Minimum Wages in India

Minimum Wages in India. For over seven decades minimum wages in India were governed by the Minimum Wages Act, 1948. That position has now changed fundamentally. The Code on Wages, 2019 (Act No. 29 of 2019) has repealed and subsumed four central enactments — the Payment of Wages Act, 1936, the Minimum Wages Act, 1948, the Payment of Bonus Act, 1965 and the Equal Remuneration Act, 1976 — with its substantive provisions in force from 21 November 2025. The Code on Wages (Central) Rules, 2026 followed on 8 May 2026, superseding seventeen legacy rule sets including the Minimum Wages (Central) Rules, 1950.
This is not a cosmetic renumbering exercise. Coverage is now universal, the definition of "wages" has been rewritten in a way that directly affects provident fund and gratuity liability, and the record-keeping architecture has been replaced with a smaller, digital-first set of prescribed forms.
The Statutory Framework
The obligation flows from Chapter II. Section 5 prohibits payment below the minimum rate notified by the appropriate Government; Section 6 governs fixation, Section 8 revision, and Section 9 introduces the national floor wage.
Identifying the "appropriate Government" correctly is essential, as it determines which rules and wage notifications apply. For railways, mines, oilfields, major ports, air transport, telecommunications, banking and insurance, central public sector undertakings and establishments under Central Government authority, the Central Rules, 2026 apply. For all other establishments — the overwhelming majority of employers — the State Government governs, and existing State wage and dearness allowance notifications continue until expressly superseded.
Applicability — Who Is Covered
The most consequential change is the removal of the "scheduled employment" concept. Under the 1948 Act, protection extended only to employments listed in the Schedule; a worker in an unlisted employment had no entitlement at all. That restriction is gone. Protection now extends to every employee in every establishment, irrespective of sector, size or wage ceiling:

All establishments — factories, shops, offices, mines, plantations, service providers and unorganised sector units alike.

Employees at every level, including supervisory, managerial and administrative staff, subject to the Section 2 definitions.

Full-time, part-time, temporary, casual, piece-rated, daily-rated and contract employees, wherever a "hire or reward" relationship exists. The wage-ceiling exclusions under the Payment of Wages Act, 1936 no longer apply; apprentices under the Apprentices Act, 1961 remain outside the definition of "worker".

Section 60 renders void any agreement by which an employee relinquishes the right to minimum wages. An employee cannot validly consent to sub-minimum pay; a signed acceptance is no defence.
Floor Wage and Minimum Wage
The Code creates a two-tier structure. Under Section 9 the Central Government fixes a national floor wage after consulting the Central Advisory Board, and may fix different floor wages for different areas. The floor wage is a statutory basement, not the wage payable to a worker: no appropriate Government may fix rates below it, and existing higher rates cannot be reduced. Above that floor sit the rates actually notified — these are what an employer must apply. As at the date of writing no floor wage figure has been notified, so State schedules and their dearness allowance revisions determine operative rates.
Fixation, Revision and the VDA Cycle
Rates are fixed by defined criteria rather than administrative discretion: the skill level of the employee — unskilled, semi-skilled, skilled and highly skilled — the arduousness of the work, and the geographical class of the workplace, categorised as metropolitan, non-metropolitan or rural. Rates may be hourly, daily, monthly or piece-rated. The Rules prescribe the conversion arithmetic that has historically caused disputes:

Hourly rate = daily rate divided by 8; monthly rate = daily rate multiplied by 26.

In rounding, a fraction of one-half or more is rounded up; a fraction below one-half is ignored.

