Section 63: Validation of certain payments

Overview

Section 63 of the Code on Wages, 2019 deals with the legality of wage payments made before the Code itself was implemented. It essentially says that if a payment would have been legal under this new Code, even if it was made under the old laws, it remains valid. This provides clarity and protects both employers and employees regarding past wage practices.

Scope and Coverage

• This section applies to all employees and all establishments covered by the Code on Wages, 2019. This includes workers employed in any factory, mine, plantation, or establishment making more than a certain number of employees (as defined in the Code).
• There are no specific thresholds or exclusions relating to the application of Section 63 itself. It applies broadly to all payments made before the Code’s commencement.

Key Obligations and Rights

• Employer Obligation: Employers don't need to retroactively change or re-process payments made before the Code came into force, as long as those payments would have been lawful under the new Code.
• Employee Right: Employees are protected because payments they received in the past, which were compliant with the then-existing laws, continue to be valid even under the new Code. This prevents employers from claiming past payments were invalid simply because the law has changed.

Compliance and Penalties

Section 63 doesn’t create a new compliance requirement or penalty. It’s a ‘saving’ provision – it preserves the validity of past actions. Violations would relate to ongoing wage payments *after* the Code’s commencement, and those would be subject to the usual inspection and penalty provisions of the Code on Wages, 2019.

Practical Examples

• Example 1: A factory paid its workers a bonus in December 2019, based on the rules of the Payment of Bonus Act, 1965. The Code on Wages, 2019 came into effect in January 2020. Section 63 validates that December 2019 bonus payment, even though it was made before the new Code was in force.
• Example 2: An establishment made deductions from an employee’s wages in November 2019 for a canteen facility, which was permissible under the then-applicable Payment of Wages Act. The Code on Wages, 2019 has stricter rules on permissible deductions. Section 63 ensures that the November 2019 deduction remains valid, as it was lawful at the time it was made.