Introduction
This guide explains the provisions of the Code on Wages (Andhra Pradesh) Rules, 2026 in a practical manner for HR Professionals, Employers, Payroll Teams, Contractors, Compliance Officers and Labour Law Practitioners. The content is organised chapter-wise for easy understanding.
Overview
Objective
To regulate minimum wages, payment of wages, working hours, overtime, deductions, registers, forms and other wage related compliances under the Code on Wages.
Effective Date
29 June 2026
Applicable State
Andhra Pradesh
Applicable Law
Code on Wages, 2019
Chapter I
Preliminary
Introduction
The Code on Wages (Andhra Pradesh) Rules, 2026 have been framed by the Government of Andhra Pradesh under the Code on Wages, 2019 to regulate wage-related matters in establishments within the State. These Rules provide the procedural framework for implementation of the Code by prescribing requirements relating to minimum wages, payment of wages, working hours, overtime, deductions, maintenance of registers, wage slips, claims and statutory forms.
The Rules aim to ensure timely payment of wages, fair remuneration, transparent wage administration and protection of employees against unlawful deductions or delayed wage payments.
Objectives
- Ensure payment of at least the notified minimum wages.
- Standardise wage administration across establishments.
- Provide a transparent system for wage payment.
- Protect employees against exploitation.
- Promote digital maintenance of statutory records.
- Strengthen labour law compliance through Inspector-cum-Facilitators.
Applicability
These Rules apply to establishments to which the Code on Wages, 2019 applies within the State of Andhra Pradesh and cover matters relating to wages, minimum wages, payment of wages and associated procedural requirements.
Quick HR Compliance Checklist
- ✔ Pay at least the notified minimum wages.
- ✔ Revise wages whenever VDA is revised.
- ✔ Pay wages within the prescribed time.
- ✔ Issue wage slips.
- ✔ Maintain statutory registers.
- ✔ Record overtime correctly.
- ✔ Ensure deductions are lawful.
Chapter I
Preliminary
Short Title and Commencement
These Rules may be called the Code on Wages (Andhra Pradesh) Rules, 2026. They come into force on the date notified by the Government, with the final notification published in the Andhra Pradesh Gazette on 29 June 2026.
Purpose of Chapter I
Chapter I lays down the foundation of the Rules by specifying the short title, commencement, application and interpretation of terms used throughout the Rules.
Important Definitions
Unless the context otherwise requires, expressions used in these Rules have the same meanings assigned to them under the Code on Wages, 2019. HR professionals should always refer to the statutory definitions while interpreting obligations under the Rules.
HRINFO Practical Note
Before implementing any wage policy, employers should verify whether the establishment falls within the scope of the Code on Wages and ensure that wage structures, payroll practices and records align with the statutory requirements.
Key Compliance Points
- Understand the scope of the Code and the Rules.
- Use statutory definitions consistently in HR policies.
- Review wage structures for compliance.
- Train payroll and HR teams on the new framework.
Key Takeaway
Chapter I establishes the legal framework for interpreting and implementing the Code on Wages (Andhra Pradesh) Rules, 2026. Correct understanding of the definitions and applicability is essential for compliance with all subsequent chapters.
Chapter II
Minimum Wages
Chapter II – Minimum Wages
Introduction
Chapter II prescribes the procedure relating to minimum wages payable to employees in Andhra Pradesh. Every employer shall ensure that no employee receives wages below the minimum rate of wages notified by the Appropriate Government for the scheduled employment, category of skill and geographical area.
Rule 3 – Minimum Rates of Wages
The Government notifies minimum rates of wages for different scheduled employments. Employers are legally bound to pay not less than the applicable minimum wage to every employee covered by the notification.
Skill Categories
- Unskilled
- Semi-Skilled
- Skilled
- Highly Skilled
Employees must be classified correctly according to the work actually performed. Incorrect classification may result in underpayment of wages and statutory liability.
Wage Components
The notified minimum wage generally consists of:
- Basic Rate of Wages
- Variable Dearness Allowance (VDA), wherever notified
The employer shall ensure that the total wages paid are not less than the notified minimum wages applicable to the employee.
Monthly Wage Calculation
Where the Government notifies daily wages, the monthly wages are ordinarily calculated using the prescribed conversion method under the Rules (commonly based on a 26-day wage month where applicable).
Illustration
Daily Minimum Wage = ₹800
Monthly Wage = ₹800 × 26 = ₹20,800
This is only an illustration. Employers should always adopt the method specified in the applicable Government notification.
