Daniel Albuquerque delves carefully into the term ‘Wages’ and presents a very complex portrait. Just by trying to define this single term in the new Law on Wages or Code on Wages, 2019, as it has been titled, the author reveals how difficult it is to understand the word ‘Wages’. The very text of the definition of wages is reproduced verbatim to make our business leaders aware of it before they surrender it to the experts
The concept of wages is highly challenging. It implicitly and explicitly, directly and indirectly, assumingly and unassumingly involves all the factors of production – land, labour, capital and entrepreneurship. Land – the premises, infrastructure, etc., – earns rent; wages is what the labour (worker) earns; capital is what the entrepreneur invests from the earnings on the enterprise; the entrepreneur then looks forward for the returns on the investment and the surplus as profit. This recurrent process of the factors of production ultimately determine who earns what and to what extent. The problems arising from these relationships are not mechanically determined, but by law (justice), human behaviour (ethical/moral) and economic (fiscal viability).
Background
The text below is the definition of wages in the Code on Wages, 2019. The complexity which this definition presents itself is the most critical problem. Questions such as whether this definition would be acceptable as the case law develops in the courts with each case and its journey from the lowest towards the Apex Court of the land will be judged is a matter of time. Experts are already perplexed with the innumerable caveats presented. The contentious issues will press for umpteen amendments. While the wage definition involves just the three variables – (i) basic pay; (ii) dearness allowance; and (iii) retaining allowance, – the exceptions involve eleven variables which the employer has to pay, if not all, yet quite a number of them which are not considered as part of the wages! Thus while a wage earner earns his legal dues, why this definition is such a huge problem is the fact as to what happens to the wage expenses of an employer? There are also several other problems with the definition as there is no acceptable universal definition of the concept visà-vis , for instance, International Labour Organization (ILO), various international conventions, pacts and treatises. Further the definition should express the basis of its theory. But for now it is important to train our attention on the text of the law itself .
The following is the actual text of the definition, Chapter I, Section 2, clause ‘y’ and its sub-clauses.
Definition of Wages: (y) ‘wages’ means all remuneration whether by way of salaries, allowances or otherwise, expressed in terms of money or capable of being so expressed which would, if the terms of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment, and includes,– (i) basic pay; (ii) dearness allowance; and (iii) retaining allowance, if any, but does not include – (a) any bonus payable under any law for the time being in force, which does not form part of the remuneration payable under the terms of employment; (b) the value of any house-accommodation, or of the supply of light, water, medical attendance or other amenity or of any service excluded from the computation of wages by a general or special order of the appropriate Government; (c) any contribution paid by the employer to any pension or provident fund, and the interest which may have accrued thereon; (d) any conveyance allowance or the value of any travelling concession; (e) any sum paid to the employed person to defray special expenses entailed on him by the
nature of his employment; (f) house rent allowance; (g) remuneration payable under any award or settlement between the parties or order of a court or Tribunal; (h) any overtime allowance; (i) any commission payable to the employee; (j) any gratuity payable on the termination of employment; (k) any retrenchment compensation or other retirement benefit payable to the employee or any ex gratia payment made to him on the termination of employment: Provided that, for calculating the wages under this clause, if payments made by the employer to the employee under clauses (a) to (i) exceeds one-half, or such other per cent as may be notified by the Central Government, of the all remuneration calculated under this clause, the amount which exceeds such14 of 1947.42 of 2005 one-half, or the per cent so notified, shall be deemed as remuneration and shall be accordingly added in wages under this clause: Provided further that for the purpose of equal wages to all genders and for the purpose of payment of wages, the emoluments specified in clauses (d), (f), (g) and (h) shall be taken for computation of wage.
Explanation – Where an employee is given in lieu of the whole or part of the wages payable to him, any remuneration in kind by his employer, the value of such remuneration in kind which does not exceed fifteen per cent of the total wages payable to him, shall be deemed to form part of the wages of such employee; What follows hereafter this semicolon is sub clause (z) on the definition of worker.
Analysis
To assert that the very daunting formulation would not discourage legal fraternity, the labour union experts, counsels, et al would be untrue. The reason why the definition on wages is reproduced verbatim is that most of the people consider it as the job of the experts. In jurisprudence, however, no one is considered innocent of the law or the law does not considers that every citizen bears liability under the law. The legal principle states: Ignorantia legis non excusat (Ignorance of law is no excuse). It is therefore expected that the readers of this column read it!
One of the important factors about the definition of wages is that it is not done so in isolation. It is always qualified by phrases such a ‘minimum wages’, ‘real wages’, ‘living wages’, ‘family wages’, etc. Nevertheless, we must admit that the Act defines minimum wage under Section 6.
Several problems arise. In India the parameters upon which wages are paid change from employer to employer, e.g., government employees and the employees in private sector. India also has a very large scale of skilled, partially skilled and unskilled wage earners. Further, there is a very large unorganised sector, grey sector, informal sector, social sector of physically challenged wage earners, child labour, gender inequality, and prejudiced classes such as scavengers etc. In India, we must also consider regions, urban, semi urban and so on. Hence, how does one define wages for all these categories under one definition?!
Conclusion
To be fair to the idea of a single law, subsuming the labour laws since Indian independence is ideally very attractive and the authors of the law have very clearly referred to such laws both in the text as well as on the margins. The purpose that the law is a facilitator is admirable which is further confirmed by the appointment of a ‘facilitator inspector’. However, the greater purpose must be aimed at the empowerment to prosperity. The employers in our country change their perspective and rise above the ambit of the law in their ‘corporate social responsibility’ by emulating Henry Ford (1863-1947), the pioneer of the most renowned Ford automobile industry who revolutionised mere day labourers into the strongest middle class of the United States of America. He not only doubled the wages of his workers, but empowered them in all other spheres of life.
Let his famous saying enlighten our employers: “It is not the employer who pays the wages. Employers only handle the money. It is the customer who pays the wages.” This is the best way to ensure the economic and
social development of India.
The columnist is a writer with Oxford University Press and a published author.
Email: albuquerque.daniel@gmail.com
