What Does the Code on Wages 2019 Require of Employers?

The Code on Wages, 2019 is India's single wage statute, and its structure is 69 sections in nine chapters, replacing four repealed Acts. The Minimum Wages Act, 1948 became Chapter II, the Payment of Wages Act, 1936 Chapter III, the Payment of Bonus Act, 1965 Chapter IV, and the Equal Remuneration Act, 1976 sections 3 and 4. Chapters II, III and IV, plus Chapter VI for dues, claims and records, impose the day-to-day employer duties. Chapter I contains the definitions, and section 2(y) fixes how much of a pay packet counts as wages. It also prescribes the equal-pay duty, in sections 3 and 4. For Ritu's next payroll run, Chapters III and IV are the first priorities: they prescribe her payment deadlines and lawful deductions.

The Code has been in force since 21 November 2025 as to the provisions S.O. 5322(E) listed. S.O. 4604(E) of 18 December 2020 had already commenced the Central Advisory Board provisions and repealed section 8 of the Minimum Wages Act, 1948 outright, with sections 7 and 9 only so far as they related to the Central Government, so those two survived in the State sphere until 21 November 2025, and the State Advisory Board provisions of sections 42(10), 42(11) and 67(2)(s) and (t) appear in neither list. The other three Codes commenced on 21 November 2025 as well, so an employer has owed duties under all four Labour Codes since that date. The Ministry of Labour and Employment notified the Central Rules later, on 8 May 2026. Each of the other three commencement orders lists its own provisions.

A corrigendum of 15 July 2026 changed rule 1(1) of those Rules, so the instrument is now the Wages (Central) Rules, 2026, and rule 53(1)(a) of the Social Security (Central) Rules, 2026 calls them by that name. A citation to the Code on Wages (Central) Rules, 2026 is a citation to the same instrument under its former title.

The Code on Wages covers every establishment and every employee from your first hire, with no salary ceiling on protection. Sections 25, 40, 41 and 50(4) narrow that coverage, but none exempts an employer from the entire Code. Chapter III does not apply to a Government establishment unless the appropriate Government applies it by notification under section 25, and Chapter IV's bonus duties apply only where twenty or more people are employed. Section 50(4) is narrower still: it exempts the employer from the register, wage-slip and notice-board duties for an employer of not more than five persons for agriculture or domestic purpose, and nothing else. Section 2(k) defines an employee to include supervisory, managerial, administrative, technical and clerical work, so the Code applies to your engineering leads and finance staff.

The Code binds small companies, managers and government offices alike, subject to the section 25 notification for a Government establishment and the twenty-person threshold in section 41(2). Wages, minimum wages and the payment rules apply whatever the number of employees. The twenty in section 41(2) is the only headcount threshold in the Code that makes an additional duty applicable. Section 50(4) uses five as the threshold for exemptions from duties, and the proviso to section 20(2) lets an absence deduction include up to eight days' wages in lieu of notice where ten or more employed persons acting in concert absent themselves without due notice and without reasonable cause. An employer with three people therefore owes the wage-payment and deduction duties in full.

The Code uses "employee" where the other three Codes often turn on "worker". A person inside section 2(k) here may fall outside the definition that governs a retrenchment question, because each Code applies its own employee and worker definitions.

The Code on Wages replaced four of the repealed Acts; the other three Codes replaced the remaining repealed Acts.

The notification that binds you is the one your appropriate Government issues. The Central Government is the appropriate Government for railways, mines, oil fields, major ports, air transport, telecommunications, banking, insurance and central undertakings. The State Government is the appropriate Government for everyone else, which is most private employers, and your State's rules prescribe the applicable rate, form and authority.

What counts as wages is settled before any other figure on this Code means anything. Section 2(y) defines it as all remuneration payable to a person for their employment, whether called salary, allowance or anything else, and it includes basic pay, dearness allowance and retaining allowance by name. It then excludes eleven categories, from bonus payable under another law to house rent allowance, conveyance, overtime and commission. Everything payable is wages under the Code on Wages unless one of those exclusions removes it. Where the payments falling under clauses (a) to (i) of that exclusion list exceed one-half of total remuneration, the excess is added back and becomes wages.