Variable Dearness Allowance (VDA)
Where VDA forms part of the notified minimum wages, employers shall revise wages in accordance with the Government notification issued from time to time.
HRINFO Practical Note
Maintain a wage master for each scheduled employment and update payroll immediately after every Government notification revising minimum wages or VDA.
Common Compliance Risks
- Paying below notified minimum wages.
- Wrong skill classification.
- Failure to implement revised VDA.
- Using outdated wage notifications.
- Ignoring area-wise wage notifications.
Employer Compliance Checklist
- ✔ Obtain the latest Andhra Pradesh minimum wage notification.
- ✔ Verify scheduled employment classification.
- ✔ Verify skill category of each employee.
- ✔ Update payroll whenever wages are revised.
- ✔ Maintain documentary proof of wage calculations.
- ✔ Display wage notifications where required.
| Compliance Item | Requirement |
|---|---|
| Minimum Wage | Not less than Government notified rate |
| Skill Category | Correct classification |
| VDA | Implement revised rates promptly |
| Payroll | Reflect revised wages immediately |
| Records | Maintain wage registers and supporting records |
Key Takeaway
The foundation of wage compliance is ensuring that every employee receives at least the applicable minimum wage notified for the relevant scheduled employment, skill category and geographical area. Regular monitoring of Government notifications and timely payroll updates are essential for compliance.
Chapter III
Working Hours & Weekly Rest
Chapter III – Working Hours & Weekly Rest
Introduction
Chapter III outlines the regulatory framework governing normal working hours, spread-over limits, rest intervals, weekly off days, and overtime computation for employees covered under the Code on Wages (Andhra Pradesh) Rules, 2026. These regulations ensure employee health and safety while defining clear operational constraints for employers.
Rule 5 – Normal Daily Working Hours
The normal daily working hours for an adult employee shall be fixed subject to a maximum of 8 hours per day (exclusive of rest intervals). The total daily spread-over—inclusive of rest intervals—shall not exceed 12 hours on any given day.
Rest Intervals
No employee shall be allowed or required to work continuously for more than 5 hours without an interval for rest of at least half an hour (30 minutes).
Shift & Spread-over Calculation
Example Schedule:
- Work Start Time: 09:00 AM
- Rest Interval: 01:00 PM to 02:00 PM (1 Hour)
- Work End Time: 06:00 PM
- Total Working Hours: 8 Hours
- Total Spread-over: 9 Hours (Well within the 12-hour statutory limit)
Weekly Rest & Compensatory Off
Every employee is entitled to a paid rest day in every period of seven days (normally Sunday or a designated day off). If an employee is required to work on a scheduled weekly rest day:
- They must be granted a substitute rest day (compensatory off) within five days immediately before or after the rest day.
- Wages for work done on a weekly rest day must be paid at the statutory overtime rate.
Overtime Rates and Hours
Where an employee works in excess of 8 hours on any day or more than 48 hours in any week, the additional hours shall be treated as overtime.
- Overtime Rate: Double the ordinary rate of wages (Basic + VDA).
- Maximum OT Hours: Aggregate overtime hours must not exceed prescribed threshold limits (e.g., maximum 125 hours per quarter) as specified under state guidelines.
HRINFO Practical Note
Ensure shift rosters are published well in advance. Attendance systems must capture exact punch times (entry, exit, and break duration) to avoid discrepancies when calculating overtime and verifying compliance during statutory inspections.
Common Compliance Risks
- Exceeding the 12-hour daily spread-over limit.
- Forcing continuous work beyond 5 hours without a formal rest break.
- Calculating overtime at single rate instead of double the ordinary wage rate.
- Failing to grant a compensatory off within the stipulated timeframe.
- Inadequate or inaccurate attendance records.
Employer Compliance Checklist
- ✔ Fix standard working hours and display shift schedules on notice boards.
- ✔ Ensure rest intervals of at least 30 minutes for every 5 continuous hours worked.
- ✔ Track daily spread-over to ensure it stays within 12 hours.
- ✔ Pay 2x ordinary rate of wages for all overtime hours worked.
- ✔ Maintain accurate Overtime Registers (Form IV) and attendance logs.
