Govt. Enforces Key Wage | Bonus | Minimum Wage Provisions Under Wages Code, 2019

Notification No. S.O. 5322(E), Dated 21.11.2025

The Ministry of Labour and Employment has notified November 21, 2025, as the date on which the principal provisions of the Code on Wages, 2019, shall come into force. The Code seeks to consolidate and simplify the laws relating to wages, bonus, and remuneration, with an objective of ensuring timely payment of wages and universal minimum wage coverage across employments.

The Code on Wages, 2019 applies to all employees and all establishments across India, irrespective of industry type, size or nature of work. It covers every place where any business, trade, industry, manufacture or occupation is carried on, including Government establishments. Certain provision of the Code however, shall not apply to employees of the Govt. establishments

The new Code has repealed the following three legislations:

(a) The Payment of Wages Act, 1936,

(b) The Minimum Wages Act, 1948,

(c) The Payment of Bonus Act, 1965, and

(d) The Equal Remuneration Act, 1976

Key Highlights of the Code on Wages, 2019

The Key highlights are as follows:

(a) The definition of ‘establishment’ has been significantly expanded. It now covers any place where any industry, trade, business, manufacture or even an occupation is carried on, and this includes all Government establishments as well. Even an establishment employing a single worker falls within the scope. [Section 2(m)]

(b) The definition of ‘wages’ has been restructured. It provides that if allowances paid by an employer exceed 50% of basic wage plus dearness allowance plus retaining allowance, then the excess portion of such allowances is added back into wages. This curbs salary structuring aimed at reducing PF, ESI, bonus and gratuity liabilities. [Section 2(y)]

(c) The Code mandates that overtime must be paid at not less than twice the normal rate of wages. This uniform rate now extends across all establishments, not only factories. [Section 14]

(d) Time limits for wage payments have been standardised. For employees paid monthly, wages must be paid before the 7th day of the succeeding month, bringing uniformity across all classes of establishments. [Section 17(2)]

(e) The Code strictly prohibits “contracting out”. An employer cannot enter into any agreement through which an employee relinquishes or reduces his right to any amount or bonus payable under the Code. Any such agreement is treated as null and void. [Section 60]

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