Code on Wages, 2019 is the first of India's four Labour Codes, consolidating and replacing four existing wage-related statutes: the Payment of Wages Act, 1936; the Minimum Wages Act, 1948; the Payment of Bonus Act, 1965; and the Equal Remuneration Act, 1976. Under Indian law, the Code was passed by Parliament and received Presidential assent on August 8, 2019, but as of March 2026, the central rules have not been notified, and the Code is not yet fully operational — the existing four Acts continue to apply.
Legal definition
The Code on Wages, 2019 introduces a unified framework for wages:
Section 2(y): "Wages" means all remuneration whether by way of salaries, allowances or otherwise, expressed in terms of money or capable of being so expressed which would, if the terms of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment.
Key structural changes:
| Feature | Old Law Position | Code on Wages |
|---|---|---|
| Coverage | Varies by Act — factories, scheduled employments, etc. | Universal coverage — all employees in all establishments |
| Definition of wages | Different definitions in each Act | Single uniform definition across all provisions |
| Floor wage | No concept | Section 9: Central Government to fix floor wage (no state can fix minimum wage below this) |
| Minimum wage | Only for scheduled employments | For all employments — Section 6 |
| Equal remuneration | Separate Act for gender | Integrated — Section 3 prohibits gender discrimination in wages |
| Payment timelines | Payment of Wages Act — limited coverage | Universal: daily wages by end of day; weekly by last working day; fortnightly by day after last day; monthly by 7th of following month |
| Bonus eligibility | Salary up to Rs 21,000 | "Wages" as defined — basis may change based on rules |
Section 9 — Floor Wage:
The Central Government shall, before fixing the floor wage, obtain the advice of the Central Advisory Board, having regard to the minimum living standards of a worker. The minimum rate of wages fixed by the appropriate Government shall not be less than the floor wage.
Penalties: The Code prescribes graded penalties — a first offence attracts a fine (up to Rs 50,000 for non-payment of minimum wages), while repeated offences can lead to imprisonment of 1-3 months or a higher fine.
How courts have interpreted this term
Bijay Cotton Mills Ltd. v. State of Ajmer [(1955) 1 SCR 752]
The Supreme Court, interpreting the Minimum Wages Act (now subsumed under the Code on Wages), held that fixing minimum wages is not violative of the fundamental right to carry on business under Article 19(1)(g). The Court established that the obligation to pay minimum wages is a basic requirement of civilised society, and an employer who cannot pay the minimum wage has no right to engage labour. This foundational principle underpins the Code's expanded minimum wage coverage.
Airfreight Ltd. v. State of Karnataka [(1999) 6 SCC 567]
The Supreme Court held that the concept of "wages" must be interpreted broadly to include all remuneration payable for the services rendered, excluding only those components specifically excluded by the statute. The Court noted that employers cannot fragment compensation into multiple allowances to reduce the statutory wage base. This interpretive approach informs the Code's inclusive definition of wages.
Raptakos, Brett & Co. Ltd. v. Their Workmen [(1992) 1 SCC 290]
The Supreme Court, in the context of the Payment of Bonus Act, held that bonus is a deferred wage and not a gratuity or gift from the employer. The Court established that the right to bonus crystallises once the statutory conditions are met, and the employer cannot unilaterally withhold it. This principle is preserved in Chapter IV of the Code on Wages.
Why this matters
The Code on Wages represents the most significant structural reform of Indian wage laws since independence. By consolidating four disparate statutes into a single code, it aims to simplify compliance for employers and extend wage protections to all workers — including those in the informal and unorganised sectors who were previously outside the scope of the Minimum Wages Act (which applied only to "scheduled employments").
The floor wage concept under Section 9 is potentially transformative. Once notified, no state government can fix minimum wages below the central floor wage, creating a national minimum for the first time. This addresses the current disparity where minimum wages vary dramatically — from under Rs 200 per day in some states to over Rs 700 in others — creating competitive distortions and welfare gaps.
However, practitioners must note the critical caveat: as of March 2026, the Code on Wages has not been fully operationalised. The central government has not notified the effective date or the final rules under the Code. Until notification, the existing four Acts continue to govern wage matters. The delay is attributed to the complexity of the "wages" definition — the Code defines wages as requiring that basic pay constitute at least 50% of total remuneration, which would require significant restructuring of compensation packages across industries if implemented.
Related terms
Subsumed legislation:
Sibling codes:
Frequently asked questions
Is the Code on Wages in force as of 2026?
No. Although the Code on Wages, 2019 received Presidential assent on August 8, 2019, the central government has not yet notified the date on which it comes into force, nor has it finalised the central rules. Until the effective date is notified, the four existing Acts — Payment of Wages Act, Minimum Wages Act, Payment of Bonus Act, and Equal Remuneration Act — continue to apply. Some states have published draft rules, but none have operationalised the Code.
What is the difference between floor wage and minimum wage?
The floor wage is the absolute national minimum set by the Central Government under Section 9. No state government can fix a minimum wage below the floor wage. The minimum wage is the rate fixed by the appropriate government (central or state) for specific categories of workers/employment in its jurisdiction — it must be at or above the floor wage but can be higher based on skill level, region, and sector.
How does the Code on Wages change the definition of wages?
The Code defines wages to include all remuneration (salaries, allowances, etc.) but excludes specific components such as statutory bonus, HRA, conveyance, overtime, gratuity, retrenchment compensation, and commission. Critically, the excluded components cannot collectively exceed 50% of total remuneration — if they do, the excess is treated as wages. This effectively ensures that basic wages constitute at least half of total pay.
This entry is part of the Veritect Indian Legal Glossary, a comprehensive reference of Indian legal terminology grounded in statutory text and judicial interpretation.
Last updated: 2026-03-27. Veritect provides this content for informational purposes and does not constitute legal advice.