Managers Get Rights Under the Code on Wages

Managers have traditionally been treated as being outside the protective framework of many labour laws. The Code on Wages, 2019 changes that position in an important way.

A manager whose salary or full and final settlement is delayed may now rely on statutory timelines for payment of wages. A managerial employee can also question unauthorised deductions from salary. The Code further raises an interesting question about the rights of managers regarding working hours and overtime.

The reason lies in the definition of “employee”.

Section 2(k) expressly includes persons employed to perform skilled, semi-skilled, unskilled, manual, operational, supervisory, managerial, administrative, technical or clerical work.

This is significant because the Code separately defines a “worker” under Section 2(z), which excludes persons employed mainly in managerial or administrative capacity. Thus, a manager may not be a “worker”, but can still be an “employee” entitled to protections under the Code on Wages.

Timely Payment of Salary and F&F Now Covers Managers

One of the most important protections concerns the time within which wages must be paid.

Under Section 17, a monthly-paid employee must ordinarily be paid before the expiry of the seventh day of the succeeding month.

More importantly, where an employee:

• is removed or dismissed;
• is retrenched;
• resigns; or
• becomes unemployed due to closure of the establishment,

the wages payable must generally be paid within two working days.

Since “employee” expressly includes managerial and administrative employees, these protections are not confined to blue-collar or junior employees.

This can make a real difference where a manager resigns or is terminated and the employer withholds salary or other amounts falling within the statutory definition of wages for weeks or months.

Under the earlier Payment of Wages Act, 1936, protection was subject to a wage ceiling. Employees earning above that ceiling were outside its coverage. Consequently, most middle and senior managers could not invoke that Act against delayed payment or unauthorised deductions.

The Code on Wages does not have a similar general salary ceiling for an “employee”. This substantially expands statutory wage protection for managerial and administrative employees.

Protection Against Arbitrary Salary Deductions

Managers also receive statutory protection against unauthorised deductions.

Section 18 provides that deductions from wages can be made only for purposes authorised under the Code. These include deductions for absence, authorised fines, damage or loss, recovery of advances or loans, income tax, provident fund and other specified purposes.

Further, under Section 18(3), total deductions in a wage period ordinarily cannot exceed 50% of wages.

This is relevant where employers seek to deduct amounts from a manager’s salary or final settlement towards alleged business losses, advances, asset damage or other claims.

In cases involving damage or loss, Section 21 provides additional safeguards. The deduction cannot exceed the actual loss caused by the employee’s neglect or default, and the employee must be given an opportunity to show cause before the deduction is made.

Thus, an employer cannot make arbitrary deductions merely because an employment contract permits recovery. Any deduction from “wages” must comply with the statutory framework.

Can Managers Claim Overtime?

This is perhaps the most interesting question arising under the Code.

Section 14 provides that where an employee whose minimum rate of wages has been fixed under the Code works beyond the normal working day, overtime must be paid at not less than twice the normal rate of wages.

The Central Rules supplement these provisions. Rule 5 provides for a normal working day of eight hours in the circumstances covered by the Rules, while Rule 6 deals with a weekly day of rest.

Do these protections apply to managers?

The Code does not exclude managers from the definition of “employee”. On the contrary, managerial and administrative employees are expressly included.

However, Section 14 is not a universal overtime provision for every employee. It specifically refers to an employee whose minimum rate of wages has been fixed under the Code.

Therefore, it would be incorrect to say that every manager, irrespective of salary or category, automatically becomes entitled to double-rate overtime. Equally, managerial designation alone may not be sufficient to deny overtime.

Where a managerial or administrative employee falls within an applicable minimum-wage category and works beyond the prescribed normal working day, the question of entitlement under Sections 13 and 14, read with the applicable Rules, may arise.

This may be particularly relevant to lower and middle-management employees designated as “Manager”, “Assistant Manager”, “Team Leader” or “Administrative Officer” who work fixed shifts and prescribed hours.

Do Managers Have a Right to an Eight-Hour Workday?

Section 13 empowers the appropriate Government, where minimum wages have been fixed, to prescribe the normal working day, rest intervals, weekly rest and payment for work on a rest day. The Central Rules prescribe an eight-hour normal working day in the circumstances covered by them.

Again, the Code uses the term “employee”, not “worker”. There is therefore no blanket exclusion merely because a person holds a managerial post.

However, this does not mean that every manager has an absolute statutory right to an eight-hour workday. Applicability depends upon Sections 13 and 14, the relevant Central or State Rules, the applicable minimum-wage notification and any statutory exceptions.

The correct position lies between two extremes: it is neither correct to say that all managers automatically have an eight-hour workday and double overtime, nor that managers are completely outside these protections.

Equal Pay Protection Extends to Managers

Section 3 prohibits discrimination on the ground of gender in wages for the same work or work of a similar nature. It also regulates gender discrimination in recruitment and conditions of employment, subject to statutory exceptions.

Since the provision applies to “employees”, managerial and administrative employees are covered.

This protection is not entirely new. Similar rights existed under the Equal Remuneration Act, 1976. The Code essentially consolidates and continues this protection within the new wage framework.

What Has Really Changed for Managers?

The Code on Wages does not make managers “workers” or “workmen”. The distinction between a “worker” and an “employee” continues to exist.

What has changed is that important wage protections are now based on the broader definition of “employee”, which expressly includes managerial and administrative employees.

For managers, the most significant protections are:

• timely payment of salary and amounts qualifying as wages, particularly after resignation or termination under Section 17;
• protection against unauthorised deductions under Sections 18 to 24;
• possible working-hours and overtime rights under Sections 13 and 14 where the statutory conditions apply; and
• access to the claims mechanism under Section 45, including recovery of dues and compensation where appropriate.

The key takeaway is simple: being a manager no longer automatically means being outside wage-protection legislation.

A managerial employee may still be outside the definition of “worker” for industrial disputes, retrenchment and other worker-specific protections. But under the Code on Wages, 2019, managerial and administrative employees are expressly recognised as “employees” and may now invoke important statutory protections concerning their wages.