly – Before the Expiry of the 7th Day of the next
Month
• But No wage-period in respect of any employee shall be more
than a month.
N
• Different wage periods may be fixed for different
establishments.

©KDR/RGSOIPL/Labour Codes -2022 15

Payment of Wages

• Time Limit for Payment of Wages – By the Employer

Where an employee has been—
i. Removed or dismissed from service; or
ii. Retrenched or has resigned from service, or became

EL
unemployed due to closure of the establishment,
The wages shall be paid within 2 working days.

PT
• Time Limit for Payment of Wages – By the Appropriate
Government
• The appropriate Government may, provide any other time limit
N
for payment of wages having regard to the circumstances under
which the wages are to be paid.

©KDR/RGSOIPL/Labour Codes -2022 16

 EL
Deductions from Wages

PT
N
©KDR/RGSOIPL/Labour Codes -2022 17
Deductions from Wages

• There shall be no deductions from the wages of the employee,

except those authorised under this Code.
a) Fines imposed on him;
b) Deductions for his absence from duty;

EL
c) Deductions for damage to or loss of goods expressly
entrusted to the employee for custody; or for loss of money
for which he is required to account, where such damage or

PT
loss is directly attributable to his neglect or default;
d) Deductions for house-accommodation supplied by the
employer
N
e) Deductions for such amenities and services supplied by the
employer

©KDR/RGSOIPL/Labour Codes -2022 18

Deductions from Wages

• There shall be no deductions from the wages of the employee,

except those authorised under this Code.
f) Deductions for recovery of—
1. Advances of whatever nature (including advances for

EL
travelling allowance or conveyance allowance), and
the interest due in respect thereof, or for adjustment of
overpayment of wages;

PT
2. Loans and the interest due;
g) Deductions for recovery of loans granted for house-
building or other purposes approved by the appropriate
N
Government and the interest due;
h) Deductions of income-tax or any other statutory levy levied
by the Central Government or State Government

©KDR/RGSOIPL/Labour Codes -2022 19

Deductions from Wages
• There shall be no deductions from the wages of the employee,
except those authorised under this Code.

i) Deductions for subscription to, and for repayment of

advances from any social security fund or scheme

EL
including provident fund or pension fund or health
insurance scheme or fund;

PT
j) Deductions for payment of co-operative society subject to
such conditions as the appropriate Government may impose;
k) Deductions made, with the written authorisation of the

N
employee, for payment of the fees and contribution payable
by him for the membership of any Trade Union

©KDR/RGSOIPL/Labour Codes -2022 20

 Deductions from Wages
• There shall be no deductions from the wages of the employee,
except those authorised under this Code.

l) Deductions for recovery of losses sustained by the railway

administration on account of acceptance by the employee of

EL
counterfeit or base coins or mutilated or forged currency
notes;

PT
m) Deductions for recovery of losses sustained by the railway
administration on account of the failure of the employee to
invoice, to bill, to collect or to account for the appropriate

N
charges due to the railway administration whether in respect
of fares, freight, demurrage, wharfage and cranage or in
respect of sale of food in catering establishments or in respect
of commodities in grain shops or otherwise;

©KDR/RGSOIPL/Labour Codes -2022 21

 Deductions from Wages
• There shall be no deductions from the wages of the employee,
except those authorised under this Code.

n) Deductions for recovery of losses sustained by the railway

administration on account of any rebates or refunds

EL
incorrectly granted by the employee where such loss is
directly attributable to his neglect or default

PT
o) Deductions, made with the written authorisation of the
employee, for contribution to the Prime Minister’s National

N
Relief Fund or to such other fund as the Central Government
may, specify.

©KDR/RGSOIPL/Labour Codes -2022 22

Deductions from Wages

• The total amount of deductions, in any wage period from the wages
of an employee shall not exceed 50% of such wages.

EL
PT
N
©KDR/RGSOIPL/Labour Codes -2022 23
Deductions for Absence from Duty
• Deductions under section 18(2)(b) may be made
• Only on account of the absence of an employee
• From the place or places where he is required to work.

• If 10 or more employed persons acting in concert absent

EL
themselves without due notice and without reasonable cause,
such deduction from any such person may include such amount

PT
not exceeding his wages for 8 days in lieu of due notice.

• An employee shall be deemed to be absent from the place where

N
he is required to work if, although present in such place, he refuses,
in pursuance of a stay-in strike or for any other cause which is not
reasonable in the circumstances, to carry out his work.

