India: Union Cabinet Passes The Code On Wages, 2017

Last Updated: 19 July 2019
Article by Avik Biswas, Manishii Pathak, Ashi Bhat and Utkarsh Singh


The Union Cabinet passed the Code on Wages, 2017 (the "Code") on July 3, 2019. The Code intends to amalgamate, simplify and rationalize the provisions of the Payment of Wages Act, 1936, the Minimum Wages Act, 1948, the Payment of Bonus Act, 1965 and the Equal Remuneration Act, 1976. The amalgamation is expected to execute the intent of the four statutes and remove multiplicity of definitions and authorities.


We have compared the key provisions of the Code with the existing laws, in the table below.

S. No. Subject Matter Existing Law(s) Code
a) Applicability Minimum Wages Act, 1948: Applicable to employees engaged in scheduled establishments. Minimum Wages: The Code stipulates that the minimum wages must be paid to all employees by an employer.1
Payment of Wages Act, 1936: Applicable to employees whose wages do not exceed INR 24,000 (approximately USD 350) per month.2 Payment of Wages: The Code will be applicable to all employees.3

Payment of Bonus Act, 1965: Applicable only to establishments with 20 or more persons and for employees whose salary or wages do not exceed INR 21,000 (approximately USD 305) per month. Payment of Bonus: Applicable to all employees whose salary is below the notified threshold and who have worked for at least 30 days in an accounting year.4 There is no minimum threshold requirement anymore.
b) Definition of 'Wages', 'Salary' and 'Remuneration' Each of the four labor legislations5, which are now amalgamated into the Code, had a different definition for the terms 'wages', 'salary' and 'remuneration'.

The Code has now unified the definition of the term 'wages'. The definition now includes all remuneration expressed in terms of money or capable of being so expressed, which would, if the terms of employment are fulfilled, be paid to an employee. The definition of the term 'wages' also carves out a different meaning for itself in relation to the provisions under Chapter IV (Payment of Bonus) of the Code.6
c) Discrimination on the grounds of gender The Equal Remuneration Act prohibits gender discrimination in wage payment, recruitment, training, transfers and promotions. The Code prohibits discrimination on ground of gender only in matters pertaining to wages.7 There is no provision relating to gender discrimination in terms of training, transfers, promotions etc.
d) Power of Central Government to fix national minimum wage8 - The Central Government can set a national minimum wage for different states and geographical areas.9

The minimum rates of wages set by State Governments cannot be less than the national minimum wage set by the Central Government. If the existing minimum rates of wages set by State Governments are higher than the national minimum wage, the States cannot reduce the minimum rate of wages.
e) Wages for overtime work Every employee who works in excess of the limit of hours and whose minimum rate of wages is fixed, shall be entitled to wages at the rate decided by the Central Government or the State Governments. Every employee whose minimum rate of wages has been fixed under the Code, and who works overtime10, is entitled to an overtime rate which cannot be less than at least twice the normal rate of wages.
f) Mode of payment of wages The Payment of Wages Act, 1936 allows for wages to be paid in current coin or currency notes or in both or through cheques or by crediting wages in employees' bank accounts. In addition to the presently-accepted modes of payment, the Code also allows the payment to be made via electronic or digital mode or to employees' bank accounts11.
g) Inspection Under the four prevalent statutes, 'inspectors' were appointed to (i) examine, seize or take any register, record of wages or notices required to be kept or exhibited by these legislations, (ii) examine any person found on the inspected premises, and (iii) exercise such other powers as may be prescribed. The range of an inspector's powers varied under the four legislations. The Code states that the appropriate Government may lay down an inspection scheme by notification for generation of web-based inspection schedules.12
h) Facilitators and their powers13 - The concept of an 'inspector' has been removed from the Code. The Code has instead introduced the concept of 'facilitators'.

A facilitator may, within the local limits of his or her jurisdiction, (a) supply information and provide advice to employers and workers regarding the most effective means of complying with the provisions of the Code, and (b) inspect an establishment on the basis of the inspection scheme.
i) Offences & Penalties Each of the four labour legislations which have been amalgamated into the Code prescribed fines as well as an imprisonment term, in the event of violation of certain provisions. The Code stipulates that a first-time offender will only be levied a fine.14 Subsequent offences or similar offences repeated within 5 years of the first offence will, however, carry a fine as well as an imprisonment term.15
The extent of fines levied by the legislations ranged from INR 500 (approximately USD 7) to INR 22,500 (approximately USD 325). The extent of fines levied under the Code ranges from INR 5,000 (approximately USD 70) to INR 50,000 (approximately USD 725).
j) Compounding of offences There were no provisions relating to the compounding of offences, although certain States had made amendments to insert such provisions. The Code provides an opportunity to all first-time offenders, in a 5-year interval, to compound their offences.16


The consolidation of the provisions of the four labour legislations is a welcome move, as is widening the scope of the minimum wages to all employees. By introducing a concept of 'national minimum wages' for different geographical areas,17 the Code ensures that all national minimum wages are fixed after taking into account parameters which are local and acute to the respective area. Similarly, the introduction of 'facilitators' is noteworthy as they would be replacing the inspectors. The role envisaged for them seems to be a more collaborative one in the sense that, while they can conduct inquiries and investigations, they are also empowered to provide employers and workers with advice in relation to the most effective means of compliance.

The Code also proposes to bring in the use of technology which will help improve transparency and accountability and also provide an impetus to India's progress towards a digital economy. That being said, the Code appears to have diluted certain important provisions, such as the following:

  1. unlike the existing provisions on the prohibition of gender discrimination under the Equal Remuneration Act, 1976, the Code is silent on the prohibition of gender discrimination in matters relating to recruitment, training, transfers and promotions;
  2. the Code has taken a softer approach against a first-time offender in cases where the employer has paid to any employee an amount which is less than the prescribed amounts. The Code now prescribes a fine of INR 50,000 (approximately USD 725). An offence of the same nature within 5 years or a subsequent offence will, however, have a sterner punishment;18 and
  3. the Code permits the employers who have violated the provisions of the Code for the first time in a period of 5 (five) years, to compound their offences. The existing labor legislations do not permit the compounding of offences at the central level. Only a few states have permitted such concessions by way of amendments.

The Code is yet to be presented before the Parliament. We will provide a more detailed update on the Code once it becomes statutory law.


1. Section 5 of the Code.

2. Gazette Notification dated August 28, 2017, available here:

3. See Chapter III of the Code.

4. See Section 26 of the Code.

5. The Payment of Wages Act, 1936, the Minimum Wages Act, 1948, the Payment of Bonus Act, 1965, and the Equal Remuneration Act, 1976.

6. See the first proviso to Section 2 (x) of the Code.

7. Section 3 (1) of the Code.

8. Section 9 of the Code.

9. We note that the Central Government has reserved the right to set different minimum rates for different geographical areas. This

10. Works on any day in excess of the number of hours constituting a normal working day. See Section 14 of the Code.

11. The central or state governments may specify, through notification, the types of employments where wages can be paid only through electronic mode or by crediting to bank accounts, as per Section 15 of the Code.

12. Section 51 (2) of the Code.

13. Chapter VII (Facilitator) of the Code.

14. Section 53 (1) (a) and (c) of the Code.

15. Section 53 (1) (b) and (d) of the Code.

16. Section 55 of the Code.

17. Section 9 (1) of the Code, which stipulates that the Central Government may fix the national minimum wages. Provided that different national minimum wages may be fixed for different States or different geographical areas.

18. Section 53 (b) of the Code.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
AZB & Partners
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
AZB & Partners
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions