Minimum Wages Act, 1948 and the Code on Wages, 2019: What Replaced It and What Employers Must Do in 2026

Many people still search for the Minimum Wages Act, 1948 — to check a rate, settle a pay dispute or prepare for an inspection. That Act no longer exists. Since 21 November 2025, minimum wages, timely payment, deductions, bonus and equal pay all fall under one law: the Code on Wages, 2019. This guide is for business owners, HR and payroll teams. It explains what the old Act did, which four laws the Code replaced, what carried over, the new definition of "wages" and its 50% rule, payment deadlines, bonus, where the central and state rules stand in October 2026, the penalties, and a checklist you can work through this month.

Quick answer

The Minimum Wages Act, 1948 was repealed on 21 November 2025 when the Code on Wages, 2019 came into force. The Code also replaced the Payment of Wages Act, 1936, the Payment of Bonus Act, 1965 and the Equal Remuneration Act, 1976. Minimum wage rates notified under the old Act stay valid until each government replaces them, so the rate your state last notified still applies.

• Minimum wages now cover every employee, not only listed 'scheduled employments'

• 'Wages' = basic + DA + retaining allowance; excluded allowances above 50% of total remuneration are added back

• Monthly pay due before the end of the 7th day of the next month; full and final within 2 working days

• National floor wage: provided for in section 9 but not notified as of October 2026

• Underpayment: fine up to ₹50,000, plus the worker's claim and compensation of up to 10 times the claim

What the Minimum Wages Act, 1948 did

The Minimum Wages Act was one of independent India's first labour laws. It let the central and state governments fix minimum rates of wages, but only for "scheduled employments" — the trades and industries listed in a schedule to the Act and added to it by each state over the years. A shop assistant, a hotel cook and a security guard were covered only if their employment appeared in the state's schedule. Each state ended up with dozens of separate rate tables, sometimes with different rates for the same job in different industries.

The Act also set the method most states still use. Governments fixed a basic rate and added a variable dearness allowance (VDA) linked to the consumer price index, revised once or twice a year. It required a normal working day, a weekly rest day and overtime at double rates, and let workers claim unpaid amounts before an authority. Fines were low by today's standards.

Three other laws ran alongside it. The Payment of Wages Act, 1936 set deadlines and allowed deductions, but applied only to employees earning up to a wage ceiling (last fixed at ₹24,000 a month). The Payment of Bonus Act, 1965 required an annual bonus for employees earning up to ₹21,000 a month in establishments with 20 or more people. The Equal Remuneration Act, 1976 required equal pay for men and women doing the same or similar work.

How the Code on Wages replaced four Acts

Parliament passed the Code on Wages in August 2019, but it sat unused while rules were drafted. The government brought it into force, together with the other three labour codes, on 21 November 2025. Section 69(1) repealed all four Acts on that date.

What carried over. Section 69(2) is the savings clause. Anything done under the repealed Acts — including notifications, appointments, orders and amounts of wages fixed for any purpose — is treated as done under the matching provision of the Code, and stays in force to the extent it isn't contrary to the Code, until it is replaced. That is why a state's old minimum wage notification, or its latest VDA order, still binds employers until the state issues fresh rates under the Code.

What changed in practice. States have started re-fixing rates under section 8 of the Code. Haryana did so from 1 April 2026 and Punjab from 1 May 2026, each replacing scheduled-employment tables with four skill categories that apply to all employments. See our guides to minimum wages in Punjab and minimum wages in Haryana. For railways, banks, mines, ports and central PSUs, the central government sets the rates — see central minimum wages.

Minimum wages under the Code

Section 5 is short: no employer may pay any employee less than the minimum rate of wages notified by the appropriate government. "Employee" is broad. It covers anyone employed on wages to do skilled, semi-skilled or unskilled, manual, operational, supervisory, managerial, administrative, technical or clerical work. The old idea of a schedule of covered employments has gone.

