Code on Wages, 2019: One-Liner Q&A for Professional Examinations

The Code on Wages, 2019

Preliminary & Definitions

Q: What is the short title of the Code on Wages, 2019?
A: The Code on Wages, 2019.
Q: To what geographical area does the Code on Wages extend?
A: It extends to the whole of India.
Q: Who is an ’employee’ as per the Code?
A: Any person employed on wages to do any skilled, semi-skilled, unskilled, manual, operational, supervisory, managerial, administrative, technical, or clerical work.
Q: Does the definition of ’employee’ include a member of the Armed Forces of the Union?
A: No, it explicitly excludes them.
Q: Who is an ’employer’ in relation to a factory?
A: The occupier of the factory.
Q: What does the term ‘wages’ primarily include?
A: It includes (i) basic pay, (ii) dearness allowance, and (iii) retaining allowance.
Q: Name any three items that are excluded from the definition of ‘wages’.
A: (Any three) Value of house accommodation, employer’s contribution to PF, gratuity, overtime allowance, house rent allowance.
Q: For equal pay purposes, which allowances are included for wage computation?
A: Conveyance allowance, house rent allowance, remuneration under award/settlement, and overtime allowance.
Q: A person employed in a supervisory capacity drawing a wage of ₹20,000 per month is considered a ‘worker’. True or False?
A: False, as his wage exceeds the threshold of ₹15,000 per month.
Q: What constitutes ‘same work or work of a similar nature’?
A: Work where skill, effort, experience, and responsibility required are the same under similar working conditions.

Minimum Wages (Sections 5-14)

Q: What is the core obligation of an employer under Section 5?
A: Not to pay any employee less than the minimum rate of wages.
Q: What are the bases on which the appropriate Government can fix minimum wages?
A: For time work or for piece work.
Q: What is the primary criterion for fixing minimum wages?
A: The skill of workers required and the geographical area.
Q: What are the components that can form part of the minimum rate of wages?
A: A basic rate with a cost of living allowance, or a basic rate with the value of concessions, or an all-inclusive rate.
Q: What is the maximum interval for the review or revision of minimum wages?
A: Ordinarily, it should not exceed five years.
Q: Who has the power to fix the floor wage?
A: The Central Government.
Q: Can a State Government fix its minimum wage below the floor wage?
A: No, the minimum rates of wages cannot be less than the floor wage.
Q: Is an employee entitled to full wages for a day if he works for less than a normal working day?
A: Yes, unless his failure to work is due to his own unwillingness.
Q: What is the overtime rate prescribed under the Code?
A: Not less than twice the normal rate of wages.

Payment of Wages (Sections 15-25)

Q: What are the permitted modes of payment of wages?
A: Current coin, currency notes, cheque, crediting to bank account, or electronic mode.
Q: What is the maximum wage period that can be fixed?
A: One month.
Q: What is the time limit for payment of wages to a monthly-rated employee?
A: Before the expiry of the seventh day of the succeeding month.
Q: What is the time limit for payment of wages to a dismissed employee?
A: Within two working days of his dismissal.
Q: What is the maximum limit for total deductions from an employee’s wages in a wage period?
A: Fifty percent of the wages.
Q: Can an employer impose a fine on an employee under the age of 15 years?
A: No.
Q: What is the maximum percentage of wages that can be recovered as a fine in a wage-period?
A: Three percent.
Q: From which date is a fine deemed to have been imposed?
A: On the day of the act or omission in respect of which it was imposed.
Q: Do the provisions for deductions (Chapter III) automatically apply to Government establishments?
A: No, unless the appropriate Government applies them by notification.

Payment of Bonus (Sections 26-41)

Q: What is the statutory minimum bonus payable, even in a loss-making year?
A: 8.33% of the wages or one hundred rupees, whichever is higher.
Q: What is the maximum bonus payable under the Code?
A: Twenty percent of the wages.
Q: An employee is disqualified from receiving bonus if dismissed for fraud. True or False?
A: True.
Q: Is an employee on maternity leave with salary deemed to have worked for bonus calculation?
A: Yes.
Q: What is the allocable surplus for a non-banking establishment?
A: Sixty-seven percent of the available surplus.
Q: Within what period must the bonus be paid after the close of the accounting year?
A: Within eight months.
Q: Can an employer deduct a financial loss caused by an employee’s misconduct from the bonus?
A: Yes, but only for that accounting year.
Q: Are employees of the Life Insurance Corporation of India (LIC) entitled to bonus under this Code?
A: No, they are explicitly excluded under Section 41.
Q: To which establishments does the Bonus chapter apply mandatorily?
A: Establishments in which twenty or more persons are employed on any day during an accounting year.

Advisory Boards, Claims, and Inspection

Q: What is the key feature of the composition of the Central Advisory Board?
A: It has equal numbers of representatives from employers and employees.
Q: What is the limitation period for filing a claim under Section 45?
A: Three years from the date the claim arises.
Q: Who can file a claim application before the authority?
A: The employee, a registered Trade Union of which the employee is a member, or the Inspector-cum-Facilitator.
Q: What additional relief can the authority order while deciding a claim?
A: Compensation which may extend to ten times the claim determined.
Q: What is the primary dual role of an Inspector under this Code?
A: Inspector-cum-Facilitator.
Q: What is the rank of the court competent to try offences under this Code?
A: Metropolitan Magistrate or Judicial Magistrate of the first class.

Offences, Penalties & Miscellaneous

Q: For a first offence of paying less than the due wages, what is the punishment?
A: Fine which may extend to fifty thousand rupees.
Q: What is the key safeguard for an employer before prosecution for non-maintenance of records?
A: An opportunity to comply via a written direction.
Q: In a claim for non-payment of wages, on whom does the burden of proof lie?
A: On the employer to prove that the dues have been paid.
Q: Is a contract whereby an employee relinquishes his right to bonus valid?
A: No, it is null and void.
Q: The provisions of this Code have an overriding effect over other laws. True or False?
A: True.
Q: Which four Acts are repealed by the Code on Wages, 2019?
A: The Payment of Wages Act, 1936; The Minimum Wages Act, 1948; The Payment of Bonus Act, 1965; and The Equal Remuneration Act, 1976.
Q: What is the time limit for the Central Government to exercise the power to remove difficulties after the Code’s commencement?
A: A period of three years.