The Code on Wages amalgamates the Payment of Wages Act, Minimum Wages Act, Payment of Bonus Act, and Equal Remuneration Act. Amalgamates 4 laws: Payment of Wages Act, Minimum Wages Act, Payment of Bonus Act, Equal Remuneration Act. Aim: Balance worker rights + ease of compliance.
Key Provisions
Section 3 – Equal Remuneration: Employers must not discriminate on the basis of gender in paying wages for the same or similar work, and must not discriminate on the basis of sex while recruiting employees.
Section 5 – Minimum Wages: Universal minimum wages notified by the appropriate government, applicable across all employments.
Section 6 – Wage Periods: Every establishment and employers shall fix wage periods, which may be daily, weekly, fortnightly, or monthly. All wages must be paid within the prescribed timelines
Section 17 – Settlement of Dues: When an employee leaves an establishment, whether by resignation, dismissal, or termination, the employer is required to pay all due wages within two working days.
Section 14 – Working Hours and Overtime: Employer must comply with the daily and weekly working hour limits prescribed under the Code and the Rules made thereunder. If an employee whose minimum rate of wages has been fixed under the Code, works beyond normal working hours, the employer must pay overtime for each extra hour at a rate of at least twice the normal wage.
Section 18 – Deductions: Employers must not make any deductions except authorised under the Code. These include deductions for absence from duty, deduction for damage or loss, deductions for recovery of advances or loans, deductions for fines imposed after giving the employee an opportunity to be heard, house accommodation or amenity in service on acceptance. Deductions shall not exceed 50% of wages during the wage period.
Section 26 – Bonus: Bonus must be paid to every employee who draws wages up to the limit set by the appropriate government and has worked for at least 30 days in the accounting year i.e. the year commencing on the first day of April. The annual bonus is paid minimum at the rate of 8.33% and maximum up to 20% of the wages earned by the employee.
Registers & Records These registers must always be kept updated and can be maintained either in physical or electronic form. The record shall be preserved for period of 5 years. Employers must issue wage slips in prescribed form to all employees on or before payment of wages.
Section 50 - Display on Notice Board : Employers must display the following on the notice board Employers are required to display on the notice board, in English, Hindi, and the local language, the minimum rate of wages, the normal working hours, the wage period, the date of wage payment, and the name and address of the Inspector cum Facilitator.
Code on Wages, 2019 – Exam Preparation Q&A
Q1. What is the objective of Code on Wages, 2019?
Ans: To amalgamate 4 wage-related laws, ensure universal minimum wages, equal pay, timely payment, and simplify compliance for employers.
Q2. Within how many days must wages be settled after termination?
Ans: All dues must be paid within two working days of resignation, dismissal, or termination (Section 17).
Q3. What is the maximum limit of wage deductions under the Code?
Ans: Authorised deductions cannot exceed 50% of wages in a wage period (Section 18).
Q4. What registers must an employer maintain under the Code on Wages, 2019?
Ans: Employers must maintain attendance registers, wage registers, overtime registers, and registers of fines/deductions. These must be preserved for 5 years and can be in physical or electronic form.
Q5. What information must be displayed on the notice board under Section 50?
Ans: Employers must display minimum wage rates, normal working hours, wage period, date of wage payment, and inspector details in English, Hindi, and local language.
Q6. Explain the provisions of Minimum Wages and Wage Periods under the Code on Wages, 2019.
Ans: Section 5 mandates universal minimum wages notified by the appropriate government, applicable across all employments. This ensures dignity and fair compensation for workers. Section 6 requires employers to fix wage periods—daily, weekly, fortnightly, or monthly—and adhere to strict timelines for payment. Daily wages must be paid at the end of the day, weekly wages on the last working day of the week, fortnightly wages before the end of the second day after the fortnight, and monthly wages before the 7th day of the succeeding month. These provisions safeguard employees against delayed payments and promote workplace equity.
Q7. Discuss the compliance requirements under the Code on Wages, 2019.
Ans: Employers must maintain registers such as attendance, wage, overtime, and fines registers in prescribed form, either physical or electronic, and preserve them for 5 years. Wage slips must be issued to employees at the time of payment. Employers must also display wage-related information on the notice board in English, Hindi, and local language, including minimum wage rates, working hours, wage period, payment date, and inspector details. Additionally, authorised deductions are strictly regulated, capped at 50% of wages, and bonuses must be paid to eligible employees (8.33%–20%). These compliance measures ensure transparency, accountability, and protection of employee rights.
Q8. Explain the provisions related to Bonus under the Code on Wages, 2019.
Ans: Section 26 of the Code deals with bonus provisions. Every employee who earns wages below the limit notified by the appropriate government and has worked for at least 30 days in the accounting year (starting from April 1) is entitled to receive a bonus. The minimum bonus payable is 8.33% of wages, while the maximum can go up to 20% of wages earned during the year. This ensures that employees share in the profits and productivity of the establishment. The bonus system motivates workers, improves morale, and contributes to industrial harmony. By linking bonus entitlement to service and wage limits, the Code balances employee welfare with employer capacity, thereby promoting fairness and inclusivity in the workplace.