Ch. 18 Code on Wages, 2019: PYQ Decoder

June 2025Q. 5(d)5 marksSyllabus 2022Law changed

Law changed after this attempt: The answer is based on the Payment of Wages Act, which stands repealed and subsumed into the Code on Wages, 2019 (all four Labour Codes came into force on 21 November 2025; Lesson 18 of the current study material). The section numbers and some provisions in this answer are those of the old Act; check the Code on Wages for the current provisions. The answer below reflects the law as it stood for June 2025.

Show the facts common to all parts of Q. 5

Odisha Coal Mining Ltd. (OCML) contracted external parties for the transportation of crushed coal between 1984 and 1994. To carry out various essential tasks such as coal spill removal, equipment operation, and railway siding maintenance, the contractors employed 32 workers. These tasks were integral to OCML’s operations and needed to be performed consistently as part of the company’s daily functioning.

The workers, represented by the OCML Coal Mines Workers’ Union, sought regularization of their employment. The union argued that the nature of the work being done was not temporary but rather permanent and ongoing, which should have entitled these workers to regular employment rather than being outsourced to contractors. They also invoked the National Coal Wage Agreement-IV (NCWA-IV), which, in its terms, prohibited the outsourcing of work that was permanent and essential to the company’s operations.

Specifically, the NCWA-IV, dated July 27, 1989, aimed to protect workers in permanent roles from being replaced with casual or contract workers.

In response to the union’s demands, the Assistant Labour Commissioner initiated a conciliation process, which led to a settlement on April 5, 1997, under Rule 58 of the Industrial Disputes (Central)

Rules, 1957. According to this settlement, 19 out of the 32 workers were regularized as General Mazdoors. However, 13 workers were excluded from this regularization and were classified by OCML as ‘casual workers,’ rather than as permanent workers.

The exclusion of the 13 workers led to disputes between the union and OCML, which were referred to the Industrial Tribunal. The core issue before the Tribunal was whether the 13 excluded workers were engaged in work of a perennial nature, similar to the tasks carried out by the 19 workers who were regularized. The Tribunal examined testimonies from various sources, including OCML’s personnel manager, who acknowledged that all 32 workers performed identical tasks, which were vital to the daily operations of OCML.

After reviewing the evidence, the Tribunal ruled on May 23, 2002, that the exclusion of the 13 workers was unjustified. It directed OCML to regularize their employment and pay them back wages for the period of their wrongful exclusion. OCML, dissatisfied with the Tribunal’s decision, challenged it in the Orissa High Court. The company argued that the 1997 settlement was binding and that the Tribunal lacked jurisdiction to alter its terms. However, the High Court dismissed OCML’s petition, affirming the Tribunal’s decision. The court noted that all 32 workers had been engaged in the same essential and perennial tasks, and therefore, the settlement could not be used as a basis to deny regularization to the excluded workers. The High Court also dismissed a subsequent review petition filed by OCML on November 11, 2021.

Following this, OCML appealed to the Supreme Court, raising the following key points :

•That the 1997 settlement was binding on all parties under Section 19(2) of the Industrial Disputes Act, 1947, as it had not been terminated or modified.

•That the 13 excluded workers were engaged in ‘casual’ work, which was different from the ‘perennial’ tasks performed by the 19 regularized workers.

•That the Tribunal had erred in awarding back wages, as there was no evidence of the workers being unemployed during the period in question. OCML cited the case of J.K. Synthetics Ltd.

v.K.P. Agrawal [(2007) 2 SCC 433] in support of their argument.

The Union countered these arguments by emphasizing that :

•All 32 workers had performed the same essential tasks for OCML, making their work undeniably permanent in nature.

•Their duties were continuous and integral to the company’s coal transportation process, and as such, should be treated as part of the company’s regular operations.

•The exclusion of the 13 workers from regularization was arbitrary, unjust, and violated principles of fairness and equity.

•The workers were entitled to back wages because they had been wrongfully denied regular employment, which had caused them financial harm.