How rates are fixed. Section 6 lets governments fix rates for time work or piece work (piece-rated workers must still be assured a time-based minimum), by the hour, day or month. They must primarily take into account skill — unskilled, semi-skilled, skilled or highly skilled — or geographical area, or both, and may add higher rates for arduous, hazardous or underground work. Section 7 allows a basic rate plus a cost-of-living allowance, or an all-inclusive rate. Section 8 sets the procedure: an advisory committee, or a published proposal with at least two months for objections, then a notification. Rates should be reviewed at intervals of not more than 5 years.

The central rules. The Code on Wages (Central) Rules, 2026, notified on 8 May 2026 (G.S.R. 343(E)), apply where the central government is the appropriate government. They fix minimum wages on a daily basis, derive the hourly rate by dividing by 8 and the monthly rate by multiplying by 26, and require the cost-of-living allowance to be computed before 1 April and before 1 October each year from the consumer price index. A July 2026 corrigendum renamed them the Wages (Central) Rules, 2026.

The floor wage. Section 9 is the biggest new idea. The central government is to fix a floor wage, possibly different for different regions, and no state may then set its minimum wage below it. States already paying more cannot cut their rates. Rule 10 of the central rules says the floor will reflect minimum living standards, including food, clothing and housing. As of October 2026, no floor wage had been notified. The National Floor Level Minimum Wage of ₹176 a day (advisory, 2017) that you may see quoted dates from 2017 and was only advisory.

Hours and overtime. Section 13 lets governments fix a normal working day and a weekly rest day. The central rules set 8 hours a day for daily-rated workers and a 48-hour week for others. Section 14 requires overtime at twice the normal rate of wages. Under the central rules, overtime of 15–30 minutes counts as half an hour and anything over 30 minutes as an hour, and no worker may do more than 144 hours of overtime in a quarter.

Code on Wages — key numbers (2026)

twice the normal rate of wages

Overtime rate

Section 14

5 years

Maximum gap between minimum wage reviews

Section 8(4)

50% of total remuneration

Cap on excluded allowances

Section 2(y)

50% of wages

Cap on deductions in a wage period

Section 18

The new definition of "wages" and the 50% rule

This is the change that reaches every payroll, not just minimum-wage workers. Section 2(y) defines wages as all remuneration expressed in money, including basic pay, dearness allowance and retaining allowance. It then lists items that are not wages, among them:

• statutory bonus that isn't part of the terms of employment;
• the value of housing, light, water and medical attendance;
• the employer's PF and pension contributions;
• conveyance allowance and travel concessions;
• sums for special expenses of the job;
• house rent allowance (HRA);
• remuneration under an award or settlement;
• overtime allowance;
• commission;
• gratuity, retrenchment compensation and retirement benefits.

The twist is the proviso. If the first nine kinds of excluded payment (from bonus to commission) together come to more than 50% of total remuneration, the part above that is treated as wages. In-kind remuneration counts as wages up to 15% of total wages. The same definition, with the same 50% rule, appears in the Code on Social Security as section 2(88), so it drives PF, ESI and gratuity as well.

Note what is not on the excluded list: "special allowance", "flexible allowance", "performance allowance" and similar catch-all components. Those are wages from the first rupee.

In Structure A the employer may have treated only ₹14,000 as "basic" for PF and gratuity. Under the Code, ₹22,000 is wages because special allowance is not excluded. In Structure B the allowances are within the list but exceed half of pay, so ₹8,000 comes back in. For gratuity, which is 15 days' wages per year of service, that is a permanent increase in the liability. Our gratuity guide and PF deduction rules show the knock-on effects.

Paying wages: mode, wage period, deadlines and deductions

Chapter III replaced the Payment of Wages Act and, crucially, dropped its wage ceiling. Every employee is now covered, though the chapter does not apply to government establishments unless the government extends it (section 25).

Mode. Wages may be paid in coins or notes, by cheque, by bank credit or electronically. Governments can require certain industries to pay only by cheque or bank transfer (section 15).

