Will The New Labour Code On Wages Fix The Gender Pay Gap In India?

Written by: Avanti Deshpande

The World Economic Forum’s (WEF) said that it will take 100 years for women to be paid as much as men. The WEF Global Gender Gap Report 2020 ranked India 112th out of 153 countries, four spots lower than in 2018 when we were at the 108th position.

The Indian Constitution under Article 14 provides for equality before law, prevention of discrimination on grounds of sex under Article 15, and equality of opportunity in public sector employment under Article 16. Further, Article 39, i.e. under the chapter of Directive Principles of State Policy contains principles of policy to be followed by the State where clause (d) provides for equal pay for equal work for both men and women.

Here, it is pertinent to note the meaning of the term ‘gender pay gap‘, which can be described as a measurable indicator of inequality that is the difference in average gross hourly earnings between women and men.

The new Code on Wages, 2019 is one of the four Codes set to reform India’s numerous and complex labour laws. Thus, it is important to understand what the new Code means for pay equity in India, whether any changes have been made, and what pitfalls are likely to arise.

Understanding The Code on Wages, 2019 [In The Context Of Pay Equity]

In Randhir Singh v. Union of India 1982 SCR (3) 298, the Supreme Court held that the doctrine of ‘equal pay for equal work’ is not an abstract but a substantive one and although it is not a fundamental right, it is definitely a constitutional goal.

The Code on Wages, 2019 is an Act that seeks to amend and consolidate the laws relating to wages and bonus, connected and incidental matters to these issues, and absorbs four central legislations namely the Payment of Wages Act, 1936, the Minimum Wages Act, 1948, the Payment of Bonus Act, 1965, and the Equal Remuneration Act, 1976 (“ERA”). Section 3 under Chapter I of the Code on Wages, 2019 provides for the prohibition of discrimination on the grounds of gender, which reads as follows,

3. (1) There shall be no discrimination in an establishment or any unit thereof among employees on the ground of gender in matters relating to wages by the same employer, in respect of the same work or work of a similar nature done by any employee.

(2) No employer shall, —

(i) for the purposes of complying with the provisions of sub-section (1), reduce the rate of wages of any employee; and
(ii) make any discrimination on the ground of sex while recruiting any employee for the same work or work of similar nature and in the conditions of employment, except where the employment of women in such work is prohibited or restricted by or under any law for the time being in force.

A welcome change that this section makes, unlike the erstwhile Equal Remuneration Act, 1976 that specified the binary of men and women, the provision under Code on Wages has replaced ‘men and women’ with ‘gender’ thus including other genders, i.e. transgender persons within its ambit as well.

Drawbacks Of The Code

Unfortunately, the Code does not define the term ‘discrimination’ and doesn’t delve into the meaning of the term at all. With respect to the law and discrimination, it is relevant to understand the two main types of discrimination, namely direct and indirect discrimination.

Direct discrimination occurs when a person is treated unfavorably or unfairly because of an intrinsic personal characteristic that is protected by law, such as sex or gender.

Indirect discrimination occurs when a rule, policy or mandate that is seemingly equal and applies to everyone in the same way, but in reality disadvantages a particular individual/group of individuals because of a personal attribute of such individual/group.

The workplace is a space where discrimination of both types is amply possible. By not delving into the meaning of discrimination and how women can face discrimination at the workplace, the Code is decidedly narrow in its approach.

Principle Of Same Work Or Work Of Similar Nature

The standard for determining equal pay for equal work in Indian law, right from the ERA to the Code on Wages has been ‘same work or work of similar nature’. Unfortunately, the judiciary has interpreted it in a fairly narrow manner.

As per Section 2(h) of the ERA, ‘same work or work of similar nature’ is defined as, “same work or work of a similar nature” means work in respect of which the skill, effort and responsibility required are the same, when performed under similar working conditions, by a man or a woman and the differences, if any, between the skill, effort and responsibility required of a man and those required of a woman are not of practical importance in relation to the terms and conditions of employment”

The problem with the adoption of this standard is that it cannot hope to solve the problem of pay inequity. The first step towards pay equity would be to constantly work against unequal way for equal work. That said, a lot more work would be required to solve deep-rooted issues like segregation of work on the basis of gender and undervaluing women’s work just because they are done by women. If the law does not even attempt to tackle these larger issues, how can we hope to truly achieve the ultimate goal of pay equity?