In view of the above, answer the following :

(d)State the conditions stipulated for award of back wages under the Payment of Wages Act, 1936.

December 2024Q. 6A(iii)5 marksSyllabus 2022OR, alternative to Q. 6Law changed

Law changed after this attempt: The answer is based on the Payment of Bonus Act, which stands repealed and subsumed into the Code on Wages, 2019 (all four Labour Codes came into force on 21 November 2025; Lesson 18 of the current study material). The section numbers and some provisions in this answer are those of the old Act; check the Code on Wages for the current provisions. The answer below reflects the law as it stood for December 2024.

(iii)What are the stipulations regarding the payment of minimum bonus and maximum bonus under the Payment of Bonus Act, 1965 ?

June 2025Q. 6A(i)5 marksSyllabus 2022OR, alternative to Q. 6Law changed

Law changed after this attempt: The answer is based on the Payment of Bonus Act, which stands repealed and subsumed into the Code on Wages, 2019 (all four Labour Codes came into force on 21 November 2025; Lesson 18 of the current study material). The section numbers and some provisions in this answer are those of the old Act; check the Code on Wages for the current provisions. The answer below reflects the law as it stood for June 2025.

(i)What is meant by ‘set on and set off’ of allocable surplus under the Payment of Bonus Act, 1965 ?

Section 15 of the Payment of Bonus Act, 1965 deals with Set on and set off of allocable surplus. It provides that:

(1)Where for any accounting year, the allocable surplus exceeds the amount of maximum bonus payable to the employees in the establishment under Section 11, then, the excess shall, subject to a limit of twenty per cent of the total salary or wage of the employees employed in the establishment in that accounting year, be carried forward for being set on in the succeeding accounting year and so on up to and inclusive of the fourth accounting year to be utilized for the purpose of payment of bonus in the manner illustrated in the Fourth Schedule.

(2)Where for any according year, there is no available surplus or the allocable surplus in respect of that year falls short of the amount of minimum bonus payable to the employees in the establishment under Section 10, and there is no amount or sufficient amount carried forward and set on under sub-section (1) which could be utilized for the purpose of payment of the minimum bonus, then, such minimum amount or the deficiency, as the case may be, shall be carried forward for being set off in the succeeding accounting year and so on up to and inclusive of the fourth accounting year in the manner illustrated in the Fourth Schedule.

(3)The principle of set on and set off as illustrated in the Fourth Schedule shall apply to all other cases not covered by sub-section (1) or sub-section (2) for the purpose of payment of bonus under this Act.

(4)Where in any accounting year any amount has been carried forward and set on or set off under this Section, then, in calculating bonus for the succeeding accounting year, the amount of set on or set off carried forward from the earliest accounting year shall first be taken into account.

Apart from the provisions contained in Section 15(1), there is no statutory obligation on an employer to set apart any part of the profits of the previous year for payment of bonus for subsequent years.

Source⁠‌‌‌‌⁠: ICSI Guideline Answers, June 2025, Q. 6A(i) (Syllabus 2022).

December 2024Q. 6(c)5 marksSyllabus 2022Law changed

Law changed after this attempt: The answer is based on the Payment of Wages Act, which stands repealed and subsumed into the Code on Wages, 2019 (all four Labour Codes came into force on 21 November 2025; Lesson 18 of the current study material). The section numbers and some provisions in this answer are those of the old Act; check the Code on Wages for the current provisions. The answer below reflects the law as it stood for December 2024.

(c)Bright Futures Ltd., is imparting education to the students. It has been facing financial difficulties and has delayed salary payments and other dues to its employees for the past three months.

Several employees have resigned due to the non-payment of wages, while those remaining are increasingly concerned about their financial stability. The affected employees have approached the company management several times, but no concrete measures have been taken to resolve the issue. Consequently, the employees have decided to take legal action to recover the amounts due to them under the Payment of Wages Act, 1936.

Explain the measures to be taken by the employees for recovery of amount due from the employer.