©KDR/RGSOIPL/Labour Codes -2022 24

Bank of India and Ors. vs. T.S. Kelawala and Ors. (04.05.1990 - SC)

• Whether BoI has the right to deduct wages unilaterally and

without holding inquiry for a period Respondent go on strike?
• It was Held, Respondent had not worked for the full 8 hours on
any day in the month concerned and that Respondent was

EL
working intermittently only for some time and were sitting idle
during the rest of the time

PT
• Pro-rata deduction of wages made by BoI for that month did not
amount to an act of unfair labor practice within the meaning of the
Act

N
©KDR/RGSOIPL/Labour Codes -2022 25
• Goodlass Nerolac Paints Limited vs. Paints Employees Union, Mumbai
(01.10.2001 - BOMHC)
• Absence of workman from duty or not performing allotted work
• Held: “ deductions from the wages of an individual workman can be made
for absence from duty only after holding an inquiry or at least some kind
of investigation.

EL
• Once the workman disputes his absence or the reasons for not performing
the allotted work, the dispute has to be investigated by holding an inquiry
into the matter.

PT
• No deduction on this basis can be made by any management without
establishing the guilt on the part of the employee concerned.
• The observation of the Apex Court in Kelawala's case that mere presence

N
on duty is not sufficient and the worker must work for his wages.

©KDR/RGSOIPL/Labour Codes -2022 26

Deductions for Damage or Loss

• A deduction under section 18(2)(c) or 18(2)(n), for damage or loss

• Shall not exceed the amount of the damage or loss caused to the
employer by negligence or default of the employee.

EL
• No deduction until the employee has been given an opportunity
of showing cause against the deduction

PT
• All such deductions and all realizations shall be recorded in a
register

N
©KDR/RGSOIPL/Labour Codes -2022 27
Deductions for Services Rendered

• A deduction under section 18(2)(d) or 18(2)(e)

• Shall not be made from the wages of an employee,
• Unless the house-accommodation amenity or service has been

EL
accepted by him as a term of employment or otherwise and

PT
• Such deduction shall not exceed the value of the house-
accommodation amenity or service supplied

N
©KDR/RGSOIPL/Labour Codes -2022 28
Deductions for Recovery of Advances
• Deductions under section 18(2)(f) for recovery of advances
• Given to an employee
• Shall be subject to the following conditions:
a) Recovery of advance of money given to an employee
before the employment began shall be made from the 1st

EL
payment of wages to him in respect of a complete wage-
period but no recovery shall be made of advances given

PT
for travelling expenses;
b) Recovery of advance of money given to an employee after
the employment began shall be subject to such conditions

N
as may be prescribed
c) Recovery of advances of wages to an employee not already
earned shall be subject to such conditions as prescribed.

©KDR/RGSOIPL/Labour Codes -2022 29

Deductions for Recovery of Loans

1. Deductions under section 18(2)(g) for recovery of loans,

2. The extent to which such loans may be granted and
3. The rate of interest payable thereon
• Granted to an employee

EL
• Shall be such as may be prescribed.

PT
N
©KDR/RGSOIPL/Labour Codes -2022 30
Fines

• No fine shall be imposed on any employee

• Other than in respect of those acts and omissions on his
part
• As the employer, with the previous approval of the

EL
appropriate Government or of such authority, may have
specified by notice.

PT
• Such notice specifying such acts and omissions shall be
exhibited on the premises in which the employment is carried
on.

N
• No fine – Without an opportunity of showing cause against the
fine.

©KDR/RGSOIPL/Labour Codes -2022 31

Fines
• The total amount of fine which may be imposed shall not exceed
3% of the wages payable to an employee in that wage-period.
• No fine shall be imposed on any employee who is under the age

EL
of 15 years.
• No fine imposed on any employee shall be recovered from him by

PT
instalments or after the expiry of 90 days from the day of
imposition.
N
©KDR/RGSOIPL/Labour Codes -2022 32
• The code is comprehensive with regard to the mode of wage payment,
fixation of wage period and time limit for payment of wages, deductions that
are allowed under the code, and fines that may be imposed.

EL
PT
N
©KDR/RGSOIPL/Labour Codes -2022 33
• The Code on Wages, 2019
• The Code on Wages (Central Advisory Board) Rules, 2021
• The Code on Wages (Central) Rules, 2020 (Draft)

EL
PT
N
©KDR/RGSOIPL/Labour Codes -2022 34
 EL
PT
N
©KDR/RGSOIPL/Labour Codes -2022 35
 New Labour Codes of India
Prof. K D Raju

EL
Rajiv Gandhi School of Intellectual Property Law
Indian Institute of Technology Kharagpur

PT
Lecture 24: Equal Remuneration
N
©KDR/RGSOIPL/Labour Codes -2022 1
• Concept of equal remuneration
• Constitutional provisions
• Payment of Equal Remuneration

EL
• Constitutional Equality Clauses
• Equal pay for equal work

PT
N
©KDR/RGSOIPL/Labour Codes -2022 2
• Payment of Equal Remuneration
• Gender Equality

EL
PT
N
©KDR/RGSOIPL/Labour Codes -2022 3
Equal Remuneration - Concept
 Gender Justice is an important ingredient of every civilized
society.
 It’s no longer the popular mindset that the female is a weaker
sex.

