Ministry of Labour and Employment vide notification dated 07.07.2020 published the draft of Code on Wages (Central) Rules, 2020, for calculating minimum wages and payment of wages along with inviting objections and suggestions from the public.
Code on Wages, 2019, which subsumes four existing laws on labour wages – the Payment of Wages Act, 1936; the Minimum Wages Act, 1948; the Payment of Bonus Act, 1965, and the Equal Remuneration Act, 1976 was passed by the Parliament last year. The Code received the assent of the President on 08.08.2019. Section 67 of the Code empowers the appropriate Government, subject to the condition of previous publication, to make rules for carrying out the provisions of the said code.
According to the draft, for calculating minimum rate of wages on a day basis, six criteria can be used:
1. standard family of four (self, spouse and two children);
2. net intake of 2,700 calories per day per consumption unit;
3. 66 metres cloth per year per standard working-class family;
4. housing rent expenditure to constitute 10 per cent of food and clothing expenditure;
5. fuel, electricity and other miscellaneous items of expenditure to constitute 20 per cent of minimum wage;
6. Expenditure for children education, medical requirement, recreation and expenditure on contingencies.

These Rules, when notified, will supersede the following Rules:
(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;
(v) Ease of Compliance to Maintain Register under various Labour Laws Rules, 2017 to the extent these rules are made in exercise of the powers conferred by section 13 of the Equal Remuneration Act, 1976 (25 of 1976), section 29 and section 30 of the Minimum Wages Act, 1948 (11 of 1948) and section 26 of the Payment of Wages Act, 1936 (4 of 1936) and applicable accordingly;
(vi) Payment of Bonus Rules, 1975;
(vii) Equal Remuneration Rules, 1976; and
(viii) Central Advisory Committee on Equal Remuneration Rules, 1991

The government has also relaxed the terms of responsibility for the principal employers in case the contractors (who arrange workers for the former) fail to pay minimum bonus to workers stipulated under the law. In the previous draft, principal employers were held liable in case contractors failed to pay up bonus to workers. Now, only if the principal employers get written information of such failure from employees or registered trade unions, they will become liable towards this sum.

For the first time, the labour and employment ministry has made a set of rules prescribing the way in which it will fix the minimum wages and it will cover cost of workers’ family on children education, medical requirements and recreation, in a bid to remove arbitrariness.

“When the rate of wages for a day is fixed, then, such amount shall be divided by eight for fixing the rate of wages for an hour and multiplied by twenty-six for fixing the rate of wages for a month.” draft rule states.

The power to fix minimum wages will continue to be vested in the Central Government as well as the State Government in their respective sphere. It has been proposed to divide geographical area into three categories: metropolitan, non-metropolitan and rural. There is a proposal to form a Technical Committee to suggest, modify, add or delete particular occupation in the tentative list of four categories: unskilled, semi-skilled, skilled and highly skilled.

The draft rules further states that a normal working day comprised of eight hours of work and one or more intervals of rest, which in total shall not exceed one hour. An employee will get a day of rest every week, which shall ordinarily be Sunday, but the employer may fix any other day of the week depending upon the requirement. An employee will be entitled for a rest day if he has worked under the same employer for a continuous period of not less than six days. The draft rule says that if a shift extends beyond midnight, a rest day for the whole day needs to be given. A ‘rest day’ means a full 24-hour period beginning from the time when the shift ends.

The draft has prescribed a revision in the Dearness Allowance (DA) twice a year — once by April 1 and then by October 1. The Dearness Allowance will be payable on the minimum wages. This allowance helps the wage-earner get more money in case prices of various commodities go up. As on date, the Government revises the Dearness Allowance twice a year for its employees and officers: the first instalment is effective from January 1, and the second one from July 1. Every employer will issue wage slips, electronically or physically to the employees, it said.

As per the said notification, objections and suggestions, in this regard, shall be addressed to Shri M. A. Khan, Deputy Director (, and Smt. Rachana Bolimera, Assistant Director (, Government of India, Ministry of Labour and Employment, Shram Shakti Bhawan, Rafi Marg, New Delhi-110001, within 45 days from the date on which the copies of the Official Gazette in which this notification is published are made available to the public.