Minimum Wages Act

The Code on Wages, 2019. It came into force on 21 November 2025 and its section 69(1) repealed four statutes at once: the Minimum Wages Act, 1948, the Payment of Wages Act, 1936, the Payment of Bonus Act, 1965 and the Equal Remuneration Act, 1976.

The repeal did not sweep away the rate notifications. Section 69(2) provides that anything done under the repealed enactments, expressly including any notification and any amount of wages provided for any purpose, is deemed to have been done under the corresponding provisions of the Code, and stays in force so far as it is not contrary to the Code until it is replaced. The state minimum wage notification you were applying in October 2025 is therefore still the operative rate, now carried by the Code rather than by the 1948 Act. This is worth stating plainly because the alternative assumption, that a repeal left a gap, produces the opposite and wrong conclusion.

This entry keeps the old name because that is what most people still search for and what most internal documentation still says. But the 1948 Act is not the operative law, and an obligation cited to it is cited to a repealed statute.

What has not changed is the shape of the problem. The Code, like the Act before it, does not itself set a wage. It gives the appropriate government the power to fix minimum rates, to review them periodically and to enforce them. There is still no single number to look up. There is a set of notifications, issued state by state, revised on their own timetables, with different rates for different skill categories and often for different zones within a state.

The floor is still a floor. It applies whatever the employee agreed to, whatever the market for the role looks like and whatever the employer's ability to pay. Paying below the notified rate is not a commercial decision that went badly. It is a contravention.

Three variables decide the rate, and getting any of them wrong produces a wrong answer that looks authoritative.

A fourth variable used to sit at the top of that list and no longer does. Under the 1948 Act, the minimum wage applied only to scheduled employment, meaning employment the appropriate government had listed in a schedule. Work outside every schedule was outside the Act. The Code removes that gateway completely: the expression "scheduled employment" does not appear anywhere in it, and there is no Schedule of employments. Section 5 simply says that no employer shall pay any employee less than the notified minimum rate. For most white-collar payrolls this is the single largest practical change, because roles that were genuinely outside the old Act are now inside the new one.

Read section 5 carefully on who is covered, because the Code uses two different words. The duty runs on employee, which section 2(k) defines to include manual, operational, supervisory, managerial, administrative, technical and clerical work alike. The narrower term worker, which section 2(z) defines to exclude managerial and administrative staff and supervisors paid above fifteen thousand rupees a month, is used elsewhere in the Code but not to limit the minimum wage obligation. An employer that treats its managers as outside the minimum wage because they sit above the supervisory limit has read across from the wrong definition.

The rate itself is still usually expressed in two parts: a basic rate and an allowance adjusted to the cost of living index. The Code calls the second part the cost of living allowance at section 7, though notifications and payroll systems generally call it the variable dearness allowance. Both parts together are the minimum. Paying the basic and ignoring the variable revision is a common and quiet shortfall. The Code does not itself set the revision interval; the familiar half-yearly cycle comes from the notifications.

Rates may be fixed for time work or piece work, and a time rate may be fixed by the hour, by the day or by the month. Note what is missing from that list: the Code provides no weekly or fortnightly minimum rate, though it permits weekly and fortnightly wage periods for payment. Confirm the position in the notification that applies to you, and confirm whether your state has notified its rules under the Code, since states are at different stages.

Two timing rules are worth holding. A revision notification comes into force on the expiry of three months from its issue unless it says otherwise, so there is normally a window between publication and effect rather than an immediate obligation. And the appropriate government is to review or revise rates ordinarily at intervals not exceeding five years, which is the outer limit rather than the expected cadence.

The floor wage is new with the Code and has no equivalent under the 1948 Act. The central government fixes it, and it operates beneath the state minimum wages: a state may fix a rate above the floor wage, but not below it. Where a state's existing minimum is already higher, the Code does not permit it to be reduced.

It is worth being precise about what this is not. The floor wage is not a national minimum wage that employers pay directly, and it is not the figure to put in a payroll system. The operative number remains the state notification for the relevant employment, skill category and zone. The floor wage constrains what a state may notify; it does not replace the notification.

The central government may fix different floor wages for different geographical areas. Confirm the current figure and its area-wise variation before relying on it, since it is revised.

This is where a compliant-looking payroll turns out not to be, and the Code has tightened it considerably.