The second proviso includes four otherwise excluded components in wages for two purposes only. For equal wages to all genders and for the payment of wages, conveyance allowance, house rent allowance, remuneration payable under an award or settlement, and overtime allowance are taken into the computation of wage. You therefore compute the section 17 payment deadline, the section 18(3) fifty-per-cent deduction ceiling and the section 19(4) three-per-cent fine cap on that wider figure. An employer who excludes house rent allowance from wages and then applies the section 17 deadline or the section 18(3) ceiling computes both on the wrong figure.

No rule requires basic pay to be half of CTC, because the 50% wage rule compares the excluded payments with one-half of total remuneration and not with basic pay.

Each allowance label on your payslip is tested against the exclusion list in section 2(y), one component at a time. Provident fund and state insurance contributions are computed on the separate wage definition in section 2(88) of the Code on Social Security, 2020, and contribution rates and wage ceilings apply to that figure.

Arjun Nair's payslip shows basic pay, house rent allowance, a conveyance allowance and a special allowance. Two of those four are on the exclusion list, house rent allowance under clause (f) and conveyance under clause (d), so his section 2(y) figure for bonus excludes them. The second proviso includes both in wages for payment purposes, so his figure for the section 17 deadline is his gross.

No single minimum wage covers India under the new labour law. Section 5 bars paying any employee less than the minimum rate of wages notified by the appropriate Government. It binds the employer and fixes nothing itself. Section 6 is the fixing power, exercised through the procedure in section 8. Section 6(6)(a) requires the appropriate Government to take into account the skill of workers under the unskilled, semi-skilled, skilled and highly-skilled categories, or the geographical area, or both. There is no national rate, so the binding instrument is whichever notification covers your employment, skill level, area and wage period.

Section 9(1) says the Central Government "shall fix floor wage taking into account minimum living standards of a worker", and no minimum rate may fall below it. That is a duty in force and not yet performed: no floor wage has been fixed. Until one is, no national lower limit applies to the rates, and section 9(2) will, once a floor wage exists, both bar any minimum rate below it and stop a Government that had already fixed a higher rate from reducing it.

Ritu's Pune office falls in the State sphere, so the Maharashtra notification in force is her binding instrument. Each State's minimum rates stand until that appropriate Government revises them.

Section 14 requires overtime pay for an employee whose minimum rate has been fixed by the hour, the day or a longer prescribed wage period. Where that employee works on any day in excess of the number of hours constituting a normal working day, the overtime rate "shall not be less than twice the normal rate of wages". Rule 5 of the Wages (Central) Rules, 2026 supplies the normal working day for the Central sphere. It is eight hours where the wage period is daily, and for any other wage period a figure fixed so that the week does not exceed forty-eight hours. Under section 27 of the OSH Code, overtime instead begins above the hours the appropriate Government prescribes there, so an employer computing both applies the two tests separately.

You fix one wage period for each employee under section 16, and no wage period may run longer than a month. The four are daily, weekly, fortnightly and monthly. Your deadline follows from the period you choose, because section 17 fixes when payment falls due for each one. Section 17(2) then displaces those deadlines when someone leaves: wages are due within two working days. Only the appropriate Government may provide another time limit, under section 17(3), and under section 17(4) a time limit in any other law is unaffected. A company policy promising full and final settlement in 45 days is neither. Section 15 permits payment in coin, currency notes, cheque, credit to a bank account or electronic transfer, and the appropriate Government may by notification require a specified establishment to pay only by cheque or bank credit.

Section 17(2) lists five situations and no more: removal, dismissal, retrenchment, resignation, and becoming unemployed through the closure of the establishment. Superannuation and the expiry of a fixed term fall outside it, and the ordinary section 17(1) deadline for the wage period applies to those instead.

A final settlement after resignation is due on the section 17(2) deadline of two working days. Arjun Nair resigns with effect from Tuesday 14 July 2026, so his wages for 1 to 14 July must be paid by Thursday 16 July 2026. They are not due in the 30 July payroll run, and they are not due at the end of a 45-day settlement cycle. You separate the statutory wage component of a full and final settlement from the discretionary components, release the first within two working days, and pay the rest on the usual cycle.

The proviso to section 16 lets you fix different wage periods for different establishments, so a multi-site employer can run a weekly period at a plant and a monthly one at head office. No such period may run longer than a month. The second proviso to section 2(y) puts conveyance, house rent, award remuneration and overtime allowance into the computation of wage for the payment of wages, so you pay those components and basic pay on the same section 17 deadline.