- ✔ Grant compensatory off for work performed on weekly rest days.
| Parameter | Statutory Limit / Requirement |
|---|---|
| Max Daily Working Hours | 8 Hours per day |
| Max Daily Spread-over | 12 Hours (including breaks) |
| Continuous Work Limit | Maximum 5 hours before mandatory rest break |
| Rest Interval Duration | Minimum 30 minutes |
| Overtime Rate | 200% (Double) of ordinary rate of wages |
| Weekly Off Day | 1 day of rest per 7 days worked |
Key Takeaway
Adherence to Chapter III rules ensures worker well-being while protecting establishments from penal liabilities related to wage disputes and illegal overtime practices. Digitized attendance logging and automated shift management are key to seamless compliance.
Chapter IV
Payment of Wages
Chapter IV – Payment of Wages
Introduction
Chapter IV governs the mode, time, and procedure for the disbursement of wages to employees in Andhra Pradesh. The primary aim of this chapter is to eliminate wage delays, ensure transparent payment practices through digital modes, and guarantee the timely settlement of dues upon termination or resignation.
Fixation of Wage Period
Every employer shall fix a wage period for employees, which may be on a daily, weekly, fortnightly, or monthly basis. No wage period fixed by an employer shall exceed one month.
Time Limits for Wage Payment
Wages must be disbursed within the strict statutory timelines based on the established wage period:
- Daily Basis: At the end of the shift.
- Weekly Basis: On the last working day of the week.
- Fortnightly Basis: Before the end of the second day after the end of the fortnight.
- Monthly Basis: Before the expiry of the 7th day of the succeeding month.
Mode of Payment of Wages
All wages shall be paid in current coin or currency notes, or by cheque, or by crediting the wages directly into the bank account of the employee (electronic bank transfer). Digital payment modes (NEFT/RTGS/UPI) are strongly prioritized for transparency.
Timelines for Final Settlement (Separation / Removal)
Where an employee has been removed, dismissed, retrenched, resigned, or has ceased employment due to closure of the establishment, the wages payable to them must be fully paid within two working days of such removal, dismissal, resignation, or closure.
Final Settlement Timeline
Scenario: An employee submits their resignation and works their final day on Tuesday.
Compliance Obligation: All pending wages and accrued statutory dues must be settled and credited to their bank account by Thursday (within 2 working days).
HRINFO Practical Note
Align your payroll processing cycles so that monthly payouts are completed on or before the 7th of every month. For exiting employees, establish a fast-track full & final (F&F) settlement process to ensure compliance with the mandatory 2-working-day payout window.
Common Compliance Risks
- Delaying monthly wage disbursement beyond the 7th day of the month.
- Holding final wage settlements beyond the mandatory 2-working-day limit post-resignation or termination.
- Making cash payments without proper wage receipts or signatures.
- Unilateral delay of wages citing client payment delays or operational issues.
Employer Compliance Checklist
- ✔ Set a defined wage period not exceeding 30 days.
- ✔ Complete monthly salary transfers on or before the 7th day of the following month.
- ✔ Ensure payment is made electronically or via official bank channels.
- ✔ Process final settlement (F&F) within 2 working days of separation.
- ✔ Maintain bank transaction logs or signed wage registers as proof of payment.
- ✔ Issue digital or physical wage slips to all employees on or before the pay date.
| Wage Period / Event | Statutory Payment Deadline |
|---|---|
| Monthly Wage Period | On or before the 7th day of the next month |
| Weekly Wage Period | Last working day of the week |
| Fortnightly Wage Period | Within 2 days following the fortnight end |
| Daily Wage Period | At the end of the shift |
| Resignation / Termination / Closure | Within 2 working days from separation date |
| Permissible Payment Modes | Bank Transfer, Cheque, or Currency Notes |
Key Takeaway
Chapter IV emphasizes strict adherence to wage payment schedules and electronic transparency. Timely monthly wage payouts and rapid 2-day final settlements post-separation are essential compliance pillars under the Code on Wages (Andhra Pradesh) Rules, 2026.
Chapter V
Deductions
Chapter V – Deductions from Wages
Introduction
Chapter V sets out strict legislative boundaries on permissible deductions that can be made from an employee’s gross wages under the Code on Wages (Andhra Pradesh) Rules, 2026. To safeguard workers against arbitrary or excessive financial penalties, the rules explicitly list authorized deductions and cap the total allowable deductions per wage period.
Authorized Deductions
No employer can make deductions from an employee’s wages except those specifically authorized under the Code. Authorized categories include:
- Fines: Imposed for specific acts or omissions approved by the competent authority.