Under Section 8, rates must be reviewed and revised at intervals not exceeding five years. Separately, the variable dearness allowance is revised twice yearly — before 1 April and 1 October — by reference to the average Consumer Price Index for Industrial Workers published by the Labour Bureau. These dates should be permanently calendared: a lapsed VDA revision is the commonest cause of inadvertent short payment.
The Definition of "Wages" and the 50 Per Cent Rule
Section 2(y) provides a uniform definition across the Code: broadly basic pay, dearness allowance and retaining allowance, with components such as house rent allowance, conveyance allowance, statutory bonus, overtime and gratuity excluded. Critically, where the excluded components exceed one-half of total remuneration, the excess is deemed to form part of wages.
The implication extends beyond minimum wage compliance. Because the same definition anchors provident fund, gratuity and bonus computation, an establishment running a low-basic, allowance-heavy structure may find part of its special allowance statutorily added back, increasing contribution liability. Restructuring salary breakups so that wages are at least fifty per cent of total remuneration is, for most employers, the first substantive step under the new regime.
Working Hours, Overtime and Weekly Rest
A normal working day is eight hours where the wage period is daily; for weekly or monthly wage periods, weekly hours must not exceed forty-eight. Every employee is entitled to one rest day each week, ordinarily Sunday; another day may be designated on prior notice. No employee may work more than ten consecutive days without a rest day — a provision materially affecting rosters in hospitality, logistics and manufacturing. Where an employee works on a rest day, overtime must be paid and a substituted rest day granted.
Under Section 14, work beyond the normal working day attracts overtime at not less than twice the normal rate. For night shifts extending past midnight, the rest day means twenty-four consecutive hours from the end of the shift, and work after midnight is reckoned against the preceding day.
Payment of Wages and Deductions
The wage period must be fixed as daily, weekly, fortnightly or monthly, with monthly wages paid before the seventh day of the succeeding month. On termination by the employer, wages are payable within two working days. Payment may be in currency, by cheque or by bank credit, and the appropriate Government may notify establishments that must pay only electronically.
Section 18 exhaustively lists permissible deductions — fines, absence from duty, damage or loss, house accommodation, recovery of advances, income tax and provident fund among them. Total deductions in a wage period may not exceed fifty per cent of wages, and fines carry their own safeguards including a show-cause opportunity and a three per cent ceiling. Any deduction outside this list is unlawful, however characterised.
Registers, Forms and Records
Section 50 requires every employer to maintain prescribed registers, display notices and issue wage slips. The Rules replace the earlier multiplicity of registers with a consolidated set of forms, all of which may be maintained electronically.

Form

Purpose

Key Requirement

Form I

Employee Register

Name, designation, skill category, date of joining, wage rate, bank and identification details of every employee.

Form IV

The core payroll register: wages payable, overtime, advances granted and recovered, fines and all deductions, per wage period.

Form V

Wage Slip

Issued to every employee, electronically or physically, on or before the date of payment.

Form IX

Attendance Register-cum-Muster Roll

Daily attendance, hours worked, overtime hours and rest days availed.

Form II

Application for Claims

Filed under Section 45 by an employee, group of employees or registered trade union; one application may cover a group for the same wage period.

Form VIII

Notice to Employer

Served by the claims authority electronically or by speed post, requiring appearance with documents and witnesses.

Three points deserve emphasis. Registers must be preserved for five years from the last entry — a register discarded at financial year end is itself a contravention. Electronic maintenance is expressly permitted and is now the intended norm, provided records are complete, retrievable and producible on inspection. And the employer must display a notice showing wage rates, the wage period, the date of payment and the Inspector-cum-Facilitator’s name and address, which the Rules allow through a designated portal or mobile application.
Contractor Arrangements
Where work is done through a contractor, the contractor is primarily responsible for wages; if it fails to pay, the principal employer must pay and may recover the amount by deduction or as a debt. Establishments engaging contract labour should obtain monthly evidence of the contractor’s wage payment — registers, bank proof and wage slips — before releasing invoices, rather than relying on a contractual indemnity.
Enforcement, Claims and Penalties
Section 51 replaces the traditional Inspector with an Inspector-cum-Facilitator, whose mandate includes advising on compliance alongside inspection; the appropriate Government may frame a web-based inspection scheme. Under Section 45, an employee, group of employees, registered trade union or the Inspector-cum-Facilitator may file a claim before the notified authority. The limitation period is now three years, up from the six months to two years available earlier. The authority is to decide within three months; appeal lies within ninety days; amounts determined are recoverable as arrears of land revenue. Under Section 59 the burden of proof rests on the employer, which makes the quality of the Form IV and Form IX records the practical determinant of any dispute.
Penalties under Section 54 are graded. Paying less than the amount due attracts a fine extending to fifty thousand rupees; repetition within five years may attract imprisonment up to three months, a fine up to one lakh rupees, or both. Other contraventions attract lesser fines, with a further reduced penalty for failure to maintain records. Significantly, before prosecuting record-keeping and similar contraventions the Inspector-cum-Facilitator must first issue a written direction allowing compliance within a stated period; compliance averts prosecution. That opportunity is unavailable where the same violation recurs within five years. Section 56 permits compounding of offences not punishable with imprisonment, on payment of fifty per cent of the maximum fine.
Practical Compliance Checklist

