Section 16: Fixation of wage period

Overview

This section of the Code on Wages, 2019, deals with how often wages must be paid to employees. It ensures that workers receive their earnings at regular intervals, providing financial stability. Specifically, it focuses on the employer’s responsibility to define the ‘wage period’ – the time frame for which wages are calculated and paid.

Scope and Coverage

• Which employees and establishments are covered: This section applies to all employees covered under the Code on Wages, 2019, regardless of the type of work (skilled, unskilled, manual, etc.) and the sector they work in. This includes establishments in both the organized and unorganized sectors.
• Any thresholds or exclusions: There are no thresholds or exclusions regarding the application of this section. All employers responsible for paying wages must comply, irrespective of the number of employees or the size of the establishment.

Key Obligations and Rights

• Main duties of employers: Employers must clearly define and fix the periods for which wages will be payable. This means deciding whether wages will be paid weekly, fortnightly, or monthly. The employer is responsible for communicating this wage period to their employees.
• Important rights or protections for employees: Employees have the right to be paid their wages within the fixed wage period. This ensures predictable income and helps with financial planning. The law protects employees from arbitrary or delayed wage payments.

Compliance and Penalties

If an employer fails to fix a wage period, or if the wage period exceeds one month, they can face penalties. This could include fines and other legal consequences determined by the appropriate authorities. Labour inspectors can conduct inspections to ensure compliance with this provision. Repeated violations can lead to more severe penalties.

Practical Examples

• Example 1 from a typical workplace: A manufacturing company decides to pay its employees on the 7th of every month for the work done in the previous month (1st to 30th/31st). This means the wage period is one month.
• Example 2 for a borderline scenario: A construction company attempts to pay its workers every 60 days. This is a violation of Section 16 because the wage period exceeds the permissible limit of one month. They must revise their payment schedule to be within the legal timeframe.