New Labour Codes Mandate Wage Payment Within 2 Days Of Resignation, Reskilling Within 45 Days: Know The Details

The four new labour codes have simplified the 23 old and complex labour laws. The new codes ensure a minimum wage and social security for all workers. The changes in the labour laws, happened with amalgamating four laws in the Code on Wages, 2019, three laws in the Industrial Relations Code, 2020, nine laws in the Code on Social Security, 2020, and 13 laws in the Occupational Safety, Health and Working Conditions Code, 2020.

The new codes now mandate timely wage payment. For those being paid wages on a monthly basis, payment should be made within seven days of the next month. For workers engaged on a fortnightly basis, the wage should be paid within two days, and for weekly and daily wagers, the payment must be given before the weekly holiday and at the shift, respectively.  

In case an employee is terminated or resigns, the time limit within which the wage must be paid to the employee is two working days. Earlier, the timely payment rule was restricted to a certain set of employees.

What Does The Wage Payment Include?

Tarun Garg, director, Deloitte India, says: “Under the new Labour Code on Wages, employers are required to pay wages to employees within two working days of resignation, dismissal, retrenchment or removal, as the case may be. This requirement applies specifically to “wages” as defined under the Labour Codes and does not automatically extend to statutory dues, such as provident fund, gratuit, and so on.” 

He adds: “Prior to the enforcement of the Labour Codes, the Payment of Wages Act, 1936 was applicable to employees drawing wages up to Rs 24,000 per month, and accordingly, the employer had to adhere to the prescribed timelines for such employees for the relevant wage periods. Previously, the Act specified two working days for settlement of wages only in case of termination of employment by the employer.” 

So, in short, the reforms have abolished the monthly wage limit of up to Rs 24,000 for timely wage payment. Besides, the two-working-day rule was applicable only in case of termination, which now includes other conditions as well, such as resignation.

Payment For Reskilling

Another significant change is related to reskilling. Under the Industrial Relations Code, 2020, in case of a job loss, a worker will be given financial aid by the government under the Atal Bimit Vyakti Kalyan Yojna. This will be a type of unemployment allowance available to workers covered under the Employees’ State Insurance (ESI) scheme. A worker who is retrenched from the job would be paid money, equivalent to 15 days of last drawn wages, for reskilling. The amount will be directly credited to the workers’ bank accounts within 45 days of retrenchment. 

Garg adds: “The ‘Worker Re-skilling Fund’ under the Industrial Relations Code, 2020, provides financial support to the retrenched worker. It is paid in addition to any retrenchment compensation, and therefore, the framework ensures an immediate safety net that allows workers to redirect their focus towards upskilling and improving employability and smooth workforce redeployment.”

The purpose of the reskilling fund is to ensure the financial stability of workers, so that such retrenched workers learn new skills with this money and are able to secure another job.