Identify the appropriate Government for each establishment and map the applicable wage notification by skill category and area class.

Test every salary structure against Section 2(y) and confirm wages are at least fifty per cent of total remuneration.

Verify that no employee — including part-time, casual and contract workers — is paid below the notified minimum.

Calendar the two annual VDA revision dates and apply revised rates from the effective date, with arrears where notified retrospectively.

Migrate registers to Form I, Form IV and Form IX, and configure payroll to issue Form V wage slips on or before the payment date.

Audit rosters against the eight-hour day, forty-eight-hour week, weekly rest and ten-consecutive-day rules; confirm overtime at twice the normal rate.

Confirm total deductions do not exceed fifty per cent of wages and that each falls within the Section 18 list.

Display the statutory wage notice, physically or on a designated portal, and retain evidence of display.

Institute a monthly contractor compliance check and a five-year register retention protocol measured from the last entry.

Conclusion
The move from the Minimum Wages Act, 1948 to the Code on Wages, 2019 has widened the protective net while simplifying the compliance apparatus. Universal coverage, a floor wage, a uniform wages definition and a consolidated register regime together represent the most substantial restructuring of Indian wage law since Independence. Exposure has shifted away from whether an employment was scheduled and towards the correctness of the salary structure, the discipline of the VDA cycle and the integrity of prescribed records. 
With the burden of proof on the employer and a three-year limitation period, contemporaneous record-keeping is the primary defence. Employers should monitor developments closely: several operational details are expected through executive orders and State-specific rules rather than the Central Rules, and the floor wage remains to be notified.

For over seven decades minimum wages in India were governed by the Minimum Wages Act, 1948. That position has now changed fundamentally. The Code on Wages, 2019 (Act No. 29 of 2019) has repealed and subsumed four central enactments — the Payment of Wages Act, 1936, the Minimum Wages Act, 1948, the Payment of Bonus Act, 1965 and the Equal Remuneration Act, 1976 — with its substantive provisions in force from 21 November 2025. The Code on Wages (Central) Rules, 2026 followed on 8 May 2026, superseding seventeen legacy rule sets including the Minimum Wages (Central) Rules, 1950.

This is not a cosmetic renumbering exercise. Coverage is now universal, the definition of "wages" has been rewritten in a way that directly affects provident fund and gratuity liability, and the record-keeping architecture has been replaced with a smaller, digital-first set of prescribed forms.

The Statutory Framework

The obligation flows from Chapter II. Section 5 prohibits payment below the minimum rate notified by the appropriate Government; Section 6 governs fixation, Section 8 revision, and Section 9 introduces the national floor wage.

Identifying the "appropriate Government" correctly is essential, as it determines which rules and wage notifications apply. For railways, mines, oilfields, major ports, air transport, telecommunications, banking and insurance, central public sector undertakings and establishments under Central Government authority, the Central Rules, 2026 apply. For all other establishments — the overwhelming majority of employers — the State Government governs, and existing State wage and dearness allowance notifications continue until expressly superseded.

