What is the floor wage under the Code on Wages?

The Floor Wage is a national minimum threshold fixed by the Central Government based on living standards. No State minimum wage can be lower than this floor wage.

What are the bonus rules under the Code on Wages?

Eligible employees are entitled to an annual bonus of at least 8.33% of wages (or ₹100, whichever is higher) up to a maximum of 20% of annual wages.

Who decides wages for railways and mines?

The Central Government decides wages for specific employments like railways, mines, and oil fields. State Governments decide for all other employments.

Code on Wages, 2019 – Employer Guide & Payroll Calculator [2025 Edition] | ComplianceAge

Table of Contents

Code on Wages, 2019: The Employer’s Implementation Guide

Effective November 21, 2025, the Indian labour landscape changes fundamentally. The Code on Wages consolidates four major Acts, introduces a universal minimum wage, and enforces a strict “50% Rule” for salary structuring.

What this page covers:

The 50% Wage Definition Rule
Floor Wage vs. Minimum Wage (Centre vs State)
Bonus Calculation (8.33% – 20%)
Live Payroll Impact Calculator
Consolidated Compliance Registers

Updated: 22 Nov 2025 Source: Ministry of Labour & Employment By: ComplianceAge

Four Acts Consolidated

Payment of Wages Act, 1936

Minimum Wages Act, 1948

Payment of Bonus Act, 1965

Equal Remuneration Act, 1976

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Code on Wages, 2019

Single Unified Framework

Critical Rules for HR & Payroll

Understanding the new definition of “Wages” is the single most important compliance requirement.

1. Coverage & Jurisdiction

The Code applies to all employees.

Central Govt Decides: Railways, mines, oil fields, major ports.
State Govt Decides: All other employments.

2. The “50% Cap” on Exclusions

If exclusions (HRA, Bonus, Traveling Allowance, etc.) exceed 50% of total remuneration, the excess amount is added back to “Wages” for PF/Gratuity.

3. Bonus & Deductions

Bonus: Min 8.33% to Max 20% of annual wages.
Deductions: Fines, absence, accommodation, advances (Max 50% of wage).

4. Gender Equality & Penalties

No discrimination for work of similar skill, effort, and experience.

Penalty: Up to ₹1 Lakh fine & 3 months imprisonment.

Reduced Compliance Burden?

Graph: Comparison of registers and returns before and after the Code.

Free Tool

Payroll Impact Calculator

Test your CTC structures against the 50% Rule.

Enter monthly figures below (₹)

Is your payroll software ready?

Manual calculations are risky. Get a professional gap analysis of your salary registers before the law comes into force.

Request a Compliance Audit

Implementation Action Plan

Audit Contracts

Review all employment contracts. Ensure terms align with the new definitions and Central/State jurisdiction.

Update Software

Reconfigure payroll logic to auto-detect when exclusions cross the 50% threshold or fall below Floor Wages.

Map Registers

Consolidate legacy registers (Form I, II, IV) into the unified formats. Ensure women representation in Advisory Boards if applicable.

Frequently Asked Questions

How often are minimum wages revised?

Minimum wages are reviewed and revised by the Central or State Governments at an interval of not more than five years, taking into account the skill of workers and difficulty of work.

What is the rule for overtime payment?

Employees working in excess of a normal working day are entitled to overtime wages at a rate of at least twice the normal rate of wages.

What counts as “Work of Similar Nature” for gender equality?

It is defined as work for which the skill, effort, experience, and responsibility required are the same. Gender discrimination is prohibited in wages and recruitment for such roles.

This page is intended for general informational purposes only and does not constitute legal advice. Application of the Code on Wages, 2019 may vary based on sector, location, notifications and specific facts. Please consult a qualified professional for advice tailored to your organisation.