EL
 To imbibe this principle in society, various steps were taken
at the international level.
 The International Labour Organization held 1951 a

PT
Convention concerning Equal Remuneration for Men and
Women Workers for the Work of Equal Value.
N
©KDR/RGSOIPL/Labour Codes -2022 4
Equal Remuneration - Concept
 The Universal Declaration of Human Rights,
under Article 23 ensures that everyone without any
discrimination has the right to equal pay for equal
work.

EL
 The Convention on Elimination of all forms of
Discrimination, 1979 has its main objective to

PT
prevent discrimination, especially in the case of
women.
N
©KDR/RGSOIPL/Labour Codes -2022 5
What is meant by equality of work?
The equality of work is not based on the
designation or the nature of work alone.
There are several other factors, which are equally
relevant.

EL
They are qualifications, responsibilities, reliabilities,
experience, confidentiality, functional need, and

PT
requirements commensurate with the position in
the hierarchy.
N
©KDR/RGSOIPL/Labour Codes -2022 6
The Indian Constitution, 1950 - Equality
Part III – Fundamental Rights - Right to Equality
 14. Equality before law.—The State shall not deny to any person
equality before the law or the equal protection of the laws within the
territory of India.
 16. Equality of opportunity in matters of public employment.

EL
Part IV – Directive Principles of State Policy

PT
 39. Certain principles of policy to be followed by the State.—
The State shall, in particular, direct its policy towards securing— (d)
That there is equal pay for equal work for both men and women;
N
©KDR/RGSOIPL/Labour Codes -2022 7
The Indian Constitution
 The Preamble of the Constitution provides for Justice and Equality to all.
 Article 14 equality before the law
 Article 15 guarantees a right against discrimination
 Article 15(3) recognizes ‘protective discrimination to bring women at par
with men in all possible respects.

EL
 Article 16 provides the right to equal opportunity regarding public
employment irrespective of the sex of the person.
 Article 39(a) states that the citizens, men, and women, equally, have the

PT
right to an adequate means of livelihood.
 Article 39(d) “that there is equal pay for equal work for both men and
women”.

N
Article 42 requires the state to make provisions for securing humane
conditions of work and maternity relief.

©KDR/RGSOIPL/Labour Codes -2022 8

Equal pay for equal work.
The Doctrine of ‘equal pay for equal work’ is not
a fundamental right but a Constitutional right.
Equal remuneration for men and women is the
right of an employee without any qualification.

EL
The Act of Equal Remuneration, 1976 was
enacted to comply with the provisions of the

PT
Directive Principle of State Policy (DPDP) under
Article 39.
N
©KDR/RGSOIPL/Labour Codes -2022 9
Equality
 India being a signatory to the
International Covenant on Economic,

EL
Social and Cultural Rights, 1966, there is
no escape from the obligations

PT
thereunder in view of the different
provisions of the Constitution.
N
©KDR/RGSOIPL/Labour Codes -2022 10
Equal pay for equal work.
The Doctrine of ‘equal pay for equal work’ is not
a fundamental right but a Constitutional right.
Equal remuneration for men and women is the
right of an employee without any qualification.

EL
The Act of Equal Remuneration, 1976 was
enacted to comply with the provisions of the

PT
Directive Principle of State Policy (DPDP) under
Article 39.
N
©KDR/RGSOIPL/Labour Codes -2022 11
Equal pay for equal work.
 In the case of State of Punjab v. Surjit
Singh (2009) 9 SCC 541, it was held by
the supreme court that “equal pay must

EL
be for equal work of equal value”.
 The nature of work or quality work can

PT
differ in the same nomenclature of work.
 While applying this doctrine physical
N
activity is not enough for comparison.

©KDR/RGSOIPL/Labour Codes -2022 12

Equality
 People’s Union for Democratic
Rights v. Union of India, where in the
Hon’ble Supreme Court held “is the

EL
principle of equality embodied in Article
14 of the Constitution which finds

PT
expression in the provision of the Equal
Remuneration Act, 1976”.
N
©KDR/RGSOIPL/Labour Codes -2022 13
Equality
 Randhir Singh vs. Union of India , the
Hon’ble Supreme Court opined that the
doctrine of equal pay for equal work is

EL
contained in the preamble and the right to equality
contained in our constitution, and it forms an

PT
integral part of the right to equality.
 The Court held that the right to equality
N
prohibits irrational classification based on
gender.

©KDR/RGSOIPL/Labour Codes -2022 14

Equal Remuneration Act, 1976 - Repealed
Objective:
• An act to provide for the payment of equal remuneration to
men and women workers and for the prevention of
discrimination, on the ground of sex, against women in the

EL
matter of employment and for matters.