Undervaluation Of Women’s Work

Women’s work has been consistently undervalued historically and by institutions like the family, governments, and now, also corporates. Extensive job segregation has led to the feminization of certain professions. Undervaluation of women’s work is one of the most prominent contributing factors to the gender pay gap.

Work done by women is often undervalued because of different reasons – mainly because it has traditionally been done in the home and has been unpaid, as women remain primary care givers and are responsible for the majority of domestic work.

Undervaluing of women’s work is directly related to occupational segregation, women bearing the disproportionate burden of unpaid care work (at home), stereotypes about the work done by women such as the 5 C’s namely cooking/catering, cleaning, clerical work, cashier (receptionist) and childcare. Furthermore, there are gender normative assumptions about work that women are ‘naturally good at,’ examples of which include cooking and cleaning that reinforce sexist stereotypes.

Another major factor that contributes to the gender pay gap is outdated assumptions about the value of women’s paid work as only ‘pin money’ rather than money that was actually used by the family for sustenance.

Pin money is money that is supplementary to the main source of income (earned by the man) and is essentially not the breadwinner’s income. Thus, the assumption that the work done by women is not the primary source of income, but merely supplementary, better payment is not a requirement. Such old and downright discriminatory stereotypes are unfortunately deeply entrenched and contribute to the gender pay gap.

Principle Of Work Of Equal Value

The principle of equal pay for equal work is not the same as the principle of equal pay for work of equal value. The principle of equal pay for work of equal value goes beyond the same work or work of similar nature principle and engages with a particular aspect of workplace discrimination, that is, the undervaluation of work ordinarily done by a disadvantaged group. Due to existing systemic hierarchies, women are relegated to undervalued, low paid, feminized work.

The concept of work of equal value determines that the comparison should not be limited only to the content of the work, but that other job requirements, such as the level of skill, effort and responsibility, and working conditions are compared as well. Simply put, the equal pay for equal work principle curbs the implementation of the principle to work undertaken by two persons (usually a man and a woman) in the same area of activity and in the same workplace.

However, the concept of equal pay for work of equal value is broader and includes instances where men and women do different work. Whether the work is of equal value is determined through a job evaluation scheme. Thus, work of equal value is not same or similar work, it is not work that is treated as equivalent, but it is work that has equal value when factors such as the effort needed, required skills, decision making involved while working are accounted for. By using this principle, two completely different jobs can be taken and analysed using these parameters.

The UK’s Equality Act, 2010 (“the Act”) provides for the principle of work of equal value and under Section 65(1) of the Act distinguishes between like (same) work, work rated as equivalent, and work of equal value. Section 65(6) elaborates on the meaning of work of equal value to be neither like (same) work or equivalent work but nevertheless be equal in terms of efforts, skill, and decision making.

Examples of professions held to be of equal value by Courts in the UK include a clerical assistant equal to a warehouse operative and a school nursery nurse equal to a local government architectural technician.

This principle is important because of factors mentioned previously such as occupational segregation and feminization of certain professions and lower minimum wages in occupations where more women are found working.

ILO Standards

The International Labour Organization (ILO) adopted the Equal Remuneration Convention, 1951 (No.100) that solidified the principle of equal remuneration for men and women. It was ratified by India in 1958. The Equal Remuneration Convention too embraces the principle of ‘work of equal value’ as opposed to that of ‘same work or work of similar nature’.

Disappointingly, although the Convention was ratified by India when the ERA was enacted, the law did not adopt the principle of work of equal value and rather stuck to the principle of work of similar nature. The same approach and the same principle was unfortunately duplicated in the Code on Wages as well.

Conclusion

The gender pay gap is a huge reality that cannot be bridged easily. It is a complex problem that needs urgent attention. The law lacks both nuance and depth, and with India’s current standing on the Gender Gap Report falls short of the goal of helping to bridge the pay gap. The subsuming of an entire legislation into one section of the Code, the lack of clear definition of ‘discrimination’ are some of the disappointing factors of the Code.

It is also regrettable that the Code did not seek to take a more progressive stand on the issue by adopting the principle of work of equal value and fails to comprehensively address the issue of pay inequity in India. In an effort to consolidate labour laws, the state should not lose sight of the importance of the legislations being replaced, many of whom have been hard fought for.

About the author: Avanti Deshpande is a penultimate year law student at ILS Law College, Pune. Her main interest areas are human rights, gender laws and international law.

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