Balancing the Scales
The Code on Wages, 2019 (“Code”) consolidates and rationalises the legal framework governing wages, minimum wages, bonus and equal remuneration with the objective of ensuring timely and fair payment to employees. The provisions relating to offences, penalties, and miscellaneous matters form the backbone of enforcement under the Code, as they prescribe consequences for non compliance and lay down procedural safeguards. These provisions strike a balance between deterrence and facilitation by introducing graded penalties, opportunities for compliance, compounding of offences and protections for bona fide actions. Together, they aim to promote adherence to wage related obligations while reducing unnecessary litigation.
Who can initiate cognizance of an offence under the Code?
A court can take cognizance of an offence only on a complaint made by or under the authority of the appropriate Government, or by an authorized officer, or by an employee, or by a registered Trade Union or by an Inspector-cum-Facilitator.
Are there any restrictions on which courts can try offences under the Code?
Yes. No court inferior to a Metropolitan Magistrate or a Judicial Magistrate of the first class is competent to try offences under the Code.
Can penalties be imposed by officers of the Government instead of courts in certain cases?
Yes. For specified categories of offences, the appropriate Government may appoint an officer not below a prescribed rank to conduct an enquiry and impose penalties.
What powers does such an officer have while conducting an enquiry?
The officer may summon and enforce attendance of any person acquainted with the facts, require production of documents, and upon satisfaction that an offence has been committed, impose an appropriate penalty as permitted under the Code.
What penalty applies if an employer pays less than the amount due to an employee?
The employer may be punished with a fine extending up to fifty thousand rupees.
What is the punishment for repeated underpayment of wages?
If the employer commits a similar offence again within five years, the punishment may include imprisonment up to three months, or a fine up to one lakh rupees, or both.
What penalty applies for contravention of other provisions of the Code?
The employer may be punished with a fine extending up to twenty thousand rupees.
What happens if such contravention is repeated within five years?
The employer may be punished with imprisonment up to one month, or a fine up to forty thousand rupees, or both.
Is there a separate penalty for non-maintenance or improper maintenance of records?
Yes. Such offences are punishable with a fine extending up to ten thousand rupees.
Is prosecution mandatory for every contravention?
No. Before initiating prosecution for certain offences, the Inspector-cum-Facilitator must give the employer a written direction with a specified time for compliance.
What happens if the employer complies with the written direction?
If compliance is made within the specified period, no prosecution shall be initiated.
Is this opportunity available for repeated violations?
No. If a similar violation is repeated within five years, prosecution shall be initiated without giving such an opportunity.
Who is liable when an offence is committed by a company?
The company itself and every person in charge of and responsible for the conduct of its business at the time of the offence are deemed guilty.
Can such persons avoid liability?
Yes. They are not liable if they prove that the offence was committed without their knowledge or despite exercising due diligence.
What if the offence occurred due to consent, connivance, or neglect of company officers?
Such director, manager, secretary, or officer shall also be deemed guilty and liable for punishment.
Can offences under the Code be compounded?
Yes. Offences not punishable with imprisonment alone or with imprisonment and fine may be compounded on application by the accused.
Who is authorised to compound offences?
A Gazetted Officer specified by the appropriate Government may compound such offences.
What amount is payable for compounding an offence?
Fifty per cent of the maximum fine prescribed for the offence.
Are repeat offenders eligible for compounding?
No. Compounding is not permitted if a similar offence is committed again within five years after earlier compounding or conviction.
What happens if an offence is compounded before prosecution?
No prosecution shall be instituted for that offence.
What if compounding occurs after prosecution has begun?
The court shall be informed, and the accused shall be discharged.
What is the consequence of non-compliance with a compounding order?
The offender shall be liable to an additional sum equal to twenty per cent of the maximum fine, over and above the fine.
Can offences be compounded otherwise than as provided?
No. Compounding is permitted only in accordance with the prescribed provisions.
Are civil suits barred in certain wage-related matters?
Yes. Courts cannot entertain suits for recovery of wages, deductions, discrimination, or bonus where the matter falls within specified proceedings or remedies under the Code.
Are Government actions protected if done in good faith?
Yes. No suit or legal proceeding shall lie for actions done or intended to be done in good faith under the Code.
On whom does the burden of proof lie in wage claims?
The employer must prove that wages or bonus have been duly paid.
Can an employee contract out of rights under this Code?
No. Any agreement relinquishing such rights is void to the extent it reduces or removes liability under the Code.
What is the effect of inconsistent laws or agreements?
The provisions of the Code prevail over any inconsistent law, award, settlement, or contract.
Can the Government delegate its powers?
Yes. The appropriate Government may delegate its powers to specified officers or authorities through notification.
Can an employer avoid liability by identifying the actual offender?
Yes. If the employer proves due diligence and absence of knowledge, consent, or connivance, the actual offender may be punished instead.
Are employer assets deposited with Government protected from attachment?
Yes, except for liabilities owed to employees engaged in the relevant contract.
Can the Central Government issue directions to State Governments?
Yes. The State Government is bound to comply with such directions.
Are certain enactments saved from the operation of this Code?
Yes. Specified employment and provident fund enactments and schemes remain unaffected.
Can rules be made to carry out the provisions of the Code?
Yes. The appropriate Government may make rules after prior publication.
What matters may such rules cover?
Rules may govern wage calculation, deductions, fines, registers, bonus computations, advisory boards, inspections, appeals, compounding of offences, and any other prescribed matter.
Can the Central Government remove difficulties in implementation?
Yes, by issuing orders within three years from commencement, provided they are consistent with the Code.
Are actions taken under repealed laws still valid?
Yes. Existing actions, notifications, and appointments continue insofar as they are not inconsistent with the Code.
Do general principles governing repeal apply?
Yes. The general law relating to repeal applies to the repealed enactments.
Therefore, the offences, penalties and miscellaneous provisions under the Code reflect a modern and compliance oriented approach to labour regulation. By clearly defining liabilities, streamlining prosecution mechanisms, enabling compounding of minor offences and safeguarding good faith actions, the Code seeks to ensure effective enforcement without imposing undue hardship on employers. At the same time, by placing the burden of proof on employers and invalidating contracts that dilute statutory rights, the Code reinforces employee protections. Overall, these provisions play a crucial role in strengthening wage justice, promoting transparency and fostering a fair and balanced industrial environment.
Muneeb Rashid Malik is an Advocate. He tweets @muneebmalikrash.