PT
N
©KDR/RGSOIPL/Labour Codes -2022 15
Equal Remuneration Act, 1976 – “same work or work of similar nature”
Hon’ble Supreme Court in the case of Bhagwan
Das v. the State of Haryana, opined that; a.
remuneration for the same work cannot be varied
on the pretext of irrational classification based on

EL
the gender of an individual;
b. the equal pay for equal work also extends beyond

PT
gender-based classification, a temporary or a
contractual employee who is performing the same
N
duties as a permanent employee has the right to
equal remuneration for the same work.

©KDR/RGSOIPL/Labour Codes -2022 16

Equal Remuneration Act, 1976 – “same work or work of similar nature”
 2(h) "same work or work of a similar nature" means
 Work in respect of which the skill, effort, experience and
responsibility required are the same, when performed
under similar working conditions by employees and
 The difference if any, between the skill, effort,

EL
experience and responsibility required for employees of
any gender, are not of practical importance in relation to

PT
the terms and conditions of employment;

N
©KDR/RGSOIPL/Labour Codes -2022 17
Mackinnon Mackenzie & Co. v Audrey D Costa, (1987) 2 SCC 469
it was held by the apex court that settlement
between the management and the employees
union is not a valid ground for discrimination in
the payment of remuneration for the same work

EL
or work of similar.
It was held by the court the applicability of the act

PT
does not depend on the financial ability of the
management to pay equal remuneration as it will
N
be contrary to the provision of section 4(1) of the
act.

©KDR/RGSOIPL/Labour Codes -2022 18

The Code on Wages, 2019 – “same work or work of similar nature”
 Mackinnon Mackenzie & Co. Ltd. v. Audrey d' Costa , wherein
the Supreme Court, for the first time laid down the test for
determining the “same work or work of similar nature”.
 The Court interpreted the National legislation in harmony with the
international charters and conventions and opined that in

EL
determining the “same work or work of similar nature”, one has to
take a broad view in order to decide whether the works are similar or

PT
not.
 The Court held that what is needed is an objective evaluation of all
the surrounding circumstances, conditions, and limitations of the

N
nature of the work in order to conclude whether two types of work
are similar or not.

©KDR/RGSOIPL/Labour Codes -2022 19

The Code on Wages, 2019 – “same work or work of similar nature”
 2(v) "same work or work of a similar nature" means
 Work in respect of which the skill, effort, experience and responsibility
required are the same, when performed under similar working conditions
by employees and
 The difference if any, between the skill, effort, experience and responsibility

EL
required for employees of any gender, are not of practical importance in
relation to the terms and conditions of employment;

PT
N
©KDR/RGSOIPL/Labour Codes -2022 20
Non-Discrimination on the ground of Gender in the matters of Wages
1. There shall be no discrimination
• 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.

EL
• No employer shall,—
i. For complying with the above sub-section(1), reduce the

PT
rate of wages of any employee; and
ii. Make any discrimination on the ground of sex while
recruiting any employee for the same work or work of
N
similar nature and in the conditions of employment, except
where women in such work is prohibited or restricted by
law.

©KDR/RGSOIPL/Labour Codes -2022 21

Determination – “same or similar nature of work”

• If there is any dispute as to whether a work is of same or similar

nature, the dispute shall be decided by such authority as notified by
the appropriate Government.

EL
PT
N
©KDR/RGSOIPL/Labour Codes -2022 22
Surinder Singh and Ors. vs. Engineer-in-chief, C.P.W.D. and Ors. (17.01.1986 - SC)
 The petitioners who are employed by the Central Public Works
Department on a daily-wage basis and who have been so
working for several years demand that they should be paid the
same wage as permanent employees employed to do identical
work.

EL
 Held: We allow the writ petitions and direct the respondents to pay
to the petitioners and all other daily rated employees, to pay the
same salary and allowances as are paid to regular and

PT
permanent employees.

N
©KDR/RGSOIPL/Labour Codes -2022 23
Janta Shikshan Prasarak Mandal and Ors. vs. The Industrial Court and Ors.
(06.01.2010 - BOMHC)
 Petitioner 1&2: The institution which runs B.N. Engineering
College and the Principal of that College. Respondents: wife
appointed after their husbands’ death, claimed salary in pay
scale as was being paid to two male sweepers.

EL
 They pointed that though they are working for full 8 hours i.e.
between 8 AM to 12 AM and from 2 PM to 6 PM, they were being
paid consolidated pay of Rs. 1,000/per month. Their work was of

PT
cleaning toilets, sweeping etc. in Hostel for Girls. Male
sweepers working in Boys Hostel and doing same work were
receiving their salary in the pay scale of Rs. 750-940.
N
 The Industrial Court directed the petitioners to pay them salary
in pay scale of Rs.750-940 accordingly with arrears from
07.02.2003.