What an employer can deduct from salary is fixed by a closed list. Section 18(2) permits no deduction the Code does not list, and section 19 allows a fine only with the appropriate Government's prior approval. The maximum fine in any wage period is three per cent of the wages for that period. Section 18(2) lists fines, absence from duty, damage or loss, house accommodation and amenities the employer supplies, advances and loans with the interest on them, and income tax or another statutory levy. It also lists deductions required by a court order, subscriptions to and repayment of advances from a social security fund or scheme constituted by law including provident fund, pension or a health insurance scheme, co-operative society dues, union subscriptions the employee has authorised in writing, and contributions to the Prime Minister's National Relief Fund or another notified fund. There is no category for an ordinary insurance premium: that was section 7(2)(k) of the repealed Payment of Wages Act, 1936, and the Code does not retain that deduction category.

Total deductions in one wage period cannot exceed 50% of the wages for that period, under section 18(3).

Section 18(3) limits deductions in a wage period to half the wages. Section 2(y) determines which payments count as wages, by comparing excluded payments with one-half of total remuneration. An employer who applies the section 2(y) one-half comparison as a deduction ceiling computes the ceiling on the wrong base.

Meena Rao's wages for a month are ₹18,000. Authorised deductions that month cannot exceed ₹9,000, and any fine that month cannot exceed ₹540. If her employer deducts a provident fund subscription and fails to deposit it, section 18(5) protects her from the consequence of the default. It does not protect the employer.

The registers an employer must maintain under the Code on Wages come from section 50 read with rule 51, and a wage slip is mandatory for every employee. Section 50(1) requires a register containing the details of persons employed, the muster roll, wages and such other details as the rules prescribe. Section 50(2) requires a notice on the notice board at a prominent place. It states an abstract of the Code, the category-wise wage rates, the wage period, the day or date and time of payment, and the name and address of the Inspector-cum-Facilitator having jurisdiction. Section 50(3) requires a wage slip for every employee, in the prescribed form. Rule 51(1) of the Wages (Central) Rules, 2026 prescribes three registers for the Central sphere: Form I, Form IV and Form IX.

There is no separate overtime register and no separate register of fines. Rule 51(2) puts the fines and realisations under section 19(8) into Form IV, and names the Deputy Chief Labour Commissioner (Central) as the authority for them. Rule 51(3) puts the section 21(3) damage deductions and realisations into Form IV too. An employer keeping only Form I and Form IX holds no register of wages, overtime, advances, fines and deductions, which rule 51(1)(ii) requires in Form IV.

Under section 59, when an employee claims unpaid wages or an unauthorised deduction, the employer must prove that the wages were paid. Form IV is that proof. Section 54(2) separately fines non-maintenance of records up to ₹10,000 on its own, before any wage claim is decided. Rule 51 binds the Central sphere, and a State may prescribe its own forms once it notifies its rules.

Statutory bonus is owed only by an establishment where twenty or more persons are employed, or were employed on any day during the accounting year, under section 41(2). That sub-section opens "Subject to the provisions of sub-section (1)". Section 41(1) excludes nine classes from Chapter IV however large they are. They include employees of the Life Insurance Corporation of India, seamen, and registered or listed dock workers. They include employees of an establishment under the authority of a department of the Central or a State Government or a local authority, and employees of the Reserve Bank of India. They include employees of the Indian Red Cross Society and like institutions, of universities and other educational institutions, and of non-profit hospitals, chambers of commerce and social welfare institutions, which together are one clause. Clause (h) covers employees of inland water transport establishments operating on routes passing through another country, and needs no notification. Two of the nine do: specified public sector financial institutions under clause (g), and establishments the appropriate Government exempts under clause (i). Neither has been notified. Section 40 excludes a public sector establishment from the chapter, unless its competitive sales or services are at least twenty per cent of its gross income. A twelve-person startup owes no statutory bonus however much its people earn. Ritu's 140-person firm owes it.

Both notifications are Central-sphere instruments, made on 25 August 2026 and deemed in force from 21 November 2025. A State-sphere employer applies the figures that section 69(2) keeps in force. Section 69(2) deems any amount of wages provided in the four repealed Acts to have been provided under the corresponding provisions of this Code. Each such amount stays in force so far as it is not contrary to the Code, until it is repealed under the corresponding provisions of the Code or by a notification of the Central Government to that effect. The Payment of Bonus Act's figures therefore continue under sections 26(1) and 26(2), and a State that has issued its own section 26 notification applies its own figures instead.