- Absence from Duty: Pro-rata deduction for period(s) of absence without authorization.
- Damage or Loss: For loss or damage directly attributable to the neglect or default of the employee.
- Housing & Amenities: For house accommodation or amenities/services provided by the employer.
- Advances & Loans: Recovery of wage advances, interest, or loans granted to the employee.
- Statutory Deductions: Provident Fund (PF), Employees' State Insurance (ESI), Professional Tax (PT), Income Tax (TDS), and court orders.
Rule 14 – Imposition of Fines
Fines cannot be levied arbitrarily. Employers must observe the following conditions:
- A list of acts/omissions for which fines may be imposed must be displayed on the notice board.
- The total fine in a single wage period cannot exceed 3% of the employee’s wages.
- No fine shall be imposed on any employee who is under the age of 15 years.
- Fines must be recovered in a single installment and within 60 days of the offense.
- All fines realized must be recorded in a dedicated Register of Fines and utilized for employee welfare.
Deductions for Damage or Loss
Before making any deduction for damage to or loss of property belonging to the employer:
- The employee must be given a reasonable opportunity to show cause why the deduction should not be made.
- An opportunity for a formal hearing must be provided.
- The deduction shall not exceed the actual amount of damage or loss caused to the establishment.
Overall Ceiling on Deductions (50% Cap)
The total amount of deductions (statutory + non-statutory) which may be made in any wage period from the wages of an employee shall not exceed 50% of such wages. If total deductions exceed 50%, the excess amount must be carried forward and recovered in subsequent wage periods.
50% Deduction Limit Calculation
Gross Monthly Wages: ₹30,000
Maximum Total Deductions Allowed (50% Limit): ₹15,000
If statutory deductions (PF, ESI, PT) sum to ₹4,000 and loan recovery amounts to ₹12,000 (Total ₹16,000), the employer can only recover ₹11,000 towards the loan during that month to keep the total within the ₹15,000 ceiling. The remaining ₹1,000 loan balance must be carried forward.
HRINFO Practical Note
Configure your automated payroll system with a hard lock logic that caps aggregate payroll deductions at 50% of net gross earnings. Ensure all disciplinary fines undergo a formal show-cause process prior to deduction to stand statutory scrutiny during inspections.
Common Compliance Risks
- Recovering loans or advances that push net payout below the 50% statutory threshold.
- Deducting money for damage or stock loss without issuing a formal written notice/hearing.
- Imposing fines exceeding 3% of the monthly gross wage.
- Failing to maintain statutory Registers of Fines, Deductions, and Advances.
Employer Compliance Checklist
- ✔ Display an approved notice listing acts and omissions subject to fines.
- ✔ Issue formal Show Cause Notice before making deductions for loss or damage.
- ✔ Enforce the 50% ceiling on aggregate deductions in payroll processing.
- ✔ Record all fines, damage recoveries, and advances in Form II / Statutory Registers.
- ✔ Ensure non-statutory recoveries (e.g., transport, canteen, housing) are explicitly authorized in writing by the employee.
| Type of Deduction | Statutory Ceiling / Requirement |
|---|---|
| Overall Maximum Deduction Limit | Cap of 50% of total wages in any wage period |
| Fines (Max Cap) | Max 3% of total wage; 0% for employees under 15 years |
| Fine Realization Timeline | Must be recovered within 60 days in a single installment |
| Deduction for Loss/Damage | Requires prior Show-Cause notice & formal hearing |
| Absence from Duty | Proportionate to the actual duration of absence |
| Statutory Recoveries (PF, ESI, PT, TDS) | As prescribed under respective primary Acts |
Key Takeaway
Chapter V ensures that employee take-home pay remains protected. Employers must rigidly enforce the 50% overall deduction limit and adhere strictly to natural justice—providing notice and hearing—before penalizing employees through wage deductions for damage or default.
Chapter VI
Claims & Authorities
Chapter VI – Claims & Authorities
Introduction
Chapter VI establishes the statutory mechanism for dispute resolution, filing of claims, appointment of adjudicating authorities, and the appellate procedure under the Code on Wages (Andhra Pradesh) Rules, 2026. It provides employees, trade unions, and Inspector-cum-Facilitators a streamlined legal recourse for recovering unpaid or delayed wages, unauthorized deductions, and minimum wage shortfalls.
