New labour code: Salary must be paid by 7th of next month. What employees should know
The Code on Wages, one of the four new labour codes, lays down clear timelines for when employers must pay salaries and wages. It requires monthly salaries to be paid before the expiry of the seventh day of the succeeding month and mandates payment of final dues within two working days after an employee resigns, is dismissed, removed or retrenched.
The law also extends protections relating to timely payment of wages to all employees, irrespective of their salary, replacing the earlier framework that applied only up to a specified wage ceiling. It further provides a mechanism for employees to seek redress in cases of delayed wage payments or unauthorised deductions.
When should employers pay salaries?
The Code prescribes different timelines depending on the wage period. Employees paid on a monthly basis must receive their wages before the expiry of the seventh day of the succeeding month.
Employees paid on a weekly basis must receive their wages before the last working day of the week. Those engaged on a fortnightly basis must be paid within two days after the end of the fortnight, while daily-rated employees must receive their wages at the end of the workday.
The law also lays down timelines for payment of final dues. If an employee resigns, is dismissed, removed or retrenched, the employer must pay all wages due within two working days.
What happens if wages are delayed?
The Code provides for the appointment of Inspector-cum-Facilitators to ensure compliance with its provisions.
Employees can file claims before the authority appointed under the Code if wages are delayed or if unauthorised deductions are made. The law provides a three-year limitation period for filing such claims.
If the authority directs an employer to pay wages or compensation and the employer fails to comply with the order, the amount may be recovered as arrears of land revenue in accordance with the provisions of the Code.
How is the new framework different from the earlier law?
The Code on Wages replaces multiple wage-related laws, including the Payment of Wages Act, 1936, with a single framework governing wage payments.
Unlike the earlier law, which applied only to employees earning up to a prescribed wage ceiling, the provisions relating to timely payment of wages and unauthorised deductions under the Code apply to all employees, irrespective of their salary.
The Code on Wages (Central) Rules also require employers to issue wage slips, either in physical or electronic form, on or before the payment of wages. The Code further regulates the deductions that employers may make from wages and prescribes limits on the aggregate amount that can be deducted.