An employee earning ₹21,000 or less a month is inside the eligibility ceiling. Meena Rao earns ₹18,000, so she is. Because her wages exceed ₹7,000, section 26(2) requires her bonus to be computed as if they were ₹7,000, no Central minimum wage having been fixed. That last step is Central-sphere reasoning. In the State sphere the comparator preserved by section 69(2) is section 12 of the repealed Payment of Bonus Act, 1965: ₹7,000 or the minimum wage for the scheduled employment fixed by the appropriate Government, whichever is higher. Where your State's scheduled-employment minimum wage exceeds ₹7,000, the higher figure is the base, and computing on ₹7,000 underpays. Section 27 proportionately reduces the section 26(1) minimum bonus where an employee has not worked all the working days and that minimum exceeds 8⅓% of the wages for the days actually worked. Section 29 disqualifies an employee dismissed for fraud, for riotous or violent conduct on the premises, for theft, misappropriation or sabotage of the establishment's property, or on conviction for sexual harassment.

An employer owes equal pay for the same work or work of a similar nature, under section 3 of the Code on Wages. That section bans discrimination on the ground of gender in wages for the work and in recruitment for it, and section 3(2)(ii) applies to the conditions of employment as well. Section 3(2)(i) prohibits reducing anyone's wage rate to achieve equal pay. The one exception applies only to recruitment and conditions of employment: work where the employment of women is prohibited or restricted by or under any law. The wage-parity duty in section 3(1) has no exception. Where employer and employee disagree about whether two jobs are of a similar nature, section 4 refers that dispute to an authority the appropriate Government notifies, and not to the employer's own job-evaluation committee. No such notification is on record for the Central sphere.

Section 2(v) defines "same work or work of a similar nature" as work in respect of which the skill, effort, experience and responsibility required are the same, when performed under similar working conditions. Any difference in those four between employees of any gender must not be of practical importance in relation to the terms and conditions of employment.

Run that comparison for any two roles paid differently, and record the objective reason before anyone asks for it. Section 3 does not require identical pay for work that is not of a similar nature. Where a pay disparity must be corrected, section 3(2)(i) permits only one method: raising the lower rate.

The legal action available where salary is not paid is a claim, and the penalty an employer faces for underpaying is separate from it. An authority appointed under section 45(1) hears a claim for unpaid wages, bonus, equal remuneration or an unauthorised deduction. Section 45(2) lets that authority order compensation in addition to the claim determined, extending to ten times the claim, and requires it to endeavour to decide within three months. On a ₹40,000 unpaid wage claim, the authority can order up to ₹4,00,000 in compensation, separately from any fine. Section 45(1) reads "may, by notification, appoint", and no Central-sphere authority has been appointed, so no Central-sphere authority is presently available for the claim. The same is true of the appellate authority under section 49(1) and the compounding officer under section 56(1).

Rule 50(1) of the Wages (Central) Rules, 2026 provides that no appeal by an employer shall be admitted unless the appellant has deposited the claim amount with the appellate authority at the time of preferring the appeal. It binds the Central sphere, and an employer planning to appeal funds the whole deposit as well as the disputed amount.

Section 43 puts the duty on the employer and makes the company, firm or other proprietor of the establishment responsible where the employer fails to pay. Section 59 puts the burden of proving that wages were paid on the employer. Section 60 makes void any contract or agreement by which an employee relinquishes the right to any amount due under the Code, so a full and final settlement document can record what was paid without waiving what was owed.

A change to your wage period, your deduction masters and your exit process is part of the one-time compliance changes all four Codes require.

Underpaying attracts a fine of up to ₹50,000 under section 54(1)(a), rising under section 54(1)(b) to imprisonment of up to three months or a fine of up to ₹1,00,000, or both, where the employer has been convicted of that offence and is again found guilty within five years. Any other contravention is punishable with a fine of up to ₹20,000 under section 54(1)(c), and a repeat of it within five years is punishable with up to one month's imprisonment or ₹40,000, or both, under section 54(1)(d).

Section 54(3) requires the Inspector-cum-Facilitator to give a written direction and a period to comply before prosecuting for a contravention other than underpayment, and no proceeding follows if you comply. No such opportunity is given where a violation of the same nature is repeated within five years. Section 56 allows an offence not punishable with imprisonment only, or with imprisonment and also with fine, to be compounded for fifty per cent of the maximum fine, by a Gazetted Officer the appropriate Government notifies. Compounding is not available for a second similar offence within five years of an earlier composition or conviction.