Viewpoint: Gender Pay Gap in India - Legal Considerations

During a women's football championship match in Brazil, the scoreboard displayed 0.8 instead of 1 after the first goal by one of the teams, to highlight research proving women earn 20 per cent less than men for the same work.¹ The US Women's Soccer Team has incidentally filed a lawsuit that seeks equal pay and employment conditions as compared to the US Men's Soccer Team.

As per the International Labour Organisation (ILO), gender pay gap refers to the difference in average wages between all women and all men who are engaged in paid employment.² Based on its analysis, gender pay gap is used as a common indicator of gender inequality in the world of work and is also used to monitor progress towards gender equality at the national or international level.³ 

Wage inequality remains a serious challenge not just globally, but also to India's path to achieving decent working conditions and inclusive growth, states the India Wage Report prepared by the ILO in 2018.⁴ The IBA Global Employment Institute's Eighth Annual Global Report, which provides national regulatory trends in human resources law, states that gender-related developments in discrimination laws and practices are most prevalent.

Although overall wage inequality has narrowed through the years, gender pay gap is still high based on international standards. Based on news reports, gender pay gap has percolated into almost all sectors including technology, outsourcing, manufacturing, healthcare, caring services and social work.⁵

ILO's Global Wage Report

As per ILO's flagship Global Wage Report 2018/19⁶, which is published every two years,  women continue to be paid approximately 20 per cent less than men. Gender pay gap has spread its wrath through the world with certain variations between the Republic of Korea, with a high 32 per cent of gender pay gap,  compared to Belgium, where it is  just 3 per cent. The report also states that the wage inequality is higher in low-income countries like Namibia as opposed to high-income countries like Sweden.

The Indian Experience

India ranks 108 in World Economic Forum's (WEF) gender gap index in 2018, which is the same rank it held in 2017.⁷ Apart from the gender pay gap, India is also facing a huge pay disparity among the categories of organised and unorganised sectors, rural and urban areas and regular and casual workers.

As per the Employment and Unemployment Survey conducted by the National Sample Survey Office (NSSO), average daily wages have almost doubled between 1993-94 and 2011-12, increasing more rapidly in rural areas than in urban areas and for casual workers than regular workers.⁸ The significant increase of wages in the rural areas can be attributed to the introduction of welfare policies by the government, such as the Mahatma Gandhi National Rural Employment Guarantee Act, 2005 (MGNREGA), while wage policies for the urban population remains the same. As per the WEF report on wage equality for similar work indicator, India has improved its rank to 72^nd.

Laws governing pay disparity in India

As per Article 16 of the Constitution of India, all citizens have a right to equality of opportunity in relation to matters of public employment or appointment to any office under the state. Article 38(2) strives to minimize inequalities in income among individuals and Article 39 promises equal pay for equal work for both men and women.

The Equal Remuneration Act, 1976 of India (ERA) prohibits differential pay to men and women workers for performing the 'same work or work of similar nature'. The law defines 'same work or work of similar nature' to mean "work in respect of which the skill, effort, experience and responsibility required are the same, when performed under similar working conditions by employees and the difference if any, between the skill, effort, experience and responsibility required for employees of any gender, are not of practical importance in relation to the terms and conditions of employment." Additionally, the ERA prohibits any discrimination between men and women workers for the same work or work of similar nature on the grounds of recruitment including promotions, training, or transfer.

The Supreme Court of India has upheld the constitutional validity of the principle of equal pay for equal work. It ruled that temporary employees discharging similar duties and functions as discharged as that by permanent employees are entitled to draw equal wages as that of the similarly placed permanent employees.⁹

In another landmark case, the Supreme Court held that men and women employees should be paid equally for same work.¹⁰ The employer's plea with respect to inability of the employer to pay similar wages

to female employees was not accepted by the Court, as it said that the applicability of the law does not depend upon the financial ability of the management to pay equal remuneration to the employees. To that extent, it ruled that the employer was in violation of the provisions of the ERA.

The new Code on Wages

Recently, the Code on Wages, 2019 of India (Code on Wages) has been notified and it received the Presidential assent on August 8, 2019. The Code of Wages consolidates four national level labour laws on wages, being the ERA, Minimum Wages Act, 1948, Payment of Wages Act, 1936 and Payment of Bonus Act, 1965.

The first set of provisions of the Code of Wages relates to anti-discrimination, prohibiting discrimination against employees on the ground of gender in matters relating to payment of wages. The Code on Wages also prohibits discrimination while recruiting any employee and in the conditions of employment, except in cases where employment of women in such work is prohibited or restricted under any law.

The key points of differential between the ERA and Code on Wages are that while the ERA referred to discrimination against women and between men & women workers, the Code on Wages prohibits discrimination on the grounds of gender, thereby covering the LGBTIQ category as well.

The Future of Gender Pay Gap in India

Based on the research and statistics, it is pertinent to note that pay disparity is one of the major indicators of the issue on social injustice, which needs immediate attention. India has also taken certain steps to curb the pay disparity. India has previously ratified the Equal Remuneration Convention, 1951 which was adopted by the ILO. 

Although India has certainly come a long way in addressing the issue of pay equity, there is lots more to do. The principle of equal pay for equal work needs to be strongly advocated and promoted by the government, starting with itself! This should further be supported by strong wage policies and strict implementation of the existing anti-disparity laws. Since pay disparity is also noticed in India's massive unorganised sector, it is imperative to conduct regular awareness programs among the workers enlightening them about their rights. Additionally, efforts need to be made by the government to formalise the unorganised / informal sector by framing of effective wage policies applicable to them and implementation of the same.

On an international front, India has been a part of G20 (Group of Twenty), which has adopted certain sustainable wage policies to address the wage gap which have been identified as the key objectives of the United Nations 2030 Agenda for Sustainable Development. While India may be party to various international treaties and conventions working towards eliminating wage gap, it requires active participation as well as a collective intent and steps to achieve the agenda. 

Time is running out if India truly would like to project itself as a progressive nation. India can certainly learn from smaller but more progressive countries such as Iceland, which has topped the WEF ranking by closing more than 85.8% of its overall gender pay gap. Hopefully, we will see it included in the government's agenda sooner rather than later.

Vikram Shroff is the Leader, HR Law at Nishith Desai Associates, based in Mumbai, India and is SHRM's subject matter expert for Industrial Relations. Archita Mohapatra is an Associate, HR Law.