©KDR/RGSOIPL/Labour Codes -2022 24

Bimla Rani and Ors. vs. Appellate Authority Equal Remuneration Act, 1976
and Ors. (13.08.2004 - DELHC)
 Respondent contended that all ladies were working as Packing
Cleaners and their job was to clean pulses, mussel, etc. while the
menfolk were working as Packers and had to weigh the goods and
pack them with the use of electrical a appliances.

EL
 Court Discussed: The Convention Concerning Equal
Remuneration for Men and Women Workers for Work of Equal
Value. India is one of the signatories to the Convention. Also

PT
discussed is The Convention on the Elimination of all Forms of
Discrimination against Women.
 Held: What designation is given to an employee is of no
N
consequence at all. The writ petition is allowed.

©KDR/RGSOIPL/Labour Codes -2022 25

Responsibility for Payment of various dues

 Every employer
 Shall pay all amounts required to be paid under this Code
 To every employee employed by him:
• Where such employer fails to make such payment in accordance with this

EL
Code, then,
• The company or firm or association or any other person who is the
proprietor of the establishment,

PT
• In which the employee is employed,
• Shall be responsible for such payment.

N
©KDR/RGSOIPL/Labour Codes -2022 26
Responsibility for Payment of Undisbursed Dues in case of Death
of Employee
 All amounts payable to an employee
1. If such amounts could not or cannot be paid on account of
his death before payment or
2. On account of his whereabouts not being known

EL
 Shall
i. Be paid to the person nominated by him or

PT
ii. Where no such nomination has been made or where for any
reasons such amounts cannot be paid to the person so
nominated, be deposited with the such authority who shall

N
deal with the amounts so deposited in the manner as may be
prescribed.

©KDR/RGSOIPL/Labour Codes -2022 27

Claims under Code and Procedure thereof
• The appropriate Government may, appoint one or more authorities,
• To hear and determine the claims which arises under the
provisions of this Code.
• The authority shall have all the powers of a civil court
• For the purpose of taking evidence,

EL
• Of enforcing the attendance of witnesses,
• Compelling the production of documents
• Every such authority or appellate authority shall be deemed to be a civil

PT
court.
• The claim should ideally be decided within a period of 3 months.
• Having regard to the circumstances the authority may order (payment of

•
•
N
compensation in addition to the claim)
The compensation may extend to 10 times the claim
If an employer fails to pay the claim, the same shall be recovered as
arrears of land revenue.

©KDR/RGSOIPL/Labour Codes -2022 28

Claims Filing – By Whom
• An application for claim may be filed within 3 years of when it arises and by
1. The employee concerned; or
2. Trade Union registered of which the employee is a member; or
3. Inspector-cum-Facilitator

EL
PT
N
©KDR/RGSOIPL/Labour Codes -2022 29
Appeal
• Any person aggrieved by the order passed by the authority may prefer an
appeal, to the appellate authority, within 90 days from the date of such order, or
beyond 90 days on sufficient cause.

EL
• The appellate authority shall, after hearing the parties in the appeal, dispose
of the appeal within a period of 3 months.

PT
N
©KDR/RGSOIPL/Labour Codes -2022 30
• The code is comprehensive and prohibits any discrimination in the matters of
wages, made on the basis of gender between men and women, as well as
men and men or women and women.

EL
PT
N
©KDR/RGSOIPL/Labour Codes -2022 31
• The Code on Wages, 2019
• The Code on Wages (Central Advisory Board) Rules, 2021
• The Code on Wages (Central) Rules, 2020 (Draft)

EL
PT
N
©KDR/RGSOIPL/Labour Codes -2022 32
 EL
PT
N
©KDR/RGSOIPL/Labour Codes -2022 33
 New Labour Codes of India
Prof. K D Raju

EL
Rajiv Gandhi School of Intellectual Property Law
Indian Institute of Technology Kharagpur

PT
Lecture 25: Bonus
N
©KDR/RGSOIPL/Labour Codes -2022 1
• Concept of bonus
• Payment of Bonus
• Minimum Bonus
• Eligibility for Bonus

EL
• Disqualification for Bonus
• Allocable surplus

PT
N
©KDR/RGSOIPL/Labour Codes -2022 2
• Bonus

EL
PT
N
©KDR/RGSOIPL/Labour Codes -2022 3
 EL
Payment of Bonus Act, 1965 - Repealed

PT
N
©KDR/RGSOIPL/Labour Codes -2022 4
Historical Aspects
• The practice of paying bonus in India appears to have originated
during World War I, when certain textile mills granted 10% of wages
as war bonus to their workers in 1917.
• In 1950, the Full Bench of the Labour Appellate evolved a formula

EL
for determination of bonus.
• A plea was made to raise that formula in 1959.
• At the 2nd and 3rd meetings of the 18th Session of Standing Labour

PT
Committee (G.O.I.) held at New Delhi in March/April 1960, it was
agreed that a Commission be appointed to look into the question of
bonus and evolve suitable norms.

