Equal Remuneration and Minimum wage
Objectives of The Equal Remuneration
The objectives of Equal Remuneration under the Code on Wages, 2019 (which amalgamated the Equal Remuneration Act, 1976) are primarily rooted in constitutional mandates and international labor standards.
The following are the four primary objectives of the Code regarding equal remuneration:
- Fulfilling the Constitutional Mandate (Article 39(d)): The Code aims to realize the directive principle of “equal pay for equal work for both men and women”. It ensures that where relevant factors like skill, effort, and responsibility are the same, persons in identical posts are not treated differently in matters of pay based on gender.
- Universal Payment of Equal Remuneration: A key objective is to guarantee equal remuneration to all employees performing the “same work or work of a similar nature,” regardless of their gender. Crucially, the Code expands this right beyond “scheduled employments” to cover the entire unorganized sector, including agricultural, domestic, and gig workers.
- Prevention of Systemic Discrimination: The Code seeks to prevent discrimination not only in wages but also in the broader conditions of employment. This includes prohibiting gender-based discrimination in recruitment, promotions, training, and transfers. It also renders any settlement or agreement that discriminates on gender grounds legally void.
- Modernization and Inclusivity (Transgender Rights): The Code modernizes the legal framework by shifting the terminology from “sex” (binary male/female) to “gender”. A major objective of this shift is to extend statutory wage protection to the transgender community, ensuring an employer cannot pay a transgender worker less than others for the same job.
Key Implementation Rule: To ensure these objectives are met in good faith, the Code provides that an employer cannot reduce the rate of wages of any employee to achieve equality; they are legally bound to raise the lower wage to match the higher one.
Minimum wage, The procedure for the fixation of minimum wages.
Minimum wage is the irreducible level of remuneration that an employer is legally obligated to pay a worker, which cannot be reduced by any private contract. It is designed to cover the basic physical needs of a worker—food, clothing, and shelter—along with a basic level of medical requirements, education, and amenities.
Under the Code on Wages, 2019, minimum wage laws now apply universally to all employees and establishments, regardless of whether they are in the organized or unorganized sector.
Criteria for Fixing Minimum Wages
According to Section 6 of the Code, the “Appropriate Government” (Central or State) fixes minimum wage rates based on three primary factors:
- Skill Level: Categorized as unskilled, semi-skilled, skilled, or highly skilled.
- Geographical Area: Accounting for variations in the cost of living across different regions.
- Arduousness of Work: Factoring in difficult or hazardous conditions, such as underground mining or extreme temperatures.
Procedure for fixation of Minimum Wages
The statutory procedure for fixing and revising minimum wages is detailed under Section 8 of the Code. The government can utilize one of the following two methods:
1. The Committee Method
The government appoints committees and sub-committees to hold inquiries and provide advice. These committees consist of:
- An equal number of representatives from employers and employees.
- Independent persons, who cannot exceed one-third of the total members.
2. The Notification Method
The government publishes its wage proposals in the Official Gazette to inform the public.
- Affected persons are given at least two months to submit objections or suggestions.
- After considering these representations (and consulting the Advisory Board), the government officially notifies the final minimum wage rates.
Revision and the National Floor Wage
- Revision Timeline: Minimum wage rates must be reviewed and revised by the government at intervals not exceeding five years.
- National Floor Wage: Under Section 9, the Central Government fixes a statutory National Floor Wage. No State Government can fix a minimum wage that is lower than this floor wage. If a state’s current rate is already higher, they are prohibited from reducing it to match the floor.
Legal Obligations and Remedies
The payment of minimum wages is an absolute duty. Even if a company suffers financial losses, it remains legally obligated to pay the notified minimum rate. If an employer fails to comply, the authority may order them to pay the due amount plus compensation that can reach ten times (10x) the value of the short-paid wages.
