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As a latest update, the Government of India has officially notified today the Code on Wages, 2019 ("Wage Code") vide Notification bearing No. F. No. S-32022/1/2025-WC in a phased manner, consolidating and repealing key central labour laws – Payment of Wages Act, 1936, Payment of Bonus Act, 1965, Minimum Wages Act, 1948 and Equal Remuneration Act, 1976 .
Key Features at a Glance
- The Wage Code introduces a uniform definition of "wages". The new definition includes three components – basic pay, dearness allowance and retaining allowance, while excluding special components like house-rent allowance, travel allowance, overtime, gratuity, commission, rewards, bonuses and employer contribution to retirement benefits. All the exclusions are subject to a 50% ceiling beyond which the exceeding amount is considered under the definition of "wages".
- The definition of wages is to be considered for calculation of minimum wages, provident fund ("PF") contributions, Employee State Insurance ("ESI"), maternity benefit, employee's compensation, gratuity, statutory bonus, and other payment of wage related provisions. This change in definition of wages does not impact provisions under state-specific statutes such as shops and establishments statutes, labour welfare fund statutes, professional tax statutes, etc.
- The Wage Code applies to all employees, unlike the earlier Payment of Wages Act, 1936 which excluded employees earning above INR 24,000 per month.
- A new concept of national floor wage has been introduced. A national floor wage to be fixed by the Central Government basis which the appropriate State Government will have to fix the minimum wage rates.
- The obligation to pay equal remuneration to male and female employees for same work or work of similar nature have been extended to all genders in respect of conveyance allowance, house rent allowance and any remuneration payable under an award or settlement.
- The prescribed timeline for payment of wages, which was applicable only to cases of termination, has been extended to cases of resignation as well. The employer will have to pay the due wages within two (2) working days from the last day of employment
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