N
©KDR/RGSOIPL/Labour Codes -2022 5
Historical Aspects
• A Tripartite Commission was set up by the Government of India to consider in
a comprehensive manner, the question of payment of bonus based on profits
to employees employed in establishments and to make recommendations to
the Government.

EL
• To implement the recommendations of the Commission the Payment of Bonus
Act passed in 1965.

PT
N
©KDR/RGSOIPL/Labour Codes -2022 6
Concept of Bonus
• Bonus is a reward that is paid to an employee for
his good work towards the organization.
• The basic objective to give a bonus is to share the
profit earned by the organization amongst the

EL
employees and staff members.
• In India there is a principle law relating to this

PT
procedure of payment of bonuses to the
employees and that principle law is named as
N
Payment of Bonus Act, 1965.

©KDR/RGSOIPL/Labour Codes -2022 7

Payment of Bonus Act, 1965 - Repealed
Objective:
• An Act to provide for the payment of bonus to persons employed in certain
establishments on the basis of profits or on the basis of production or
productivity and for matters connected therewith.
• To impose statutory liability upon an employer of every establishment

EL
covered by the Act
• To define principle of payment of bonus

PT
• To provide for minimum and maximum bonus
• To provide machinery for enforcement of the liability

N
©KDR/RGSOIPL/Labour Codes -2022 8
Amendment to Payment of Bonus Act - Applicability
 In Section 2(13) of the Payment of the Bonus Act, 1965 the words “not
exceeding ₹3,500/- per mensem” shall be omitted.
 In section 2(13) of the Payment of Bonus Act, 1965, for the words
“three thousand and five hundred rupees”, the words “₹10,000/-” shall

EL
be substituted.

 In 2015, The ceiling was extended from ₹10,000/- to ₹21,000/-.

PT
N
©KDR/RGSOIPL/Labour Codes -2022 9
Amendment to Payment of Bonus Act - Applicability
 The constitutional validity of the act was
challenged in the Supreme Court in the case of
Jalan Trading Company Ltd. v. Mill Mazdoor
Sabha , on the grounds of violation of Articles 14

EL
and 19 of the Constitution.
 The Supreme Court ruled that the main provision

PT
of the Act which required the payment of a
minimum bonus was constitutional.
N
 The payment of a bonus is fair since it complies
with Articles 39 and 43 of the Constitution.

©KDR/RGSOIPL/Labour Codes -2022 10

2007 Amendment to Payment of Bonus Act - Applicability
 Section 32 of the Act excludes certain
classes of employees from the
application of the Act such as employees

EL
in Life Insurance Corporation, Seamen,
Dockworkers, University employees,

PT
employees employed through
contractors on building operations, etc.
N
©KDR/RGSOIPL/Labour Codes -2022 11
Eligibility

 In East Asiatic Co. Ltd. Vs

Industrial Tribunal, it was held that
a retrenched employee is eligible for

EL
the bonus if they worked for a min

PT
of 30 days and have a salary of
10,000 pm in a year.
N
©KDR/RGSOIPL/Labour Codes -2022 12
 EL
The Code on Wages, 2019

PT
N
©KDR/RGSOIPL/Labour Codes -2022 13
The Code on Wages, 2019
Objective:
• An Act to amend and consolidate the laws relating to wages and
bonus and matters connected therewith or incidental thereto.

EL
PT
N
©KDR/RGSOIPL/Labour Codes -2022 14
The Code on Wages, 2019 – Certain Relevant Provisions
Chapter IV – Payment of Bonus
26. Eligibility for bonus, etc.
27. Proportionate reduction in bonus in certain cases
28. Computation of number of working days
29. Disqualification for bonus
30. Establishments to include departments, undertakings and branches.

EL
31. Payment of bonus out of allocable surplus
32. Computation of gross profits
33. Computation of available surplus

PT
34. Sums deductible from gross profits
35. Calculation of direct tax payable by employer
36. Set on and set off of allocable surplus
37. Adjustment of customary or interim bonus against bonus payable under this code

39. Time limit for payment of bonus N

38. Deduction of certain amounts from bonus payable

40. Application of this chapter to establishments in public sector in certain cases

41. Non-applicability of this Chapter

©KDR/RGSOIPL/Labour Codes -2022 15

The Code on Wages, 2019 – “Wages”
2(y) "wages" means all remuneration
Whether by way of salaries, allowances or otherwise,
Expressed in terms of money or capable of being so expressed,
If the terms of employment, express or implied, were fulfilled,


EL
Which would be payable to a person employed in respect of his
employment or of work done in such employment, and includes—
i. Basic pay;

PT
ii. Dearness allowance; and
iii. Retaining allowance, if any
 But does not include-

N
 Any bonus payable under any law for the time being in force,
which does not form part of the remuneration payable under the
terms of employment;

©KDR/RGSOIPL/Labour Codes -2022 16

Application of this Chapter to establishments in public sector

• If in any accounting year an establishment in public sector

• Sells any goods produced or manufactured by it or renders any
services
• In competition with an establishment in private sector, and
• The income from such sale or services or both, is not less than

EL
20% of the gross income of the establishment in public sector for
that year, then,

PT
• The provisions of this Chapter shall apply in that public sector as
they apply to private sector.