Applicability — Who Is Covered

The most consequential change is the removal of the "scheduled employment" concept. Under the 1948 Act, protection extended only to employments listed in the Schedule; a worker in an unlisted employment had no entitlement at all. That restriction is gone. Protection now extends to every employee in every establishment, irrespective of sector, size or wage ceiling:

All establishments — factories, shops, offices, mines, plantations, service providers and unorganised sector units alike.
Employees at every level, including supervisory, managerial and administrative staff, subject to the Section 2 definitions.
Full-time, part-time, temporary, casual, piece-rated, daily-rated and contract employees, wherever a "hire or reward" relationship exists. The wage-ceiling exclusions under the Payment of Wages Act, 1936 no longer apply; apprentices under the Apprentices Act, 1961 remain outside the definition of "worker".

Section 60 renders void any agreement by which an employee relinquishes the right to minimum wages. An employee cannot validly consent to sub-minimum pay; a signed acceptance is no defence.

Floor Wage and Minimum Wage

The Code creates a two-tier structure. Under Section 9 the Central Government fixes a national floor wage after consulting the Central Advisory Board, and may fix different floor wages for different areas. The floor wage is a statutory basement, not the wage payable to a worker: no appropriate Government may fix rates below it, and existing higher rates cannot be reduced. Above that floor sit the rates actually notified — these are what an employer must apply. As at the date of writing no floor wage figure has been notified, so State schedules and their dearness allowance revisions determine operative rates.

Fixation, Revision and the VDA Cycle

Rates are fixed by defined criteria rather than administrative discretion: the skill level of the employee — unskilled, semi-skilled, skilled and highly skilled — the arduousness of the work, and the geographical class of the workplace, categorised as metropolitan, non-metropolitan or rural. Rates may be hourly, daily, monthly or piece-rated. The Rules prescribe the conversion arithmetic that has historically caused disputes:

Hourly rate = daily rate divided by 8; monthly rate = daily rate multiplied by 26.
In rounding, a fraction of one-half or more is rounded up; a fraction below one-half is ignored.

The Definition of "Wages" and the 50 Per Cent Rule

Section 2(y) provides a uniform definition across the Code: broadly basic pay, dearness allowance and retaining allowance, with components such as house rent allowance, conveyance allowance, statutory bonus, overtime and gratuity excluded. Critically, where the excluded components exceed one-half of total remuneration, the excess is deemed to form part of wages.

The implication extends beyond minimum wage compliance. Because the same definition anchors provident fund, gratuity and bonus computation, an establishment running a low-basic, allowance-heavy structure may find part of its special allowance statutorily added back, increasing contribution liability. Restructuring salary breakups so that wages are at least fifty per cent of total remuneration is, for most employers, the first substantive step under the new regime.

Working Hours, Overtime and Weekly Rest

A normal working day is eight hours where the wage period is daily; for weekly or monthly wage periods, weekly hours must not exceed forty-eight. Every employee is entitled to one rest day each week, ordinarily Sunday; another day may be designated on prior notice. No employee may work more than ten consecutive days without a rest day — a provision materially affecting rosters in hospitality, logistics and manufacturing. Where an employee works on a rest day, overtime must be paid and a substituted rest day granted.

Under Section 14, work beyond the normal working day attracts overtime at not less than twice the normal rate. For night shifts extending past midnight, the rest day means twenty-four consecutive hours from the end of the shift, and work after midnight is reckoned against the preceding day.

Payment of Wages and Deductions

The wage period must be fixed as daily, weekly, fortnightly or monthly, with monthly wages paid before the seventh day of the succeeding month. On termination by the employer, wages are payable within two working days. Payment may be in currency, by cheque or by bank credit, and the appropriate Government may notify establishments that must pay only electronically.

Section 18 exhaustively lists permissible deductions — fines, absence from duty, damage or loss, house accommodation, recovery of advances, income tax and provident fund among them. Total deductions in a wage period may not exceed fifty per cent of wages, and fines carry their own safeguards including a show-cause opportunity and a three per cent ceiling. Any deduction outside this list is unlawful, however characterised.

Registers, Forms and Records

Section 50 requires every employer to maintain prescribed registers, display notices and issue wage slips. The Rules replace the earlier multiplicity of registers with a consolidated set of forms, all of which may be maintained electronically.

