Section 48: Audit of accounts of employers, not being corporations or companies

Overview

Section 48 of the Code on Wages, 2019 deals with ensuring transparency and accuracy in wage payments by allowing the government to audit the accounts of employers who are not registered as corporations or companies. This is a crucial step to verify that workers are being paid their due wages correctly and that the provisions of the Code are being followed.

Scope and Coverage

• Employees Covered: This section applies to all employees whose employers are not corporations or companies. This includes individual proprietorships, partnerships, and other non-corporate businesses.
• Establishments Covered: It covers all establishments employing workers where the employer is not a corporation or a company.
• Thresholds/Exclusions: The Code doesn’t specify a minimum number of employees for this audit to be applicable. The ‘appropriate Government’ (Central or State) decides if an audit is necessary.

Key Obligations and Rights

• Main Duties of Employers: Employers who are not corporations or companies must allow government-appointed auditors access to their accounts and records related to wage payments. They must provide all necessary information and assistance during the audit.
• Important Rights/Protections for Employees: Employees have the right to assurance that their wages are being calculated and paid correctly. This audit process helps protect that right by ensuring employer compliance with the Code on Wages. If discrepancies are found, employees are entitled to receive any unpaid wages or benefits.

Compliance and Penalties

If an employer obstructs the audit process, fails to provide necessary information, or is found to have violated the provisions of the Code on Wages during the audit, they can face penalties. These penalties may include fines and, in some cases, imprisonment. The ‘appropriate Government’ will conduct inspections and investigations based on audit findings.

Practical Examples

• Example 1: Ramu runs a small tailoring shop employing 5 workers. The Labour Inspector, based on complaints, requests an audit of Ramu’s wage records. Ramu is legally obligated to cooperate and provide all relevant documents (attendance registers, wage slips, payment records) to the auditor.
• Example 2: A partnership firm operating a grocery store employs 10 workers. The State Government decides to conduct random audits of non-corporate establishments in the area. The firm must allow the auditor to examine their accounts, even if no specific complaint has been filed.