Appointment of Designated Authority
The State Government appoints officers (not below the rank of Assistant Commissioner of Labour or specified gazetted officers) as the Designated Authority to hear and decide claims arising out of non-payment of minimum wages, illegal deductions, or delayed payment of wages within their respective territorial jurisdictions.
Who Can File a Claim Application?
An application for a claim under Chapter VI can be filed before the Designated Authority by:
- The affected employee or worker.
- Any registered Trade Union of which the employee is a member.
- An Inspector-cum-Facilitator.
- An official authorized by the State Government.
Prescribed Forms and Time Limits
Claims must be submitted in the prescribed format along with relevant supporting documentation (such as wage slips, attendance records, or bank statements):
- Limitation Period: Claims must be filed within 3 years from the date on which the claim arose (extended from 12/24 months under legacy laws).
- Condonation of Delay: The Designated Authority may admit an application after the 3-year period if satisfied that the applicant had sufficient cause for the delay.
Compensation & Penalty Orders
Where a claim is admitted and decided in favor of the employee:
- Wage Recovery: The employer will be ordered to pay the unpaid or delayed wage amount along with compensation, which may extend up to 10 times the amount of the claim.
- Malicious/Vexatious Claims: If a claim is found to be malicious or frivolous, the Authority may penalize the applicant with a fine up to the prescribed limit.
Appeals & Enforcement
Any party aggrieved by an order passed by the Designated Authority may prefer an appeal before the Appellate Authority (typically a Regional Joint Commissioner of Labour) within 90 days from the date of the order.
- Pre-deposit Requirement: No appeal by an employer shall be entertained unless the employer deposits the awarded amount with the Appellate Authority prior to filing.
- Recovery Mechanism: Unpaid claim amounts awarded by the Authority are recoverable as arrears of land revenue or through distress proceedings.
HRINFO Practical Note
Maintain flawless wage and attendance records for at least 3 years to defend against statutory claims. Ensure all full and final settlements carry signed or digitally acknowledged receipts to prevent post-employment wage dispute applications before the Authority.
Common Compliance Risks
- Ignoring notices or hearings issued by the Designated Authority, leading to ex-parte orders.
- Failing to maintain supporting payroll registers for the extended 3-year limitation window.
- Challenging awards in appeal without pre-depositing the awarded wage amount.
- Underestimating heavy financial compensation risk (up to 10x penalty) for willful non-payment of minimum wages.
Employer Compliance Checklist
- ✔ Maintain full payroll, attendance, and wage records for a minimum of 3 years.
- ✔ Ensure prompt representation and reply to any notice received from the Claims Authority.
- ✔ Retain electronic receipts or signed acknowledgments for all wage settlements.
- ✔ Verify that all wage calculations strictly adhere to the state minimum wage notifications to avoid statutory claims.
- ✔ Audit sub-contractor wage compliance regularly to mitigate principal employer claim liabilities.
| Parameter / Aspect | Statutory Provision / Timeline |
|---|---|
| Adjudicating Officer | Designated Authority (Assistant Commissioner of Labour or equivalent) |
| Limitation Period to File Claim | Within 3 years from the date the cause of action arises |
| Maximum Compensation Awarded | Up to 10 times the claim amount (in addition to unpaid wages) |
| Appellate Forum | Appellate Authority (Regional Joint Commissioner of Labour) |
| Time Limit for Filing Appeal | Within 90 days from the date of the order |
| Pre-Condition for Employer Appeal | Mandatory deposit of 100% of the awarded claim amount |
Key Takeaway
Chapter VI significantly strengthens employee protection by expanding the claim limitation period to 3 years and prescribing severe compensation multipliers for default. Meticulous documentation, early dispute resolution, and prompt legal representation before the Designated Authority are critical to managing organizational legal risks.
Chapter VII
Registers & Records
Chapter VII – Registers, Records & Wage Slips
Introduction
Chapter VII prescribes the statutory maintenance of registers, records, wage slips, and notices by employers under the Code on Wages (Andhra Pradesh) Rules, 2026. The rules focus on digital recordkeeping, standardization of statutory formats, and ensuring complete transparency in wage administration across all establishments.
Rule 19 – Maintenance of Statutory Registers
Every employer shall maintain accurate registers in the prescribed statutory forms covering employee details, wages paid, deductions made, overtime worked, and attendance. Registers may be maintained electronically or physically at the establishment.
- Unified Register of Wages, Overtime, Deductions, and Fine (Form I): Combines details of gross wages, allowances, deductions, OT hours, net pay, and payment dates into a single streamlined register.