N
• In any other case, this Chapter shall not apply to the employees
employed by any establishment in public sector.

©KDR/RGSOIPL/Labour Codes -2022 17

Non-Applicability of this Chapter
This Chapter shall not apply to––
 Employees employed by the Life Insurance Corporation of India;
 Seamen under section 3(42) of the Merchant Shipping Act, 1958;
 Employees registered or listed under Dock Workers (Regulation of
Employment) Act, 1948

EL
 Employees employed by an establishment under the authority of any
department of the Central Government or a State Government or
a local authority;

PT
 Employees employed by––
 Indian Red Cross Society or institution of a like nature

N
 Universities and other educational institutions;
 Institutions including hospitals, chamber of commerce and
social welfare institutions established not for purposes of profit
 Employees employed by the Reserve Bank of India

©KDR/RGSOIPL/Labour Codes -2022 18

Non-Applicability of this Chapter
 Employees employed by public sector financial institution other
than a banking company, which the Central Government may,
specify, having regard to
i. Its capital structure
ii. Its objectives and the nature of its activities

EL
iii. The nature and extent of financial assistance or any
concession given to it by the Government
iv. Any other relevant factor

PT
 Employees employed by inland water transport establishments
operating on routes passing through any other country; and

N
 Employees of any other establishment which the appropriate
Government may exempt having regard to the overall benefits
under any other scheme of profit sharing available in such
establishments.

©KDR/RGSOIPL/Labour Codes -2022 19

Sarva Udyog Kamgar Sangh. vs. Jawahar Engineers Pvt. Ltd. (13.02.2002 - BOMHC)
 Govt. order granting exemption to the establishment from the
application of the Bonus Act.
 Held: It is, necessary that the impugned order satisfies the
three parameters laid down by the Supreme Court, namely
(a) financial position of the establishment; (b) relevant

EL
circumstances as may be applicable to the establishment;
and (c) the public interest as a whole and not confined to

PT
the personal or private interest of the establishment
concerned.

N
©KDR/RGSOIPL/Labour Codes -2022 20
Applicability of this Chapter

Subject to the restrictions mentioned, the provisions of

this Chapter shall apply to such establishment in
which 20 or more persons are employed or were
employed on any day during an accounting year.

EL
PT
N
©KDR/RGSOIPL/Labour Codes -2022 21
Eligibility for bonus
 There shall be paid to every employee
 By his employer
 Who has put in at least 30 days work in an accounting year,
 An annual minimum bonus calculated at the rate of 8.33 % of the wages or
₹100, whichever is higher

EL
 Whether or not the employer has any allocable surplus during the previous
accounting year.

PT
N
©KDR/RGSOIPL/Labour Codes -2022 22
Eligibility for bonus

In the case of J. K. Ginning & Pressing Factory

v. Second Labour Court, Akola & Others, a
factory employed ten seasonal employees, and the
issue of their bonus eligibility arose.

EL
The Bombay High Court ruled that the Act does
not exclude such seasonal workers from

PT
employment

N
©KDR/RGSOIPL/Labour Codes -2022 23
Eligibility for bonus
 Where in respect of any accounting year,
 The allocable surplus exceeds the amount of minimum bonus
payable to the employees,
 The employer shall, in lieu of such minimum bonus,
 Be bound to pay to every employee in respect of that accounting

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year, Bonus
 Which shall be an amount in proportion to the wages earned by
the employee during the accounting year, subject to a maximum

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of 20% of such wages.
 Any demand for bonus in excess of the bonus,

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 Either on the basis of production or productivity
 Shall be determined by an agreement or settlement between
the employer and the employees, subject to annual
minimum bonus 20%

©KDR/RGSOIPL/Labour Codes -2022 24

Proportionate reduction in bonus in certain cases.
 Where an employee has not worked for all the working days in an
accounting year,
 The minimum bonus, if higher than 8.33% of the salary or wage of the days
such employee has worked in that accounting year
 Shall be proportionately reduced.

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PT
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©KDR/RGSOIPL/Labour Codes -2022 25
Adjustment of customary or interim bonus against Bonus

 Where in any accounting year,—

i. An employer has paid any puja bonus or other customary bonus to
employee; or
ii. An employer has paid a part of the bonus before the date on which such
bonus becomes payable,

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 Then, the employer shall be entitled to deduct the amount of bonus so paid
from the amount of bonus payable by him to the employee and the employee
shall be entitled to receive only the balance.