Section 15 of the Payment of Wages Act, 1936 provides that the appropriate Government may, by notification in the Official Gazette, appoint –
(a)any Commissioner for Workmen’s Compensation; or
(b)any officer of the Central Government exercising functions as,— (i) Regional Labour Commissioner; or (ii) Assistant Labour Commissioner with at least two years’ experience; or
(c)any officer of the State Government not below the rank of Assistant Labour Commissioner with at least two years’ experience; or (d) a presiding officer of any Labour Court or Industrial Tribunal, constituted under the Industrial Disputes Act, 1947 or under any corresponding law relating to the investigation and settlement of industrial disputes in force in the State; or (e)
any other officer with experience as a Judge of a Civil Court or a Judicial Magistrate, as the authority to hear and decide for any specified area all claims arising out of deductions from the wages, or delay in payment of the wages, of persons employed or paid in that area, including all matters incidental to such claims.
Where contrary to the provisions of Payment of Wages Act, 1936 any deduction has been made from the wages of an employed person, or any payment of wages has been delayed, such person himself, or any legal practitioner or any official of a registered trade union authorised in writing to act on his behalf, or any Inspector under this Act, or any other person acting with the permission of the authority appointed, may apply to such authority for a direction of payment of wages.
When any application is entertained by the authority, the authority shall hear the applicant and the employer or other person responsible for the payment of wages under section 3, or give them an opportunity of being heard, and, after such further enquiry, if any, as may be necessary, may, without prejudice to any other penalty to which such employer or other person is liable under this Act, direct the refund to the employed person of the amount deducted, or the payment of the delayed wages, together with the payment of such compensation as the authority may think fit.
Where there is any dispute as to the person or persons being the legal representative or representatives of the employer or of the employed person, the decision of the authority on such dispute shall be final.
Any Amount directed to be paid under section 15 may be recovered— (a) if the authority is a Magistrate, by the authority as if it were a fine imposed by him as Magistrate, and (b) if the authority is not a Magistrate, by the Magistrate to whom the authority makes application in this behalf, as if it were a fine imposed by such Magistrate.
The above measures may be taken by the employees for recovery of amount due from the employer.
Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2024, Q. 6(c) (Syllabus 2022).

December 2023Q. 6A(iv)5 marksSyllabus 2022OR, alternative to Q. 6Law changed

Law changed after this attempt: The answer is based on the Payment of Bonus Act, which stands repealed and subsumed into the Code on Wages, 2019 (all four Labour Codes came into force on 21 November 2025; Lesson 18 of the current study material). The section numbers and some provisions in this answer are those of the old Act; check the Code on Wages for the current provisions. The answer below reflects the law as it stood for December 2023.

(iv)Explain in brief the classes of employees to whom the provisions of the Payment of Bonus Act, 1965 are not applicable.

Section 32 of the Payment of Bonus Act, 1965 provides that the Act shall not apply to the following classes of employees:

(i)employees employed by any insurer carrying on general insurance business and the employees employed by the Life Insurance Corporation of India;

(ii)seamen as defined in clause (42) of section 3 of the Merchant Shipping Act, 1958;

(iii)employees registered or listed under any scheme made under the Dock Workers (Regulation of Employment) Act, 1948, and employed by registered or listed employers;

(iv)employees employed by an establishment engaged in any industry carried on by or under the authority of any department of the Central Government or a State Government or a Local authority;

(v)employees employed by --

(a)the Indian Red Cross Society or any other institution of a like nature (including its branches);

(b)universities and other educational institutions;

(c)institutions (including hospitals, chambers of commerce and social welfare institutions) established not for purposes of profit;

(vi)employees employed by the Reserve Bank of India;

(vii)employees employed by --

(a)the Industrial Finance Corporation of India;

(b)any Financial Corporation established under section 3, or any Joint Financial Corporation established under section 3A, of the State Financial Corporations Act, 1951;

(c)the Deposit Insurance Corporation;

(d)the National Bank for Agriculture and Rural Development;

(e)the Unit Trust of India;

(f)the Industrial Development Bank of India;

