Wage Code headed for earliest finalisation of rules among states

The Code on Wages leads among the four proposed labour codes in terms of states/UTs’ readiness to implement the long-pending labour reform with 26 states/union territories pre-publishing their draft rules under it, according to latest data from the Economic Survey 2021-22 released on Monday. 

The government has proposed four labour bills -- Wage Code, Occupational Safety, Health and Working Conditions Code, Social Security Code and Industrial Relations Code – to rationalise 44 central labour laws.  

The Labour Ministry has finalised the rules under these four codes. However, both the Centre and the states have yet to notify the rules under these codes to convert them into laws as labour is a concurrent subject. The states are in various stages of progression on the codes.  

“As on 11.01.2022, 26 States/UTs have also pre-published the draft rules under the Code on Wages, 22 States/UTs under Industrial Relations Code, 20 States/UTs under Code on Social Security, and 17 States/UTs under OSH & WC Code,” said the Economy Survey 2021-22. 

In December 2021, the respective numbers were 24 states/UTs for The Code on Wages, 20 for the Industrial Relations Code, 18 states for The Code on Social Security and 13 states for the Occupational Safety, Health and Working Conditions Code, according to Union Labour Minister Bhupender Yadav’s reply in Rajya Sabha. 

Incidentally, the industry has been seeking more time from the government to implement the Code on Wages and Industrial Relations Code, especially, because of their financial implications on the employer and financial toll the Covid-19 pandemic has had on companies. 

Notably, among the investment-attracting states, Tamil Nadu and Andhra Pradesh have not published the draft rules for any of the codes. Karnataka has published them for the Code on Wages and Code on Industrial relations. Maharashtra has published draft rules for all except the Occupational Safety, Health and Working Conditions Code, while Gujarat has notified the draft rules for all four codes. The National Capital Territory of Delhi has published the draft rules for the Wage Code alone. 

The Code on Wages was the first code to be notified by the Centre – on August 8, 2019. It notified the remaining three codes on September 29, 2020. The codes were originally planned to be implemented from April 1, 2021. Some of its provisions include statutory floor-level minimum wage and provision of gratuity based on the new wage definition which caps allowances at 50 per cent of the wages.   

Announcements around the labour codes are expected to be one of the most-watched aspects of the Union Budget, to be presented by Nirmala Sitharaman on February 1, 2022, as India Inc. has been awaiting clarity on their implementation because the rules, if brought into effect, are expected to increase the cost burden for companies.  

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