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Section 54: Power of officers of appropriate Government to impose penalty in certain cases

The Code on Wages, 2019 (Act No. 29 of 2019) • Official Statutory Text & Plain English Practice Guide

Statutory Mandate
Chapter VIII: Offences and Penalties
Competent Labour Forum
Act No. 29 of 2019
Section 53 All 67 Sections of Code on Wages, 2019 Section 55

Legal Commentary & Landmark Judgments: Section 54

Section 54 of the Code on Wages, 2019 establishes a graduated, deterrence-oriented statutory penalty structure, prescribing monetary fines up to fifty thousand rupees for wage and bonus defaults, mandatory escalating fines and imprisonment up to three months for recidivism within five years, separate penalties for record-keeping breaches, and an opportunity for first-time offenders to rectify non-compliance prior to criminal prosecution.

  • Tiered Penalty Structure for Wage and Bonus Underpayments: Sub-section (1)(a) mandates that paying less than minimum wages or defaulting on wages/bonuses is punishable with a fine extending up to fifty thousand rupees for a first offense. Under clause (b), a repeat offense within five years of conviction triggers imprisonment up to three months, or a fine extending up to one lakh rupees, or both, introducing custodial deterrence.
  • Sanctions for General Contraventions & Record Defaults: Contravention of any other provision of the Code or rules is punishable with a fine up to twenty thousand rupees for a first offense, escalating to imprisonment up to one month and/or fine up to forty thousand rupees for repeat violations. Non-maintenance of registers, records, or notices under Section 50 attracts a fine up to ten thousand rupees.
  • Mandatory Rectification Opportunity for First-Time Offenders: Crucially, the section incorporates a progressive compliance mechanism: before initiating prosecution for first-time non-compliances, the Inspector-cum-Facilitator must give the employer written notice and a statutory window to rectify the defect. Prosecution is launched only if the employer fails to remedy the contravention within the allowed timeframe.
Key Landmark Precedents:
  • People's Union for Democratic Rights (PUDR) v. Union of India (1982) 3 SCC 235: The Supreme Court held that statutory penalties for wage defaults are indispensable to enforce Article 23 rights, and courts must enforce penal provisions vigorously to deter systemic exploitation of labor.
  • Sanjit Roy v. State of Rajasthan (1983) 1 SCC 525: The Supreme Court reaffirmed that paying less than statutory minimum wages cannot be excused on grounds of budgetary constraints; penal consequences follow inexorably.
  • Standard Chartered Bank v. Directorate of Enforcement (2005) 4 SCC 530: The Supreme Court held that where a statute prescribes fine and/or imprisonment, corporate bodies that cannot be physically imprisoned remain fully subject to monetary fines, while individual corporate officers remain exposed to custodial sentences.
Courtroom Practice & Strategic Litigation Guidance:

Employers receiving a rectification notice from an Inspector-cum-Facilitator under the proviso to Section 54 must treat the remediation window as a vital safe-harbor. Immediate corrective action—disbursing unpaid wage arrears, correcting payroll deductions, or updating register entries—must be undertaken and certified to the Inspector within the deadline to extinguish the criminal cause of action before prosecution is initiated.

Section 53 All 67 Sections of Code on Wages, 2019 Section 55