Section 19: Fines

Overview

This section of the Code on Wages, 2019, deals with the rules around employers imposing fines on their employees. It aims to protect workers from unfair or excessive penalties for minor issues. It ensures fines are only used in specific, pre-defined situations and are limited in amount.

Scope and Coverage

• This section applies to all employees covered under the Code on Wages, 2019, regardless of their wage level or type of work (skilled, unskilled, etc.).
• It applies to all establishments where the Code on Wages is applicable.
• There are no specific thresholds for establishment size or employee number for this section to apply.

Key Obligations and Rights

• Employer Duty: Employers can only impose fines if the specific act or omission leading to the fine is clearly stated in the written employment contract or standing orders. They cannot create new reasons for fines after someone is employed.
• Employer Duty: The total amount of all fines imposed on an employee in a wage period cannot exceed three percent (3%) of their wages for that period.
• Employee Right: Employees have the right to be informed about the specific rules regarding fines before they are employed.
• Employee Right: Employees have the right to challenge a fine if they believe it was imposed unfairly or exceeds the legal limit.

Compliance and Penalties

If an employer violates Section 19 (imposing fines without a valid reason, exceeding the 3% wage limit, or failing to disclose fine rules), they can face penalties. These penalties may include fines imposed by the Labour Department during inspections. Repeated violations can lead to more serious consequences.

Practical Examples

• Example 1: A factory worker’s employment contract states a fine for not wearing the required safety helmet. The employer correctly imposes a fine of ₹50 (which is less than 3% of the worker’s wages) when the worker is found without a helmet. This is compliant.
• Example 2: An office employee’s contract doesn’t mention any fines. The employer suddenly imposes a ₹200 fine for being 10 minutes late to work. This is a violation of Section 19 because the fine isn’t based on a pre-defined rule in the employment contract.