Worker Definition Under the Code on Wages, 2019

Background

The definition of worker is one of the key aspects to be interpreted in order to understand the changes being brought in by the new Labour Codes. In our earlier blog we already examined the difference between the definitions of worker and employee. However, we have found that there are subtle nuances in each of the four Codes pertaining to the definition of the former.

To this end, we are writing a four-blog series analyzing the definition of worker under each of the Codes. This will allow us to examine potential differences as well as identify the impact of such variations of worker as used across the Codes. The first article in our series focuses on the definition of worker under the Code on Wages, 2019. The definition reads as follows:-

“Worker” means any person (except an apprentice as defined under clause (aa) of section 2 of the Apprentices Act, 1961) employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical, or supervisory work for hire or reward, whether the terms of employment be express or implied, and includes – 

(i) Working journalists as defined in clause (f) of section 2 of the Working Journalists and other Newspaper Employees (Conditions of Service) and Miscellaneous Provisions Act, 1955; and

(ii) Sales promotion employees as defined in clause (d) of section 2 of the Sales Promotion Employees (Conditions of Service) Act, 1976, and for the purposes of any proceeding under this Code in relation to an industrial dispute, includes any such person who has been dismissed, discharged, or retrenched or otherwise terminated in connection with, or as a consequence of, that dispute, or whose dismissal, discharge or retrenchment has led to that dispute, but does not include any such person –

     (a) who is subject to the Air Force Act, 1950, or the Army Act, 1950, or the Navy Act, 1957;     or

     (b) who is employed in the police service or as an officer or other employee of a prison; or

     (c) who is employed mainly in a managerial or administrative capacity; or

     (d) who is employed in a supervisory capacity drawing wage of exceeding eighteen thousand     rupees per month or an amount as may be notified by the Central Government from time     to time.

The following section examines the nuances affecting the application and overall impact of the Codes.

Analysis of the Definition

The first major point that drew our attention was the fact that the definition confined itself to any person employed in an industry. Consequently, the definition of worker would only apply to individuals employed in undertakings that would be considered an industry; however, the same is not defined under the Code on Wages. The term has been defined under the Industrial Relations Code in accordance with the Supreme Court judgment in the case of Bangalore Water Supply vs. R Rajappa.

In the above case, the triple-test of systematic activity and coordination between employer-employee with the aim to satisfy material wants or produce goods/services was laid down. It essentially broadened the scope of what could be considered an industry under Section-2(j) of the Industrial Disputes Act, 1947.

The above implies that wherever the term worker is used in the Code on Wages, 2019 the provision would not apply to individuals employed in supervisory capacities earning more than Rs. 18,000 a month. Similarly, it would not apply to individuals in managerial or administrative capacities.

Interpretation of Chapter-II: Minimum Wages

This raises questions over interpretation in Chapter-II relating to Minimum Wages as well. Section-5 states that no employers shall pay any employee wages lower than the minimum rate of wages as notified by the appropriate Government. Whereas several provisions under the Chapter use both the terms employee and worker. For example, Section-6 relating to fixation of minimum wages, Clause-(1) uses employees while stating that the appropriate Government shall fix the minimum rate of wages payable to employees. Clause-(6), however, uses workers while explaining the aspects to be considered for fixation of minimum wages.

The above could lead to interpretational ambiguity. For e.g. employers can argue that Chapter-II is inapplicable to employees and applicable only to workers. There is a lack of clarity in the language of the provisions when it comes to the applicable procedure in the fixation of minimum wage to employee and worker, respectively.

The same may become clearer through further Government regulations, but until then it is an area of concern. Employers must be aware of definitional changes in labour reforms and this series of blogs aims to do just that. Our next article shall examine the nuances in the definition of worker in the Code on Social Security, 2020.

Do you have any doubts/concerns relating to the above? What, according to you, is the appropriate way to address the above issue?

Drop your thoughts in the comments below.

Disclaimer: This blog is meant for informational purposes and discussion only. It contains only general information about legal matters. The information provided is not legal advice and should not be acted upon without seeking proper legal advice from a practicing attorney. Simpliance makes no representations or warranties in relation to the information on this article.