SPRING 2020 TODAY’S GENER AL COUNSEL
Labor & Employment
India’s New Code on Wages Clarifies a Chaotic Situation By Vijita Verma
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W
ith the ongoing trade war between China and the United States, a number of U.S. companies are gradually shifting their business operations to set up branch offices and working centers in India. Manufacturing hubs and units of U.S. companies that were based in China are also shifting to India. The U.S. government has imposed restrictions on transfer of U.S.-origin physical goods, software and technical knowledge to Huawei and 114 global affiliates. The sanctions have largely affected U.S. and European companies that had large contracts with
Huawei for projects involving infrastructure and data warehousing. These are now shifting to Indian companies. The Wage Code discussed below will largely affect U.S. companies that currently have operations in India, and those who intend to start or develop new operations there. It does away with multiple filing requirements and affects their cash flows by relaxing/ restructuring social security contributions by employers. The 2019 Code on Wages is an act of Parliament that consolidates the provisions of four major Indian labor laws
concerning wage and bonus payments and makes universal provisions for minimum wages and timely payment of wages for all workers in India. India had 44 labor statutes enacted by the central government. At least 17 are over 50 years old. A few even date to the pre-independence (1947) era. The National Commission on Labor, an Indian statutory body created to recommend changes in the labor laws, recommended in 1999 that the existing labor laws should be classified into broader groups for easier compliance. Under the administration of Prime
