MINIMUM WAGES UNDER THE CODE OF WAGES, 2019 AND RULES MADE THEREUNDER

Introduction

The Code on Wages, 2019 (‘Code’ for short) was enacted by the Central Government with the objective to amend and consolidate the laws relating to the wages and bonus and for connected matters.  The Code on Wages, 2019 provides for the minimum wages payable to the workers, the payment of wages and the payment of bonus. The Central Government framed rules for the purpose of implementing the provisions of the Code ‘The Code on Wages (Central) Rules, 2026 (‘Rules’ for short), which came into effect from 08.05.2026.

Wage

The term ‘wage’ is defined under Section 2(y) of the Code as  all remuneration whether by way of salaries, allowances or otherwise, expressed in terms of money or capable of being so expressed which would, if the terms of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment, and includes,-

1. basic pay;
2. dearness allowance; and
3. retaining allowance, if an,

but does not include-

1. any bonus payable under any law for the time being in force, which does not form part of the remuneration payable under the terms of employment;
2. the value of any house-accommodation, or of the supply of light, water, medical attendance or other amenity or of any service excluded from the computation of wages by a general or special order of the appropriate Government;
3. any contribution paid by the employer to any pension or provident fund, and the interest which may have accrued thereon;
4.  any conveyance allowance or the value of any travelling concession;
5. any sum paid to the employed person to defray special expenses entailed on him by the nature of his employment;
6. house rent allowances;
7. remuneration payable under any award or settlement between the parties or order of a court or Tribunal;
8. any overtime allowance;
1. any commission payable to the employee;
10. any gratuity payable on the termination of the service;
11. any retrenchment compensation or other retirement benefit payable to the employee or any ex gratia payment made to him on the termination of employment.

In calculating the wages under this clause, if payments made by the employer to the employee under clauses (a) to (i) exceeds one-half, or such other per cent. as may be notified by the Central Government, of the all remuneration calculated under this clause, the amount which exceeds such one-half, or the per cent. so notified, shall be deemed as remuneration and shall be accordingly added in wages.

For the purpose of equal wages to all genders and for the purpose of payment of wages, the emoluments specified in clauses (d), (f), (g) and (h) shall be taken for computation of wage.

Where an employee is given in lieu of the whole or part of the wages payable to him, any remuneration in kind by his employer, the value of such remuneration in kind which does not exceed fifteen per cent. of the total wages payable to him, shall be deemed to form part of the wages of such employee.

Discrimination on gender

Section 3 of the Code prohibits showing the discrimination on the ground of gender.  All genders are to be treated equally in respect of wages in an establishment.  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.  There shall be no discrimination on the ground of sex in recruitment for the same work or work of similar nature and the conditions in employment except where the woman in restricted under any law for the time being in force. 

Minimum wages

Under this Code, the appropriate Government shall fix the minimum wages to employees. The workers shall be paid the minimum wages as determined and notified by the appropriate Government. The number of minimum rates of wages as far as possible, be kept at minimum by the appropriate Government.

The purposes of fixing the minimum wages are-

• the appropriate Government shall primarily take into account the skill of workers required for working under the categories of unskilled, skilled, semi-skilled and highly-skilled or geographical area or both; and
• may, in addition to such minimum rate of wages for certain category of workers, take into account their arduousness of work like temperature or humidity normally difficult to bear, hazardous occupations or processes or underground work as may be prescribed by that Government; and
• the norms of such fixation of minimum rate of wages shall be such as may be prescribed.

The minimum wages shall consist of-

• The basic pay and the Dearness allowance or cost of living allowance; or
• The basic pay and with or without cost-of-living allowance;
• The pay all inclusive of basic pay and cost of living allowance.

The minimum wages may be for piece of work or for time of work.  The time of work shall be for an hour or for the day or for the month.  

Procedure for fixing minimum wages

The appropriate Government may fix the minimum wages initially and revise the same periodically.  The appropriate Government, for this purpose, shall appoint committees to hold enquiries and give its recommendations to the appropriate Government for fixation /revision of minimum wages.  Such committee shall consist of the representatives of the employers and employees and independent persons not one third of the total number of members in the Committee.  The Committee shall, after holding the inquiries and submit the proposals to the appropriate Government.

Then the appropriate Government shall notify the above said proposals calling for any objections from the stakeholders and public within 2 months from the date of notification.  After receiving the objections, the appropriate Government shall consult the Advisory Board and fix the minimum wages/revision of minimum wages.  The appropriate Government shall revise the minimum wages once in 5 years.

While fixing the minimum wages, the appropriate Government shall take the following into its consideration-

• The skills of the workers required for working under the categories of - skilled, unskilled, semi-skilled and highly skilled;
• The geographical areas and working conditions;
• The arduousness of work like temperature or humidity normally difficult to bear;
• The hazardous occupations or process or underground work as may be prescribed by the appropriate Government.

Hours of work

The appropriate Government may,

• fix the number of hours of work which shall constitute a normal working day including one or more specific intervals;
• provide a day of rest in every period of 7 days which shall be allowed to employees or to any specified class of employees and for payment of wages in respect of such days of rest;
• provide for the payment on the day of rest at a rate not less than overtime allowance. 

The hours of the work in relation to the following employment shall apply only to such extent and subject to conditions-

• employees engaged in emergency which could not have been foreseen or prevented;
• employees engaged in the nature of the preparatory or complimentary work which must be carried on outside the limits laid down for the general working in the employment concerned;
• employees whose employment is intermittent;
• employees engaged in any work, for technical reasons, has to be completed before the duty is over; and
• employees engaged in a work which could not be carried on except at the time dependent on the irregular action of natural forces. 

Overtime wages

If any worker works in a day, in excess of his working hours fixed for him, is entitled for overtime wages. The employee shall be paid for every hour for part of an hour so worked in excess at the overtime which shall not be less than the twice the rate of normal rate of wages.

Floor wages

‘Floor Wages’ generally refers to a minimum wage level set as a baseline, below which wages cannot legally fall.  The floor wages shall be fixed by the Central Government after taking into account minimum living standards of a worker in such manner as may be prescribed.  Different floor wage may be fixed for different geographical areas. 

The minimum rates of wages fixed by the appropriate Government under section 6 shall not be less than the floor wage and if the minimum rates of wages fixed by the appropriate Government earlier is more than the floor wage, then, the appropriate Government shall not reduce such minimum rates of wages fixed by it earlier.

The Central Government may, before fixing the floor wage, obtain the advice of the Central Advisory Board constituted, taking into  taking into account the minimum living standard including the food, clothing, housing and any other factors considered appropriate by the Central Government from time to time.  The same may be circulated to all State Governments for further consultations and their comments. 

The Central Government shall considered the discussions with the Central Board and also the comments received from the State Governments may fix/revised the floor price.  The Central Government may revise the floor wage ordinarily at an interval not exceeding 5 years and undertake adjustment for variations in the cost of living periodically in consultation with the Board and the State Governments.

The minimum rates of wages fixed by the appropriate Government under section 6 shall not be less than the floor wage and if the minimum rates of wages fixed by the appropriate Government earlier is more than the floor wage, then, the appropriate Government shall not reduce such minimum rates of wages fixed by it earlier.