Section 56: Composition of offences

Overview

Section 56 of the Code on Wages, 2019, provides a way for employers to resolve certain violations of the Code without going through a full legal prosecution. It allows the government or authorized officer to accept a payment (a ‘composition fee’) from the employer instead of initiating court proceedings. This applies to offences under the Code related to wages, bonuses, deductions, and other related matters.

Scope and Coverage

• This section applies to all establishments and all employees covered under the Code on Wages, 2019. This includes workers employed in any factory, mine, workshop, or establishment.
• There are no specific thresholds or exclusions regarding the type of establishment or employee to whom this section applies. However, the amount of the composition fee will likely vary depending on the nature and severity of the offence.

Key Obligations and Rights

• Employer’s Duty: Employers have a duty to comply with all provisions of the Code on Wages. If they violate the Code, they may be offered the option to pay a composition fee instead of facing prosecution.
• Government’s Right: The appropriate Government or an authorized officer has the right to decide whether to accept a composition fee or pursue prosecution. They are not obligated to accept the fee.
• Employee’s Right: While employees don't directly decide on composition, they benefit from quicker resolution of wage-related issues. Prosecution can be a lengthy process, and composition offers a faster remedy, potentially leading to quicker wage recovery.

Compliance and Penalties

If an employer violates a provision of the Code on Wages, an inspector may conduct an inspection and find a violation. Instead of immediately filing a case in court, the inspector (or other authorized officer) can offer the employer the option to pay a composition fee. If the employer pays the fee, the prosecution is stopped. If the employer refuses, the government can proceed with legal action, which could result in higher penalties and a criminal record. The exact amount of the composition fee is determined by the government through rules.

Practical Examples

• Example 1: A factory is found to be paying workers less than the minimum wage. Instead of filing a case, the inspector offers the employer the option to pay a composition fee of ₹20,000. If the employer pays, the matter is closed.
• Example 2: An establishment makes illegal deductions from an employee’s wages. The inspector offers composition, but the employer believes the deduction was justified and refuses to pay. The government then proceeds with a court case to determine the legality of the deduction.