The Code on Wages, 2019 — A Comprehensive Overview and Its Modern-Day Relevance

India’s wage-related laws historically evolved in a fragmented manner. Different statutes governed wages, bonus, and remuneration — each with its own definitions, applicability rules, thresholds, and compliance requirements. This patchwork approach created inconsistencies across industries and regions, resulting in confusion for employers and limited protection for workers.

The Code on Wages, 2019 was introduced to solve this problem. It consolidates four major wage-related laws into a single, uniform framework:

·       Payment of Wages Act, 1936

·       Minimum Wages Act, 1948

·       Payment of Bonus Act, 1965

·       Equal Remuneration Act, 1976

By merging these laws and redefining key concepts such as “wages,” minimum wage rules, bonus eligibility, and non-discrimination principles, the Code aims to bring clarity, consistency, and fairness to wage regulations across India.

With the implementation of the new labour codes from 21 November 2025, the Code on Wages is now one of the central statutes governing wage and bonus practices in the country.

In essence, the Code is designed to simplify compliance, enhance worker protection, and ensure uniformity across sectors and states.

Core Provisions of the Code and Their Practical Impact

1. Universal Minimum Wage & Introduction of a National Floor Wage

Earlier, minimum wages applied only to “scheduled employments.” The Code expands this coverage significantly:

Every employee, across both organised and unorganised sectors, now has a statutory right to a minimum wage.

A National Floor Wage serves as the baseline. No state can set its minimum wage below this benchmark.

States may still fix higher minimum wages based on:

·       Skill level

·       Regional cost of living

·       Nature of work

·       Hazardous conditions

Impact

 This ensures wage protection even for workers who were previously excluded — such as daily wagers, informal workers, household helpers, and those in micro-enterprises.

It reduces exploitation and ensures a more equitable wage structure nationwide.

 2. Standardised Definition of “Wages”

Prior to the Code, different definitions across different laws caused ambiguity.

The Code introduces one uniform definition of wages, where:

Included in Wages:

·       Basic Pay

·       Dearness Allowance

·       Retaining Allowance

Excluded:

·       Statutory bonuses

·       HRA, conveyance, and other allowances

·       Employer PF/ESI contributions

·       Overtime payments

·       Commissions

50% Rule

If exclusions exceed 50% of total remuneration, the excess must be added back to wages.

Impact

Prevents artificial salary structuring to reduce statutory obligations.

Ensures fairer PF, bonus, and gratuity calculations.

Introduces transparency and uniformity across industries.

3. Timely Payment of Wages & Mandatory Wage Slips

The Code standardises modes and timelines for wage payments:

Wages may be paid via bank transfer, cheque, cash, or electronic method.

Employers must fix a wage period — daily, weekly, fortnightly, or monthly.

Final settlement (on termination/resignation) must occur within two working days.

Wage slips (digital or physical) are mandatory.

Impact

Workers gain transparency and documented proof of wages, useful for loans, housing, dispute resolution, and social-security benefits.

It also helps reduce wage delays, a common issue in informal employment.

 

4. Overtime Pay & Bonus Entitlement

The Code continues bonus provisions while ensuring uniformity:

Employees earning within the notified wage ceiling are eligible.

A minimum of 8.33% bonus per year, up to a statutory limit of 20%.

Overtime must be compensated at twice the normal wage rate.

Impact

This strengthens financial protection for workers and ensures fair compensation for additional work hours.

5. Equal Remuneration & Non-Discrimination

The Code prohibits discrimination in:

Wages,

Recruitment,

Working conditions,

on the basis of gender, including transgender persons.

Impact

Universalizes gender-equity principles across all establishments and industries.

Reduces wage discrimination and brings legal clarity for modern and diverse workplaces.

Broader Significance of the Code

For Workers

·       Assured minimum wages

·       Protection through wage slips and timely payments

·       Clear bonus eligibility

·       Transparent pay structures

·       Gender-equitable wages

For Employers

·       Single consolidated law instead of multiple overlapping statutes

·       Standard definitions, fewer ambiguities

·       Reduced documentation and compliance burden

·       Greater predictability in managing payroll and labour costs

For the Economy

·       Formalisation of the workforce

·       Reduced wage disparity

·       Stable income levels → improved consumption

·       Better employer–employee relationships

The government also views the Code as a critical step in modernising India's labour system to meet global and technological changes — including gig work, remote jobs, and flexible employment.

Challenges & Real-World Considerations

Despite its advantages, effectiveness depends heavily on:

1. State-Level Implementation

·       Minimum wages will still vary across states based on local conditions.

·       Ensuring coordination between the national floor wage and state wages is essential.

2. Enforcement for Informal Workers

·       Daily wagers, domestic workers, and migrant labourers may still face challenges in ensuring:

·       Wage slips

·       Overtime payments

·       Bonus eligibility

·       Effective monitoring and grievance-redress mechanisms are crucial.

3. Awareness & Education

Workers must know:

Their right to a minimum wage

The meaning of wage slips

Overtime and bonus entitlements

Similarly, small employers may need guidance on wage-setting and payroll restructuring.

4. Impact on Employer Cost Structures

Since “wages” now have a stricter 50% rule, employers who previously used allowance-heavy salary structures will need to redesign payroll — potentially increasing basic wage outflows.

Why the Code on Wages Matters in 2025

As India transitions into a more dynamic labour market — featuring gig work, start-ups, flexible roles, and widespread migration — the Code provides:

·       A stable legal foundation

·       Uniform wage practices

·       Increased worker protection

·       Simplified employer compliance

·       It strengthens transparency, promotes equitable growth, and helps create a modern and fair labour environment.

Key Takeaways

For Workers

·       Minimum wage protection is now universal.

·       Wage slips and timely payments are legal rights.

·       Bonus and overtime rules apply across sectors.

For Employers

·       Review wage structures to comply with the 50% wage rule.

·       Issue mandatory wage slips.

·       Ensure minimum wages and payment timelines are followed.

·       For Policymakers & Civil Society

·      Implementation, awareness, and enforcement will determine the Code’s real impact.

·       Regular revision of minimum/floor wages is key for inflation-adjusted incomes.

For Families & Society

Regular and fair wages improve financial stability and household income security, especially for informal workers.

Conclusion

The Code on Wages, 2019 marks a major milestone in India’s labour-law reforms. By unifying wage laws, redefining wages, expanding protections, and ensuring transparency, it offers a modern framework that benefits both workers and employers.

As implementation gains momentum in 2025 and beyond, the Code’s success will depend on:

·       Effective awareness

·       Compliance by employers

·       Strong enforcement by authorities

With these elements in place, the Code has the potential to significantly enhance wage fairness, promote economic inclusivity, and support India’s evolving labour ecosystem.