- Register of Attendance & Hours of Work: Must accurately reflect daily entry, exit, rest intervals, and overtime hours for every employee.
Rule 20 – Issuance of Wage Slips (Form V)
Every employer shall issue a wage slip to every employee—either physically or digitally (via email, ESS portal, or messaging services)—at least one day prior to the disbursement of wages.
- The wage slip must contain employee details, designation, wage rate, total days/hours worked, itemized earnings, itemized deductions, and net amount payable.
- Digital wage slips with electronic authentication or system-generated receipts satisfy legal compliance requirements.
Retention Period & Digital Storage
All registers, records, and wage slips must be preserved for a minimum period of 3 years from the date of the last entry made in them.
- Electronic registers must be maintained in a searchable, readable format and backed up regularly.
- In case of digital recordkeeping, hard copies are not required unless specifically requested by an Inspector-cum-Facilitator during inspection.
Display of Statutory Notices
Every employer shall display a notice at the main entrance of the establishment or on the company intranet/notice board in English and Telugu containing:
- Notified rates of minimum wages applicable for each category of workers.
- Abstracts of the Code on Wages and AP Rules.
- Name, designation, and official address of the Inspector-cum-Facilitator having jurisdiction.
- Designated pay day and shift schedules.
HRINFO Practical Note
Migrate from multiple legacy registers to the consolidated Form I digital layout. Ensure your payroll software generates digital wage slips automatically before payday and maintains an encrypted audit trail/backup for the mandatory 3-year statutory retention window.
Common Compliance Risks
- Failing to issue wage slips at least one day before actual wage disbursement.
- Discrepancies between physical/digital attendance logs and wage registers.
- Incomplete wage slips omitting detailed breakups of earnings or statutory deductions.
- Failure to display updated minimum wage notices and Inspector contact details in Telugu.
- Purging payroll and attendance data before the end of the mandatory 3-year retention period.
Employer Compliance Checklist
- ✔ Maintain the consolidated Register of Wages (Form I) digitally or physically.
- ✔ Issue Form V Wage Slips to all employees at least 1 day prior to payout.
- ✔ Retain all attendance, payroll, and wage records for a minimum of 3 years.
- ✔ Display statutory notices (minimum wage rates & abstract of Rules) in English and Telugu.
- ✔ Ensure electronic records are easily accessible for inspection by Inspector-cum-Facilitators.
| Statutory Register / Document | Form / Mode | Mandatory Timeline / Retention |
|---|---|---|
| Register of Wages, OT & Deductions | Form I (Consolidated) | Maintain continuously; retain for 3 years |
| Wage Slip | Form V (Physical or Digital) | Issue at least 1 day prior to wage payment |
| Attendance Register | Physical / Biometric Log | Daily updates; retain for 3 years |
| Statutory Notice Board Display | Physical / Intranet Display | Update immediately upon wage rate revision |
| Record Preservation Period | Digital / Hard Copy | Minimum 3 years from last entry date |
Key Takeaway
Chapter VII simplifies recordkeeping by consolidating multiple legacy registers into unified digital formats. Timely distribution of wage slips and digitized retention of payroll data for 3 years form the operational core of statutory audit readiness under the Code on Wages (Andhra Pradesh) Rules, 2026.
Chapter VIII
Miscellaneous
Chapter VIII – Miscellaneous Provisions
Introduction
Chapter VIII serves as the closing legal framework of the Code on Wages (Andhra Pradesh) Rules, 2026. It governs supplementary administrative mechanisms, including the composition and functioning of the State Advisory Board, duties of Inspector-cum-Facilitators, compounding of offenses, protection against prosecution, and repeal/savings provisions.
State Advisory Board
The State Government shall constitute the State Advisory Board to advise on setting and revising minimum wages, expanding employment avenues for women, and other wage-related administrative matters.
- Composition: Equal representation from employers, employees, independent persons, and statutory representation for women (at least one-third of total members).
- Term & Meetings: Board members serve for a specified term, and meetings are convened periodically to review cost-of-living indices and wage trends across Andhra Pradesh.
Role of Inspector-cum-Facilitators
The Rules redefine the traditional "Labour Inspector" as an Inspector-cum-Facilitator, shifting the focus from purely punitive actions to a web-based, transparent compliance advisory model.
- Advice & Guidance: Provide guidance to employers and workers regarding statutory compliance requirements.