Form	Purpose	Key Requirement
Form I	Employee Register	Name, designation, skill category, date of joining, wage rate, bank and identification details of every employee.
Form IV	Register of Wages, Overtime, Advances, Fines and Deductions	The core payroll register: wages payable, overtime, advances granted and recovered, fines and all deductions, per wage period.
Form V	Wage Slip	Issued to every employee, electronically or physically, on or before the date of payment.
Form IX	Attendance Register-cum-Muster Roll	Daily attendance, hours worked, overtime hours and rest days availed.
Form II	Application for Claims	Filed under Section 45 by an employee, group of employees or registered trade union; one application may cover a group for the same wage period.
Form VIII	Notice to Employer	Served by the claims authority electronically or by speed post, requiring appearance with documents and witnesses.

Contractor Arrangements

Where work is done through a contractor, the contractor is primarily responsible for wages; if it fails to pay, the principal employer must pay and may recover the amount by deduction or as a debt. Establishments engaging contract labour should obtain monthly evidence of the contractor’s wage payment — registers, bank proof and wage slips — before releasing invoices, rather than relying on a contractual indemnity.

Enforcement, Claims and Penalties

Section 51 replaces the traditional Inspector with an Inspector-cum-Facilitator, whose mandate includes advising on compliance alongside inspection; the appropriate Government may frame a web-based inspection scheme. Under Section 45, an employee, group of employees, registered trade union or the Inspector-cum-Facilitator may file a claim before the notified authority. The limitation period is now three years, up from the six months to two years available earlier. The authority is to decide within three months; appeal lies within ninety days; amounts determined are recoverable as arrears of land revenue. Under Section 59 the burden of proof rests on the employer, which makes the quality of the Form IV and Form IX records the practical determinant of any dispute.

Penalties under Section 54 are graded. Paying less than the amount due attracts a fine extending to fifty thousand rupees; repetition within five years may attract imprisonment up to three months, a fine up to one lakh rupees, or both. Other contraventions attract lesser fines, with a further reduced penalty for failure to maintain records. Significantly, before prosecuting record-keeping and similar contraventions the Inspector-cum-Facilitator must first issue a written direction allowing compliance within a stated period; compliance averts prosecution. That opportunity is unavailable where the same violation recurs within five years. Section 56 permits compounding of offences not punishable with imprisonment, on payment of fifty per cent of the maximum fine.

Practical Compliance Checklist

Identify the appropriate Government for each establishment and map the applicable wage notification by skill category and area class.
Test every salary structure against Section 2(y) and confirm wages are at least fifty per cent of total remuneration.
Verify that no employee — including part-time, casual and contract workers — is paid below the notified minimum.
Calendar the two annual VDA revision dates and apply revised rates from the effective date, with arrears where notified retrospectively.
Migrate registers to Form I, Form IV and Form IX, and configure payroll to issue Form V wage slips on or before the payment date.
Audit rosters against the eight-hour day, forty-eight-hour week, weekly rest and ten-consecutive-day rules; confirm overtime at twice the normal rate.
Confirm total deductions do not exceed fifty per cent of wages and that each falls within the Section 18 list.
Display the statutory wage notice, physically or on a designated portal, and retain evidence of display.
Institute a monthly contractor compliance check and a five-year register retention protocol measured from the last entry.

Conclusion

The move from the Minimum Wages Act, 1948 to the Code on Wages, 2019 has widened the protective net while simplifying the compliance apparatus. Universal coverage, a floor wage, a uniform wages definition and a consolidated register regime together represent the most substantial restructuring of Indian wage law since Independence. Exposure has shifted away from whether an employment was scheduled and towards the correctness of the salary structure, the discipline of the VDA cycle and the integrity of prescribed records.

With the burden of proof on the employer and a three-year limitation period, contemporaneous record-keeping is the primary defence. Employers should monitor developments closely: several operational details are expected through executive orders and State-specific rules rather than the Central Rules, and the floor wage remains to be notified.