‘Wages’ Under Labour Codes - Tipping The Balance

The implementation of four labour codes viz the Code on Wages, 2019 (“Wage Code”); the Code on Social Security, 2020 (“SS Code”); the Industrial Relations Code, 2020; and the Occupational Safety Health and Working Conditions Code, 2020 (collectively, the “Labour Codes”) has not only brought forth a seismic shift in the landscape of labour laws in India but has also led to considerable apprehensions amongst employers and industry practitioners. A prominent concern, amongst others, is the newly introduced uniform definition of ‘wages’. This definition becomes crucial owing to the fact that benefits associated with employment under the Labour Codes including gratuity, leave encashment, overtime etc. are computed based on ‘wages’; for example, gratuity under the SS Code, must now be calculated on the now-expanded definition of wages, significantly increasing payout liabilities.