The comparison is against the wage as the statute defines it, and that definition does not include everything on the payslip. Under section 2(y), wages means all remuneration and includes basic pay, dearness allowance and retaining allowance. It then excludes eleven categories at clauses (a) to (k): statutory bonus, the value of house accommodation and amenities, employer contributions to provident fund or pension and interest on them, conveyance allowance and travelling concessions, sums to defray special expenses, house rent allowance, remuneration under an award or settlement, overtime allowance, commission, gratuity on termination, and retrenchment compensation or other retirement benefit or ex gratia on termination. So an employee whose payslip totals well above the notified rate can still be underpaid once the excluded components are stripped out.

The Code then adds a condition the old Act did not have. Where the payments under those exclusions exceed one-half of all remuneration, the excess is deemed remuneration and added back into wages. This is the provision usually described as the fifty per cent rule, and it exists precisely to attack the structure described below.

One detail of the add-back is routinely stated too broadly, including in most commentary. The proviso runs on clauses (a) to (i) only. Gratuity payable on termination and retrenchment compensation, clauses (j) and (k), are excluded from wages but are not counted in the half that triggers the add-back. Testing the rule by adding up every excluded line on the payslip therefore overstates the excluded share, and can produce an add-back the Code does not require. A separate provision, the Explanation to section 2(y), deems remuneration in kind to be part of wages where its value does not exceed fifteen per cent of total wages payable.

Salary structures have long been designed to keep the basic low, which reduces provident fund and gratuity exposure. Where the workforce sits near the minimum wage, that same design pushes the comparable components under the floor, so the structure fails two tests at once. The Code's add-back condition means the design no longer works even for the first purpose: push most of the package into excluded allowances and the excess is counted as wages anyway, raising provident fund, gratuity and the minimum wage comparison together.

Paying the rate is the first obligation, not the only one.

• Pay at least the notified rate for the state, employment and skill category, and update when a revision is notified rather than at the next appraisal cycle.
• Pay overtime for work beyond the normal working day at not less than twice the normal rate of wages, for every hour or part of an hour worked in excess. The Code fixes that multiple itself, at section 14, rather than leaving it to the rules.
• Maintain a register of persons employed, the muster roll, wages and the other prescribed details, and issue wage slips. The wage slip is a statutory obligation under section 50(3), not a courtesy.
• Display a notice at a prominent place containing an abstract of the Code, the category-wise wage rates, the wage period, the day and time of payment, and the name and address of the Inspector-cum-Facilitator.
• Pay wages in the prescribed manner and within the prescribed period. Wage periods and payment timelines now sit in the Code as well, since it absorbed the Payment of Wages Act.
• Retain records for the prescribed period and produce them on inspection.

Enforcement is worth understanding in figures rather than in general terms. A claim under the Code may be filed by the employee, by a registered trade union of which the employee is a member, or by the Inspector-cum-Facilitator, and a single application can cover any number of employees in an establishment. The limitation period is three years from the date the claim arises, which is considerably longer than the six months to two years that ran under the repealed Acts. Most significantly, the authority deciding the claim may order compensation in addition to the amount determined, extending to ten times the claim. An unpaid difference is therefore not simply a debt that gets paid late; the exposure is an order of magnitude larger than the shortfall. If the employer still does not pay, a recovery certificate issues to the Collector and the amount is recovered as arrears of land revenue.

Inspection has also moved towards an inspector-cum-facilitator model with more emphasis on advice, and there is a scheme of compounding for offences not punishable with imprisonment. Neither changes the underlying obligation, and the penalty and compounding provisions themselves have not been checked against the Code text for this entry.

The failures are rarely deliberate underpayment.

• Obligations are still cited to the 1948 Act in policies, contracts and vendor agreements drafted before November 2025. The substance is often close enough to survive, but the citation is to a repealed statute and the scheduled-employment carve-out it relied on is gone.
• A notification is revised and payroll does not follow, so the shortfall accrues from the effective date rather than from the date it was noticed. The three-month default gap between a notification's issue and its coming into force is the window in which to make the change, not a grace period afterwards.
• The variable dearness allowance component is treated as optional and only the basic minimum is paid.
• Cost to company is compared against the rate instead of the statutory wage components.
• Skill classification is taken from the internal job title rather than the definitions in the notification, so semi-skilled work is paid at unskilled rates.
• Roles that sat outside every schedule under the old Act are assumed to be outside the minimum wage still. Under the Code they are not.
• Contract workers on the premises are assumed to be the contractor's problem. The principal employer's liability where the contractor defaults is real and is worth checking rather than assuming.
• Multi-state operations apply one state's rate to everyone, usually the state where head office sits.

The remedy for all of these is the same and is unglamorous: hold the applicable notification against each location and employment category in the payroll system, with an effective date, so a revision is a data change rather than a discovery.