Notified Code On Wages (Central) Rules, 2026: What Employers Need To Know

The Wage Rules operationalize several transformative concepts, key highlights of which include:

• framework for fixation and revision of minimum wages and floor wage
• prescribed formats and timelines for issuance of wage slips and maintenance of registers
• caps and procedural safeguards governing permissible deductions and recovery of advances
• standardisation of working hours, weekly rest days and treatment of night shifts
• enhanced principal employer accountability in contractor-based employment arrangements

The key features of the notified Wage Rules are summarized below:

1.     Minimum Wages and Floor Wage

• Minimum wages are to be fixed by the Central Government on a day basis, based on criteria separately notified through special or general orders under the Wage Code
• The hourly wage rate is to be calculated by dividing the daily wage by eight (8), while the monthly wage rate is to be calculated by multiplying the daily wage by twenty-six (26), with rounding off rules prescribed for fractions
• For establishments having less than six (6) working days in a week, the hourly minimum wage rate is to be used for deriving daily wages
• The Central Government may fix and revise floor wages after consultation with the Central Advisory Board and State Governments, taking into account minimum living standards including food, clothing, housing and other relevant factors, with revision ordinarily at intervals not exceeding five (5) years

2.     Hours of Work, Rest Days and Night Shift

• The normal working day for employees whose wage period is fixed on a daily basis shall be eight (8) hours, while weekly working hours for other employees shall not exceed forty-eight (48) hours
• Employees are entitled to one (1) weekly rest day, ordinarily Sunday in a six (6) day working week, while in establishments with less than six (6) working days, the rest period must include Saturday and Sunday unless another day is fixed by the employer
• An employee cannot ordinarily work for more than ten (10) consecutive days without a rest day, and where work is performed on the rest day, a substituted rest day must be provided immediately before or after the original rest day
• Employees working on a rest day are generally entitled to overtime wages for the rest day worked and wages for the substituted rest day, subject to specific exceptions such as for a six (6) day working week, if daily wages are derived by dividing by twenty-six (26) and the same is not less than the notified minimum wage rate, then no wages shall be paid for the day
• For night shifts extending beyond midnight, the twenty-four (24) hour rest period and calculation of the succeeding day are to be reckoned from the time the shift ends, and hours worked after midnight are treated as part of the previous day

3.     Payment of Wages and Deductions

• In the case of employees engaged through contractors, the principal employer is required to pay the contractor amounts payable towards wages in accordance with the Wage Code
• Employees engaged on a part-time basis are not entitled to wages for a full normal working day where such arrangement is agreed under the terms of employment
• The total deductions from wages in any wage period cannot exceed fifty per cent (50%) of wages, and any excess must be carried forward to succeeding wage periods in instalments
• Before imposing fines, deductions for absence from duty, or deductions for damage or loss, the employer must provide the employee an opportunity to explain within seven (7) days, and intimations must be issued electronically or in writing
• Recovery of advances must be made in instalments, ensuring that deductions in any wage period do not exceed the prescribed ceiling of fifty per cent (50%) of wages

4.     Payment of Bonus

• Where employees are engaged through contractors and the contractor fails to pay statutory bonus, the principal employer/establishment is required to pay the minimum bonus upon receiving written information and confirming such failure
• Separate methods are prescribed for computation of gross profits for banking companies and for establishments other than banking companies through Appendices B and C respectively
• Certain specified prior charges are required to be deducted from gross profits before computation of allocable surplus, as detailed in Appendix D of the Wage Rules depending upon the type of establishment
• Excess allocable surplus beyond the maximum bonus payable may be carried forward for up to four (4) accounting years, while deficiencies in allocable surplus for payment of minimum bonus shall similarly be carried forward as set off amounts

5.     Registers, Forms and Wage Slips

• Employers are required to maintain electronically or physically an Employee Register in Form I, Register of Wages, Overtime, Advances, Fines and Deductions in Form IV, and an Attendance Register-cum-Muster Roll in Form IX
• Registers maintained under the Wage Rules are required to be preserved for a period of five (5) years from the date of the last entry
• Every employer must issue wage slips in Form V to employees electronically or physically on or before payment of wages
• Claims relating to wages and discrimination may be filed in Form II, while appeals against orders of the authority are to be filed in Form III electronically or through speed post
• Employees are required to make nominations in Form VII for payment of dues in the event of death, and employers must deposit undisbursed dues with the jurisdictional Deputy Chief Labour Commissioner (Central) after the expiry of six (6) months from the date the amount become payable

6.     Offences and Penalties

From a commercial and compliance perspective, employers may now need to reassess existing wage structures, payroll practices, overtime and weekly-off policies, contractor engagement frameworks, bonus computation methodologies and statutory record-keeping systems to ensure alignment with the Wage Code and the Wage Rules. Particular attention may also be required in relation to timelines for procedural compliances, maintenance of prescribed forms/registers including issuance of wage slips in the prescribed form, and exposure arising from principal employer liability and adjudicatory proceedings under the Wage Code.

Given that several aspects of implementation may continue to evolve through further notifications, state-specific rules, and clarifications by labour authorities, employers should closely monitor subsequent developments and undertake a comprehensive review of internal employment and payroll processes from a Wage Code compliance perspective.

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.