Wage period. You fix it — daily, weekly, fortnightly or monthly — but no wage period may exceed a month (section 16).

Deadlines (section 17).

When wages must be paid under section 17

Daily-rated

At the end of the shift

Weekly

On the last working day of the week, before the weekly holiday

Fortnightly

Before the end of the second day after the fortnight ends

Monthly

before the end of the 7th day of the next month

Exit

Resignation, dismissal, retrenchment or closure — within 2 working days

The two-working-day rule for exits is the one most businesses get wrong. Under the old regime, many firms settled final dues at the next payroll run or after a 30–45 day clearance process. Under the Code, if an employee resigns and their last working day is Friday, their wages are due by the following Tuesday (assuming Saturday and Sunday are holidays). Other benefits, such as gratuity, have their own timelines under the Social Security Code, but unpaid wages and leave encashment owed as wages should go out within the two days.

Deductions. Section 18 allows only listed deductions: fines, absence, damage or loss caused by the employee, housing and amenities the employee has accepted, recovery of advances and loans, income tax, PF and ESI contributions, court orders, and a few others. Total deductions in any wage period cannot exceed 50% of wages. Under the central rules, anything above that cap is carried forward to later wage periods rather than taken at once.

Example. Meena earns ₹16,000 in wages for October. Her deductions are PF ₹1,920, ESI ₹120, a salary-advance instalment of ₹5,000 and canteen charges of ₹1,500 — ₹8,540 in all. That is ₹540 over the ₹8,000 limit, so you deduct ₹8,000 now and carry ₹540 of the advance into November.

Wage slips and records. Section 50 requires registers and wage slips. The central rules prescribe Form V as the wage slip, issued electronically or on paper on or before payment, and three registers: the employee register (Form I), the register of wages, overtime, advances, fines and deductions (Form IV) and the attendance register-cum-muster roll (Form IX). They must be kept for five years after the last entry. State rules use their own forms, so check yours.

Bonus under the Code

Chapter IV carries over the Payment of Bonus Act with few changes. An employee who has worked at least 30 days in an accounting year and whose wages are within the notified limit must get a minimum bonus of 8.33% of wages or ₹100, whichever is higher, whether or not the business made a profit. If there is enough allocable surplus, bonus rises in proportion, up to 20% of wages. Bonus must be credited to the employee's bank account within 8 months of the close of the accounting year. New establishments get the usual five-year relief: in their first five accounting years they pay bonus only for years in which they make a profit.

The Code leaves the wage limits to notification. On 25 August 2026 the Labour Ministry issued S.O. 4710(E) and S.O. 4711(E) for establishments where the central government is the appropriate government. They set eligibility at ₹21,000 a month and the calculation ceiling at ₹7,000 a month or the minimum wage, whichever is higher, with retrospective effect from 21 November 2025. States are expected to issue their own notifications; until they do, the figures fixed under the repealed Bonus Act — the same ₹21,000 and ₹7,000 — are generally treated as continuing under the savings clause. Confirm with your state labour department.

One detail matters for every state. Section 26(2) itself says that where an employee's wages exceed the notified calculation amount, bonus is calculated as if their wage were that amount or the minimum wage, whichever is higher. Because every state minimum wage is now well above ₹7,000, the minimum wage is the real calculation base.

Example. An unskilled worker in Punjab earns ₹14,000 a month. The Punjab unskilled minimum is ₹13,486, which is higher than ₹7,000, so bonus is worked out on ₹13,486 a month, or ₹1,61,832 a year. The minimum bonus at 8.33% is about ₹13,481; the maximum at 20% is about ₹32,366.

Central and state rules: where things stand

A code needs rules before many provisions bite. The picture in October 2026:

• Central sphere: final rules notified on 8 May 2026 (G.S.R. 343(E)), plus the August 2026 bonus notifications.
• States with final rules: examples include Andhra Pradesh (G.O.Rt. No. 124, July 2026) and Uttar Pradesh (notified 12 August 2026).
• States still at draft stage: examples include Punjab (draft published 29 December 2025) and Haryana (draft published 4 May 2026), both of which have nevertheless re-fixed minimum wages under the Code.