(g)the Small Industries Development Bank of India established under Section 3 of the Small Industries Development Bank of India Act, 1989;

(h)the National Housing Bank;

(i)any other financial Institution (other than Banking company) being an establishment in public sector, which the Central Government may by notification specify having regard to-i. its capital structure; ii. its objectives and the nature of its activities; iii. the nature and extent of financial assistance or any concession given

to it by the Government; and iv. any other relevant factor;

(viii)employees employed by inland water transport establishments operating on routes passing through any other country, Apart from the above, the appropriate Government has necessary powers under Section 36 to exempt any establishment or class of establishments from all or any of the provisions of the Act for a specified period having regard to its financial position and other relevant circumstances and if it is of the opinion that it will not be in the public interest to apply all or any of the provisions of this Act thereto. It may also impose such conditions while according the exemptions as it may consider fit to impose.

Source⁠‌‌‌‌⁠: ICSI Guideline Answers, December 2023, Q. 6A(iv) (Syllabus 2022).

June 2024Q. 5(c)5 marksSyllabus 2022Law changed

Law changed after this attempt: The answer is based on the Minimum Wages Act, which stands repealed and subsumed into the Code on Wages, 2019 (all four Labour Codes came into force on 21 November 2025; Lesson 18 of the current study material). The section numbers and some provisions in this answer are those of the old Act; check the Code on Wages for the current provisions. The answer below reflects the law as it stood for June 2024.

Show the facts common to all parts of Q. 5

XYZ Manufacturing Pvt. Ltd. is a reputable medium-sized manufacturing company headquartered in Delhi. Established in 2005, the company specializes in the production of electronic components catering to various industries such as telecommunications, automotive, consumer electronics, and industrial automation. With a commitment to quality and innovation, XYZ Manufacturing Pvt. Ltd.

has emerged as a trusted supplier in the highly competitive electronics market Infrastructure. The company operates from a state-of-the-art manufacturing facility spanning over 50,000 square feet in Delhi’s industrial hub. Equipped with advanced machinery and technology, the facility enables XYZ Manufacturing Pvt. Ltd. to meet the diverse needs of its clients with precision and efficiency.

The production lines are organized to optimize workflow and ensure timely delivery of orders.

Workforce : XYZ Manufacturing Pvt. Ltd. prides itself on its skilled and dedicated workforce comprising approximately 500 employees. The workforce includes a mix of permanent staff and contract workers, with roles ranging from production technicians and engineers to administrative personnel and managerial staff. The company fosters a culture of inclusivity, professional development, and employee welfare to enhance productivity and job satisfaction. Labour Practices :

(1)Health and Safety Measures : XYZ Manufacturing Pvt. Ltd. prioritizes the health and safety of its employees by implementing robust safety protocols and providing necessary protective equipment. Regular safety audits and training programs are conducted to mitigate workplace hazards and promote a culture of safety awareness among workers.

(2)Employee Welfare Initiative : The company recognizes the importance of employee welfare and implements various initiatives to enhance the well-being of its workforce. This includes facilities such as clean restrooms, designated break areas, and access to clean drinking water. Additionally, the company offers health insurance coverage and access to medical facilities for employees and their families.

(3)Training and Skill Development : XYZ Manufacturing Pvt. Ltd. invests in training and skill development programs to empower its employees with the necessary knowledge and skills to excel in their roles. Training sessions on technical skills, quality standards, and soft skills are conducted regularly to enhance employee competence and performance.

(4)Labour Relations : The company maintains open and transparent communication channels with its employees to address any concerns or grievances effectively. Regular meetings, feedback sessions, and employee engagement programs are organized to foster a positive work environment and build strong relations between management and staff. Compliance with Labour Laws : XYZ Manufacturing Pvt. Ltd. is committted to upholding the highest standards of compliance with labor laws and regulations in India. The company ensures adherence to the provisions of relevant statutes such as the Factories Act, Minimum Wages Act, Provident Fund Act, Employees’ State Insurance Act, Payment of Bonus A/c, Industrial Disputes Act, and Contract Labour Act. Legal compliance is overseen by a dedicated compliance team that monitors regulatory updates, conducts audits, and implements necessary measures to ensure full compliance across all aspects of employment.

