Key Provisions - Code on Wages

Key Provisions - Code on Wages

Prohibition of Discrimination

No employer shall discriminate between employees on grounds of gender in matters relating to wages.

  • Equal remuneration for same work or work of similar nature
  • Experience can be a ground for discrimination
  • Applies to ALL genders (male, female, transgender)
  • No discrimination in recruitment except where employment of women is prohibited
  • Prohibition of discrimination in conditions of employment
  • Certain wage components shall not form part of the wages, while computing equal wages

Minimum Wages

The appropriate Government shall fix minimum wages for different classes of employees.

  • Minimum wages applicable to all employments (organized and unorganized sectors)
  • Components include basic rate of wages and allowances
  • Different minimum wages may be fixed for different classes of work, age groups, and regions
  • Review of minimum wages at intervals not exceeding 5 years

Floor Wage

The Central Government shall fix the floor wage taking into account living standards of workers.

  • No state government can fix minimum wage below the floor wage
  • Floor wage may be different for different geographical areas
  • Factors considered include minimum living standards of workers
  • Binding on all states - creates national minimum benchmark

Definition of Wages - 50% Rule

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

  • Critical for calculating PF, ESI, gratuity, and bonus
  • Prevents manipulation of wage structures to minimize contributions
  • Employers must track all allowances and exclusions
  • May require restructuring of compensation packages

Deductions from Wages

Only specified deductions are permitted from wages, with a 50% cap.

  • Maximum total deductions: 50% of wages
  • Fines for acts or omissions specified by the employer
  • Deductions for absence from duty
  • Deductions for damage or loss caused by negligence
  • Deductions for house accommodation and amenities
  • Recovery of advances and loans
  • Income tax and statutory deductions

Claims and Limitation

Claims for unpaid wages must be filed within specified period.

  • Limitation period: 3 years from date wages become due
  • Single application can cover multiple employees
  • Inspector-cum-Facilitator receives complaints
  • Simplified claim procedure introduced

Inspector-cum-Facilitators

Appointment of Inspector-cum-Facilitators to ensure compliance.

  • Dual role: enforcement AND advisory
  • Powers of inspection and examination
  • Web-based inspection scheme
  • Advisory role to help employers comply with provisions
  • Power to institute prosecutions
  • Philosophy: Compliance facilitation over penalization
key_provisions.txt · Last modified: 2026/02/05 15:54 by compliance_manager

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