Many states sit somewhere between, with some rules final and others pending. Because state rules decide your forms, registers, display requirements and DA cycle, check your state labour department's website and gazette, not just central news.

Penalties under section 54 of the Code on Wages

Offence	First time	Repeat within 5 years
Paying less than is due (e.g. below minimum wage)	up to ₹50,000	up to ₹1 lakh fine and/or 3 months' imprisonment
Any other contravention of the Code or rules	up to ₹20,000	up to ₹40,000 fine and/or 1 month's imprisonment
Not maintaining records properly	up to ₹10,000	—

Paying less than is due (e.g. below minimum wage)

First time

up to ₹50,000

Repeat within 5 years

up to ₹1 lakh fine and/or 3 months' imprisonment

Any other contravention of the Code or rules

First time

up to ₹20,000

Repeat within 5 years

up to ₹40,000 fine and/or 1 month's imprisonment

Not maintaining records properly

First time

up to ₹10,000

Repeat within 5 years

—

Inspections, claims and penalties

Inspectors are now Inspector-cum-Facilitators. Besides inspecting, they are expected to advise employers on compliance. For contraventions other than underpayment, section 54(3) requires them to give you a written direction and a time limit to comply before starting prosecution. If you comply, there is no case. That chance is not available if the same violation recurs within five years.

Claims. A worker, a group of workers or a trade union can file a claim for unpaid wages, bonus or unauthorised deductions within 3 years (section 45). The authority can order payment of the amount plus compensation of up to 10 times the claim. Under the central rules, an employer's appeal is admitted only if the claim amount is deposited.

Compounding. Offences punishable with a fine only can be compounded for 50% of the maximum fine (section 56), before or after prosecution starts. The central rules give 30 days to pay the composition sum. Compounding is not available for a second similar offence within five years.

Company officers. Where a company, firm or LLP commits an offence, the people in charge of its business are also liable unless they show they exercised due diligence (section 55).

Common mistakes employers are making

Treating the Code as "not yet in force". It has been in force since 21 November 2025. The parts that still wait on rules are procedural; the wage definition, minimum wage duty, payment deadlines and penalties apply now.

Keeping a 25–30% basic. Salary structures with basic at a quarter of CTC and the rest in HRA, special allowance and "flexi" pay no longer reduce PF or gratuity. Special allowance is wages, and excluded allowances above 50% are added back.

Delaying full and final settlement. The two-working-day deadline applies to wages on exit. A 45-day clearance policy is a breach.

Paying old VDA tables after a re-fixation. When your state issues new rates under the Code, they replace the old basic-plus-VDA tables entirely. Check the effective date and pay arrears.

Forgetting contract workers. Contractors must pay the minimum wage, and principal employers are responsible if they don't. Ask for wage proof every month.

Code on Wages — employer checklist

0/10

• Confirm your state's latest minimum wage notification and map every job to a category
• Recalculate each employee's 'wages' under section 2(y) — basic, DA, retaining allowance, special allowance, plus any excess over 50%
• Re-run PF, ESI, gratuity and bonus provisions on the new wage figure
• Pay monthly wages before the end of the 7th; set up a two-working-day exit payment process
• Check that deductions never exceed 50% of wages in a period; carry forward the excess
• Issue wage slips (Form V or your state's form) to every employee
• Maintain the employee, wages and attendance registers for five years
• Check equal pay across genders for the same or similar work
• Diarise bonus payment within eight months of the year end
• Track your state's final rules and the national floor wage

Share Print

Official links

• The Code on Wages, 2019 (India Code PDF)Full text, including section 69 repeal and savings
• Ministry of Labour & Employment — Labour CodesCodes, central rules and notifications
• PIB — implementation of the four Labour Codes
• Chief Labour Commissioner (Central) — minimum wagesCentral-sphere rates and VDA orders
• Shram Suvidha PortalRegistration and combined returns

What to do next

Start with the wage definition: list every salary component, mark which ones the Code excludes, and recompute wages for each employee. That single exercise tells you your PF, ESI, gratuity and bonus exposure. Then check your state's minimum wage notification, fix your exit-payment process, and generate compliant wage slips with our salary slip generator. For the social security side, read our guides to PF deduction rules and ESIC rules.

