How will the wage definition under the Labour Codes alter fixed vs variable pay design?
AB Opinion: The wage definition introduced under the Labour Codes is likely to have a significant bearing on how organisations design the balance between fixed remuneration and variable pay. The Codes adopt a broad formulation of “wages,” covering all remuneration payable under the terms of employment, subject only to specific statutory exclusions. While certain items such as statutory bonus and commission are expressly excluded, the Codes do not provide any specific exclusion for payments linked with productivity, performance, or attendance.
This aspect has generated considerable debate among HR and legal professionals. Historically, industrial jurisprudence recognised a conceptual distinction between normal wages and what were often described as “incentive wages” or additional remuneration for higher production. In several earlier decisions dealing with incentive or production bonus schemes, the Supreme Court observed...
