Sanjib D Lahkar

The State governments in effect would be bound to fix minimum wage rates at higher than or equal to the ‘floor wage’ thus determined. Consequently, if the ‘floor wage’ notified post April 2021 is higher than the currently announced interim minimum cash wage for Assam tea workers, the process would require reworking.

Assam is in election mode. From Dhubri to Dhemaji from addas to dhabas, self-appointed experts are preoccupied in analysing gatbandhans and outcomes. While we discuss seat shares and candidature, a determined Central Government has slowly but steadily progressed on rolling out the new Wage Code 2019. Concurrently, at home, the Assam Government on February 20 last, announced the much contentious minimum daily cash wages for ‘chah-shramiks’ (tea labourers) at Rs 217 per day for workers in the Brahmaputra Valley. The announcement made headlines in the morning papers.

One may argue that the fixation of minimum wage for a category of employees under the provision of the Minimum Wages Act, 1948 is a mere statutory process. Why then the headline status? In the hotpot of State politics, readers of this column well understand the vitality of the ‘chah-janajati’ (tea tribe) ingredient. Therefore, the screaming headlines!

No doubt the political masters are doing a tricky tightrope walk at Rs 217, by notifying a Rs 50 per day interim wage increase for the Brahmaputra Valley workers. Offending the chah-janajati and ignoring per day cash wage rates of Rs 351 as claimed by the leading trade unions and the Rs 365 promised by a rival political party may impact the ruling party at the polls. On the contrary, any insensitivity to business reality of the industry would be disastrous. Industry leaders had expressed their inability to meet higher wage costs and cited ‘crisis in the industry’. One needs to appreciate that the tea industry besides impacting the political outcomes is also the largest employer in the State. One cannot kill the golden goose nor ignore the vote bank! Thus, the political tightrope walking.

Furthermore, is it politics that has determined the timing of the new daily wage rate announcement, as with foundation laying and dedication ceremonies from flyovers to petro-projects? More so, when the Central Government has expressed its intention to roll out the new Wage Code on April 1 next, which in effect may contradict the ‘interim’ tea wage announcement? To elaborate on the matter, the Wage Code 2019 has fundamentally altered the process of minimum wage rate fixation. The new Code effectively lays down that the Central Government-appointed advisory board and committees would fix a ‘floor wage’. The State governments in effect would be bound to fix minimum wage rates at higher than or equal to the ‘floor wage’ thus determined. Consequently, if the ‘floor wage’ notified post April 2021 is higher than the currently announced interim minimum cash wage for Assam tea workers, the process would require reworking. Moreover, the proposed Wage Code envisages that the value of house accommodation, medical amenities and such other facilities would not form part of wages. Currently, the norm has been to consider the referred items as ‘cash component of wages paid in kind’. This along with a proposed provision to allow adding back a percentage of such excluded items to deem as wages, would obviously alter the computation of minimum wages. Therefore, the concern.

In further decoding the proposed Wage Code, the fundamental shift in the approach adopted by the law makers is significant. The paradigm shifts merit detailed examination by employers, employees and as such all stakeholders across industries. To elaborate by way of illustration, in addition to the significant shift by way of introduction of the concept of the ‘floor wage’, the new Code has done away with fixing minimum wages based on ‘schedule’ of employment categorized by trade. The current process of differentiating minimum wage rates based on the trade/ schedule of employment as distinct for a bought leaf tea factory worker or an asbestos cement factory worker or a private hospital worker and so forth is being discontinued. Instead, the Wage Code envisages considerations such as geographical area, arduousness of work like temperature or humidity, hazardous occupations, etc., in addition to skills to categories rates of wages.

Furthermore, the Code of Wages 2019 and draft Rules 2020 have proposed criteria such as intake of 2,700 calories per adult and 66 metres of cloth per year be considered for standard working-class family of spouse and two children for arriving at the minimum rate of wages. With the vision towards inclusiveness and equity, the Code has extended the coverage to the unorganized sector accounting for more than 62% of the nation’s workforce. These are progressive concepts which support assurance of minimum living standards for employees across the country.

In its rationalization process, the new Code has proposed a single definition of wages. The pre-Code legislations had multiple definitions. The rationalized definition has been extended and universalized across all the new Codes. The outdated Acts often raised issues of interpretation. These led to confusion, IR disputes and sometimes time-consuming litigation. However, from the employer’s point of view, the altered definition of wages to exclude certain items as elaborated above in the context of the tea industry, will come with its share of questions. Will the employer’s wage bill go up on account of the new Wage Code? Will it impact the liability on account of terminal benefits such as provident fund and gratuity? Will the ESIC contribution and annual bonus be impacted? No doubt employers are examining the implications and the HR heads are busy with rejigging the ‘components of remuneration’ to strike a balance between ‘cost-to-company’ and ‘legal compliance’.

While the employers, trade bodies, employees and unions continue to examine the pros and cons of the paradigm shift in approach to labour laws, we need to decode its benefits to the nation. India, a nation with an urgent need to meet the job aspirations of ever-growing unemployed and a vision for a five-trillion-dollar economy, has no option but to accelerate reforms. In this 21st century work environment of fair trade, ethical practices, human rights and dignity, a nation, to compete and survive globally and to attract much-needed foreign investments, has to update and simplify legislation. Progressive legislations that support ease of doing business, universal coverage and legal compliance are today a prerequisite for sustainable economic growth.

The Wage Code 2019 is a step in the stated direction. The repeal and thereby merger of four archaic statutes, namely the Payment of Wages Act, 1936, the Minimum Wages Act, 1948, the Payment of Bonus Act, 1965 and the Equal Remuneration Act, 1976 under one single Code has simplified, rationalized, updated, universalized and consolidated laws relating to wages. Further, the proposed randomized web-based inspections, it is hoped, would be another facilitator in ethical legal compliances.

As the nation transits, hopefully from an era of ‘Inspector Raj’ to an era of progressive reforms, we would need to analyse the Rules as and when notified by the State governments to understand the overall implications.