This is general information, not legal or tax advice — confirm on the official source or with a professional.

Frequently asked questions

Is the Minimum Wages Act, 1948 still in force?

No. The Code on Wages, 2019 came into force on 21 November 2025 and section 69 repealed the Minimum Wages Act, 1948 along with the Payment of Wages Act, 1936, the Payment of Bonus Act, 1965 and the Equal Remuneration Act, 1976. Rates and notifications issued under the old Acts continue until they are replaced, to the extent they don't conflict with the Code.

What is the 50% rule in the Code on Wages?

'Wages' means basic pay, dearness allowance and retaining allowance. Listed items such as HRA, conveyance, overtime and commission are excluded, but only up to 50% of total remuneration. If those excluded items exceed half of total pay, the excess is added back to wages. This affects PF, ESI, gratuity and bonus calculations.

Has the national floor wage been fixed under the Code on Wages?

Not as of October 2026. Section 9 lets the central government fix a floor wage below which no state may set its minimum wage, and Rule 10 of the central rules says how. No figure had been notified when we checked. The old National Floor Level Minimum Wage of ₹176 a day (advisory, 2017) was only advisory.

When must wages be paid under the Code on Wages?

Monthly wages must be paid before the end of the 7th day of the next month, weekly wages on the last working day of the week, fortnightly wages within two days of the fortnight ending, and daily wages at the end of the shift. When an employee resigns, is dismissed, retrenched or the unit closes, dues must be paid within 2 working days.

What is the penalty for paying less than minimum wage?

Under section 54, paying an employee less than is due is punishable with a fine of up to ₹50,000. A repeat within five years can mean up to ₹1 lakh fine and/or 3 months' imprisonment. Separately, the worker can claim the shortfall within 3 years and the authority can add compensation of up to 10 times the claim.

Who is eligible for bonus under the Code on Wages?

Employees who have worked at least 30 days in the year and whose wages are within the notified limit. For central-sphere establishments that limit is ₹21,000 a month, notified on 25 August 2026 with effect from 21 November 2025. The minimum bonus is 8.33% of wages or ₹100, whichever is higher, the maximum 20% of wages, payable within 8 months of the close of the accounting year.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 9 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.The Code on Wages, 2019 (No. 29 of 2019) — India Code, Legislative Department · accessed 9 October 2026
2. 2.Government announces implementation of the four Labour Codes (21 Nov 2025) — PIB — Ministry of Labour & Employment · accessed 9 October 2026
3. 3.Government of India notifies final Rules on four Labour Codes (Flash News, 10 May 2026) — KPMG in India · accessed 9 October 2026
4. 4.[Analysis] Wages (Central) Rules 2026 — chapter-wise guide — Taxmann · accessed 9 October 2026
5. 5.Bonus payout under the Code on Wages (Ergo, 4 September 2026) — Khaitan & Co · accessed 9 October 2026
6. 6.MoLE determines ₹21,000 wage ceiling for bonus eligibility — TeamLease RegTech · accessed 9 October 2026
7. 7.Uttar Pradesh Code on Wages Rules, 2026 (final) — SGCMS · accessed 9 October 2026
8. 8.Final Code on Wages (Andhra Pradesh) Rules, 2026 — DCPSOL · accessed 9 October 2026
9. 9.Draft Code on Wages (Punjab) Rules, 2026 — TeamLease RegTech · accessed 9 October 2026