XYZ Manufacturing Pvt. Ltd. stands as model enterprise in the manufacturing sector, demonstrating a strong commitment to employee welfare, ethical labour practices, and legal compliance. By prioritizing the health, safety, and well-being of its workforce while adhering to labour laws, the company not only ensures its own sustainability and success but also contributes to the overall socio-economic development of the community.

In view the above, answer the following :

(c)Write down the procedure for fixing and revising minimum wages under the Minimum Wages Act, 1948.

Section 5 of the Minimum Wages Act, 1948 deals with procedure for fixing and revising minimum wages.

In fixing minimum rates of wages in respect of any scheduled employment for thefirst time or in revising minimum rates of wages, the appropriate Government canfollow either of the two methods described below.

First Method [Section 5(1)(a)] This method is known as the ‘Committee Method’. The appropriate Government may appoint as many committees and sub-committees as it considers necessary to hold enquiries and advise it in respect of such fixation or revision as the case may be. After considering the advise of the committee or committees, the appropriate Government shall, by notification in the Official Gazette fix or revise the minimum rates of wages. The wage rates shall come into force from such date as may be specified in the notification. If no date is specified, wage rates shall come into force on the expiry of three months from the date of the issue of the notification.

Note: It was held in Edward Mills Co. v. State of Ajmer (1955) A.LR. SC, that Committee appointed under Section 5 is only an advisory body and that Government is not bound to accept its recommendations.

Second Method [Section 5(1)(b)] The method is known as the ‘Notification Method’. When fixing minimum wages under Section 5(1)

(b), the appropriate Government shall by notification, in the Official Gazette publish its proposals for the information of persons likely to be affected thereby and specify a date not less than 2 months from the date of notification, on which the proposals will be taken into consideration.

The representations received will be considered by the appropriate Government. It will also consult the Advisory Board constituted under Section 7 and thereafter fix or revise the minimum rates of wages by notification in the Official Gazette. The new wage rates shall come into force from such date as may be specified in the notification. However, if no date is specified, the notification shall come into force on expiry of three months from the date of its issue. Minimum wage rates can be revised with retrospective effect. [1996 II LU 267 Kar.]

Source⁠‌‌‌‌⁠: ICSI Guideline Answers, June 2024, Q. 5(c) (Syllabus 2022).

June 2026Q. 6A(iv)5 marksSyllabus 2022OR, alternative to Q. 6Law changed

Law changed after this attempt: The answer says registers, wage slips and returns are to be kept "in such manner/form as may be prescribed" under S.50 of the Code on Wages. The Code on Wages (Central) Rules 2026 (G.S.R. 342-345 series, 8 May 2026, in force on publication, before this paper) now prescribe the norms for payment of wages and procedures for returns, so the answer is incomplete (Supplement December 2026, Lesson 15, p.15). The answer below reflects the law as it stood for June 2026.

(iv)What are the records, returns and notices that an employer is required to maintain and comply with under the Code on Wages, 2019 ?

June 2024Q. 6(c)5 marksSyllabus 2022Law changed

Law changed after this attempt: The answer is based on the Payment of Bonus Act, which stands repealed and subsumed into the Code on Wages, 2019 (all four Labour Codes came into force on 21 November 2025; Lesson 18 of the current study material). The section numbers and some provisions in this answer are those of the old Act; check the Code on Wages for the current provisions. The answer below reflects the law as it stood for June 2024.

(c)ABC Ltd. is a medium-sized manufacturing company that produces automotive parts. The company has a workforce of 150 employees, including both production line workers and administrative staff. ABC Ltd. typically awards annual bonuses to its employees based on performance and company profits. Upon conducting internal investigations and reviewing surveillance footage, the management discovered evidence of theft by a few employees at the stores. Citing the relevant provisions of Payment of Bonus Act, 1965, examine the eligibility for bonus to those employees involved in theft.