- Inspection Scheme: Conduct randomized, web-based inspections to ensure objective evaluation.
- Opportunity to Rectify: Before initiating prosecution for first-time non-compliance (other than severe offenses), the Inspector-cum-Facilitator must give the employer a written opportunity to rectify the defect within a specified timeframe.
Compounding of Offenses
To promote ease of doing business and reduce protracted litigation, specified first-time offenses under the Code may be compounded (settled) upon payment of a prescribed sum:
- Compounding is available for non-heinous offenses prior to or after the institution of prosecution.
- Once an offense is successfully compounded, no further criminal prosecution shall lie against the employer for that specific default.
Repeal and Savings
With the commencement of the Code on Wages (Andhra Pradesh) Rules, 2026, corresponding state rules under legacy enactments (Minimum Wages Act, Payment of Wages Act, Equal Remuneration Act, and Payment of Bonus Act) stand repealed.
Savings Clause: Any action taken, notification issued, or order passed under the repealed rules shall remain valid and continue in force unless superseded by actions under the new Rules.
HRINFO Practical Note
Leverage the "opportunity to rectify" window offered by Inspector-cum-Facilitators during initial audits. Establish an internal compliance review process so that any procedural lapses identified during an inspection are cured promptly within the stipulated notice period.
Common Compliance Risks
- Ignoring written rectification notices issued by Inspector-cum-Facilitators, leading to direct criminal prosecution.
- Failing to utilize compounding options for minor first-time statutory breaches.
- Obstruction or non-cooperation with Inspector-cum-Facilitators during web-based or physical site visits.
- Assuming legacy notifications are automatically void without verifying the savings clause transitions.
Employer Compliance Checklist
- ✔ Cooperate fully with Inspector-cum-Facilitators during digital/physical inspections.
- ✔ Act immediately upon receiving statutory notice/rectification letters from compliance officers.
- ✔ Evaluate compounding options for minor or historical first-time compliance lapses.
- ✔ Monitor State Advisory Board notifications for upcoming minimum wage and VDA revisions.
- ✔ Ensure company policies reflect the shift from legacy labor rules to the unified AP Rules format.
| Provision / Mechanism | Key Objective / Requirement |
|---|---|
| State Advisory Board | Advises state government on wage fixation & female employment growth (Min 1/3rd women members) |
| Inspector-cum-Facilitator | Provides guidance + conducts web-based randomized inspections |
| Opportunity to Rectify | Mandatory notice period given to cure first-time minor non-compliances |
| Compounding of Offenses | Monetary settlement mechanism to prevent criminal prosecution for eligible defaults |
| Repeal and Savings | Repeals legacy state rules while preserving existing notifications until updated |
Key Takeaway
Chapter VIII bridges advisory support and statutory enforcement. The introduction of web-based inspections, compounding mechanisms, and mandatory opportunity-to-rectify provisions offers employers a transparent path to maintaining compliance under the Code on Wages (Andhra Pradesh) Rules, 2026.
Forms Prescribed
Statutory Forms Matrix
Statutory Forms Matrix & Compliance Guide
Overview of Prescribed Forms
Under the Code on Wages (Andhra Pradesh) Rules, 2026, statutory forms have been consolidated to simplify compliance and support digital recordkeeping. Legacy registers have been merged into unified formats, significantly reducing administrative redundancy while maintaining full audit transparency.
| Form No. | Name of the Form | Statutory Purpose & Usage | Frequency / Mode |
|---|---|---|---|
| Form I | Register of Wages, Overtime, Fine & Deductions | Consolidated master register tracking basic pay, allowances, attendance, OT hours, statutory deductions, fine imposition, and net wages paid. | Monthly / Digital or Physical |
| Form II | Single Integrated Annual Return | Annual compliance return summarizing total employee count, gross wages disbursed, total deductions, fine realization, and OT payment summary. | Annual (On or before 1st February) |
| Form III | Application for Claim | Formal claim application filed before the Designated Authority for recovery of unpaid/delayed wages, unauthorized deductions, or minimum wage shortfalls. | Event-based (Within 3 years of claim) |
| Form IV | Register of Overtime & Rest Days | Detailed log recording individual employee overtime hours worked, normal rate vs OT rate calculations, total OT earnings, and compensatory off granted. | Continuous / Real-time |
| Form V | Wage Slip | Itemized wage statement issued to every employee detailing gross pay, individual allowance components, statutory/non-statutory deductions, and net credit. | Monthly (At least 1 day prior to payday) |
| Form VI | Notice of Rates of Minimum Wages & Abstract | Statutory notice displayed at establishment premises detailing current notified minimum wages, VDA rates, wage payment dates, and Inspector details. | Permanent Display (Updated upon revision) |
| Form VII | Application for Compounding of Offense | Formal petition submitted by the employer to compound (settle) eligible first-time compliance defaults and avoid criminal prosecution. | Event-based (Post inspection / notice) |
HRINFO Practical Note
Transitioning to Form I eliminates the need to maintain separate legacy registers for fines, deductions, advances, and overtime. Ensure your payroll software vendor updates your system's output template to export Form I and Form V directly in compliance with the AP Rules.