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©KDR/RGSOIPL/Labour Codes -2022 26
Deduction of certain amounts from bonus payable
 Where in any accounting year, an employee is found guilty of misconduct
causing financial loss to the employer, then,
 It shall be lawful for the employer to deduct the amount of loss from the
amount of bonus payable by him to the employee and
 The employee shall be entitled to receive the balance, if any.

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PT
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©KDR/RGSOIPL/Labour Codes -2022 27
Time limit for payment of bonus
 All amounts payable to an employee by way of bonus under this Code
 Shall be paid by crediting it in the bank account of the employee by
his employer within 8 months(or further for sufficient reasons, but not
beyond 2 years) from the close of the accounting year.

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 Where there is a dispute regarding payment of bonus pending before
any authority, such bonus shall be paid, within 1 month from the date
on which the award becomes enforceable or the settlement comes into

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operation.

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©KDR/RGSOIPL/Labour Codes -2022 28
Burden of Proof
 Where a claim has been filed on account of
1. Non-payment of bonus or
2. Less payment of bonus or
3. On account of making deductions not authorised by this Code from the
wages of an employee,

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 The burden to proof that the said dues have been paid shall be on the
employer.

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©KDR/RGSOIPL/Labour Codes -2022 29
Contracting Out – Null and Void
 Any contract or agreement whereby
 An employee relinquishes the right to bonus
 Due to him under this Code
 Shall be null and void


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In so far as it purports to remove or reduce the liability of any person to pay
such amount under this Code.

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©KDR/RGSOIPL/Labour Codes -2022 30
Computation of number of working days

 An employee shall be deemed to have worked in an establishment in any

accounting year also on the days on which
i. He has been laid off
ii. He has been on leave with salary or wages;
iii. He has been absent due to temporary disablement caused by accident

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arising out of and in the course of his employment
iv. The employee has been on maternity leave with salary or wages

PT
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©KDR/RGSOIPL/Labour Codes -2022 31
Disqualification for bonus
 An employee shall be disqualified from receiving bonus,
 If he is dismissed from service for––
a) Fraud; or
b) Riotous or violent behaviour while on the premises of establishment; or
c) Theft, misappropriation or sabotage of any property of establishment; or

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d) Conviction for sexual harassment.

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©KDR/RGSOIPL/Labour Codes -2022 32
Disqualification for bonus
 Pandian Roadways Corporation Ltd. vs. Presiding
Officer.
 Following that, the petitioner and management reached an
agreement, and the petitioner was appointed as a new
entrant.

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 The petitioner claimed a bonus of Rs. 1,842 for the duration
after his re-appointment.

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 The court ruled in the case that " If an employee is
dismissed from service, he is disqualified from receiving

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any bonus under the said Act, not just the bonus for the
accounting year

©KDR/RGSOIPL/Labour Codes -2022 33

Disqualification for bonus
 In Gammon India Ltd Vs Niranjan Das,
 the court held that an employee who is dismissed from
service for fraud, riotous or aggressive behaviour on the
premises of the company,
 or who is guilty of theft, misappropriation, or sabotage of

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any establishment's property is disqualified from receiving
bonus for the accounting year under section 9 of the

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Payment of Bonus Act, 1965.

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©KDR/RGSOIPL/Labour Codes -2022 34
Set on and Set off of Allocable Surplus
 Where for any accounting year,
 The allocable surplus exceeds the amount of maximum bonus(20%)
payable to the employees, then
 The excess shall, be carried forward for being set on in the
succeeding accounting year

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 To be utilised for the purpose of payment of bonus in such manner
as may be prescribed by the Central Government.
 Where for any accounting year,

PT
 There is no available surplus or the allocable surplus in respect of
that year falls short of the amount of minimum bonus(8.33%)
payable to the employees
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 Such minimum amount or the deficiency, shall be carried forward
for being set off in the succeeding accounting year.

©KDR/RGSOIPL/Labour Codes -2022 35

Company under loss
 In J.K. Chemicals Ltd. vs. Govt. of Maharashtra
 The court held that the company would not be
relieved from its liability to pay the minimum bonus
if the bonus liability is negligible in comparison to

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the loss incurred.
 If the employer's damages were not caused by

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employee wrongdoing, the employer must pay the
statutory minimum bonus.
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©KDR/RGSOIPL/Labour Codes -2022 36
• The code lays down the rules for minimum and maximum bonuses,
qualifications and disqualifications, applicability, and non-applicability
of the Act over public establishments.
• It provides a mechanism for calculating bonuses based on profit and

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performance.

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©KDR/RGSOIPL/Labour Codes -2022 37
• The Code on Wages, 2019
• The Code on Wages (Central Advisory Board) Rules, 2021
• The Code on Wages (Central) Rules, 2020 (Draft)

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©KDR/RGSOIPL/Labour Codes -2022 38
 EL
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©KDR/RGSOIPL/Labour Codes -2022 39