The four Acts it replaces
| Repealed Act | What it governed | Now under the Code |
|---|---|---|
| Payment of Wages Act, 1936 | Timely payment, permissible deductions | Chapter on payment of wages |
| Minimum Wages Act, 1948 | Minimum rates, VDA | Chapter on minimum wages + floor wage |
| Payment of Bonus Act, 1965 | Statutory bonus | Chapter on payment of bonus |
| Equal Remuneration Act, 1976 | Equal pay, no gender discrimination | Woven through as a general prohibition |
The wage definition (the 50% rule)
The code defines wages as basic pay, dearness allowance and retaining allowance, and then provides that the excluded allowances cannot exceed a set share of total remuneration. In effect, basic plus DA must be at least 50% of the total. Where allowances are structured above that limit, the excess is added back to wages for computing PF, gratuity and similar dues. For firms that historically kept basic low and allowances high, this raises statutory cost and needs a payroll structure review.
Floor wage and minimum wages
The central government sets a floor wage; no state minimum wage can fall below it. States and the central sphere continue to notify minimum wages by employment, skill and area, revised with a variable dearness allowance. Minimum-wage coverage under the code is not limited to scheduled employments as it once was.
Bonus and payment timelines
Statutory bonus continues for eligible employees within wage-ceiling limits, and wages must be paid within the prescribed period after the wage period ends, by the modes the rules allow. The Central Rules 2026 set the working-out of these limits and the registers and slips to maintain.
The code runs to 69 sections across 9 chapters; confirm any specific section against indiacode.nic.in.
Frequently asked questions
What is the 50% wage rule in the Code on Wages?
The code caps excluded allowances so that basic wage plus dearness allowance is at least half of total remuneration. Anything above the cap is treated as wages for PF, gratuity and similar dues, which can raise statutory cost for allowance-heavy salary structures.
Does the Code on Wages set a national minimum wage?
The central government sets a floor wage below which no state minimum wage can go. States and the central sphere still notify their own minimum wages by employment, skill and area, revised through a variable dearness allowance.
Which laws did the Code on Wages replace?
Four: the Payment of Wages Act 1936, the Minimum Wages Act 1948, the Payment of Bonus Act 1965 and the Equal Remuneration Act 1976.
When do the Code on Wages rules apply?
The code is in force and the Code on Wages (Central) Rules 2026 were notified on 8 May 2026. State rules are notified separately, so confirm your state's position.
Check your salary structures against the wage definition
ZeniaHR checks each worker's wage against the applicable minimum and the wage-definition rule, and runs PF, ESI and the registers automatically.
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