Key Submission & Maintenance Rules
- Digital Validity: Forms maintained electronically with valid system audit trails and digital signatures satisfy all statutory requirements during inspections.
- Annual Return Deadline: Form II (Integrated Annual Return) must be filed electronically on the state portal on or before the 1st of February every year for the preceding calendar year.
- Pre-Payday Wage Slips: Form V Wage Slips must be delivered (via email, ESS portal, or paper) at least 1 day prior to salary credit.
Key Takeaway
The 2026 Rules streamline statutory paperwork into 7 core forms. Adopting automated digital register generation for Forms I, IV, and V ensures full audit readiness and seamless annual filing via Form II.
Frequently Asked Questions
Practical HR & Compliance FAQs
Practical Answers for HR & Compliance Professionals
Overview
This section addresses common real-world compliance queries faced by HR managers, payroll leaders, employers, and legal practitioners under the Code on Wages (Andhra Pradesh) Rules, 2026. Click on any question to view the practical resolution and statutory guidance.
The Rules come into force on the date notified by the Government, with the final publication in the Andhra Pradesh Gazette occurring on 29 June 2026. Establishments operating in Andhra Pradesh must align their payroll systems, wage structures, and statutory registers with this effective date.
Under Chapter V of the Rules, aggregate deductions (including statutory deductions like PF, ESI, PT, TDS, as well as non-statutory recoveries like loans, advances, or canteen charges) cannot exceed 50% of the employee's total wages in any wage period. Any excess amount must be carried forward to subsequent pay cycles.
Where an employee resigns, is dismissed, retrenched, or separated due to establishment closure, all unpaid wages and statutory dues must be settled and credited within 2 working days from the date of removal or separation.
Yes, wage slips (Form V) can be issued digitally via email, Employee Self-Service (ESS) portals, or electronic messaging systems. Statutory compliance mandates that wage slips must be issued to employees at least 1 day prior to the actual wage disbursement date.
The normal daily working hours are fixed at 8 hours per day (exclusive of rest intervals). The total daily spread-over—inclusive of rest breaks—shall not exceed 12 hours on any given day.
Any work performed beyond 8 hours a day or 48 hours a week qualifies as overtime. Overtime wages must be calculated at double (200%) the ordinary rate of wages (Basic + Variable Dearness Allowance).
Employees, trade unions, or Inspector-cum-Facilitators can file claim applications before the Designated Authority within 3 years from the date on which the claim arose (extended from the earlier 12/24 month windows under repealed laws).
Electronic registers maintained with automated system audit trails are fully recognized and legally valid. Maintaining the unified Form I (Register of Wages, Overtime, Fines, and Deductions) digitally eliminates the need for maintaining separate legacy paper registers, provided records are retained for at least 3 years.
Fines can only be levied for acts or omissions previously approved and displayed on the notice board. The total fine in a single wage period cannot exceed 3% of the employee’s monthly wage. Additionally, no fine can be imposed on employees under 15 years of age.
The Integrated Annual Return (Form II) summarizing workforce details, wage disbursements, OT payouts, and fine realizations must be submitted electronically on or before the 1st day of February every year for the preceding calendar year.
HRINFO Practical Note
Keep this FAQ section updated alongside your internal HR Policy Knowledge Base. Integrating these standard statutory interpretations into your employee handbooks and manager training modules will minimize compliance friction during routine audits.
Key Takeaway
Understanding practical operational thresholds—such as the 50% deduction cap, 2-day separation payouts, 1-day advance wage slip distribution, and 3-year record preservation—enables proactive labor law compliance under the Code on Wages (Andhra Pradesh) Rules, 2026.