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Andhra Pradesh Releases Draft Code on Wages Rules, 2026

As per Draft Notification issued vide G.O.Rt.No.39, dated 13.02.2026 by the Labour, Factories, Boilers & Insurance Medical Services Dept.

🔰 Introduction

With the enforcement of the Code on Wages, 2019 across India, the Government of Andhra Pradesh has issued the Draft Code on Wages (AP) Rules, 2026 to align state‑level wage regulations with the central framework.

These draft rules replace long‑standing provisions under:

AP Payment of Wages Rules, 1937
AP Minimum Wages Rules, 1960

and bring all wage‑related matters under one unified code.

Objections/suggestions may be submitted within 45 days from the date of publication through the official Labour Dept. portal or e‑mail.

1️⃣ Chapter I – Preliminary & Definitions

Scope & Commencement

Applicable across the entire State of Andhra Pradesh.
Comes into force from date of publication in the Official Gazette.

Key Definitions

The Code provides clarity on several operational terms crucial for HR & compliance, including:

Authority (for claims) – appointed under Sec. 45
Appellate Authority – under Sec. 49
Inspector‑cum‑Facilitator – under Sec. 51
Committee – for minimum wage fixation
Family – expanded to include dependent parents & in‑laws
Skill Levels – Unskilled, Semi‑Skilled, Skilled, Highly Skilled

These definitions serve as the foundation for wage categorization, inspections, and dispute resolutions.

2️⃣ Chapter II – Minimum Wages

2.1 Criteria for Fixing Minimum Wages

The state government must use scientifically‑defined parameters:

Standard working‑class family = 1 earner + spouse + 2 children
Caloric requirement = 2700 calories/day per consumption unit
66 meters of cloth per family/year
House rent = 10% of food & clothing
Fuel, electricity, etc. = 20% of minimum wage
Education, medical, contingencies = 25% of minimum wage

These guidelines ensure that wage fixation is rational, transparent, and inflation‑responsive.

2.2 Calculation of Daily, Hourly & Monthly Wages

Daily → Hourly: divide by 8
Daily → Monthly: multiply by 26
Rounding rules: ≥0.5 round up, <0.5 ignore

For 5‑day week organisations (common in corporates), hourly rate becomes the basis for calculating daily wage.

2.3 Skill Categorisation Committee

A technical committee reviews and updates occupational skill levels.

Members include:

Additional Commissioner/Joint Commissioner of Labour (Chairperson)
Labour Department officials
Director of Employment
CEO, AP Skill Development Corporation
Employer/Employee representatives
Technical wage experts

The committee is empowered to modify, add or delete entries in the official “Schedule.”

2.4 Schedule of Occupations

A vast list of over 1000 job roles across unskilled to highly skilled categories is included.

Examples:

Unskilled: Helpers, Mazdoors, Cleaners, Watchmen, Loaders

Semi‑Skilled: Fitters’ helpers, Firemen, Trolley operators

Skilled: Electricians, Carpenters, Welders, Drivers, Masons

Highly Skilled: Foremen, Senior Mechanics, Mining Supervisors

This ensures AP industries have consistent classification for wage payment.

3️⃣ Chapter II – Working Hours, Rest, and Overtime

3.1 Working Hours

Daily working hours and spread‑over will be defined by the Commissioner of Labour through general/special orders.

3.2 Weekly Rest

One day of rest per week (Sunday traditionally).
For less‑than‑6‑day weeks, both Saturday & Sunday become rest days.
Prior notice to employees is mandatory.

3.3 Substituted Rest Day

If an employee works on rest day, a substituted rest day must be given.
Overtime applies.
Must not work for more than 10 consecutive days without a rest day.

3.4 Night Shifts

Day counted from end of the shift, not from midnight.

4️⃣ Chapter III – Payment of Wages

4.1 Wage Period

Monthly wage period is permitted as the “longer wage period.”

4.2 Deductions

Total deductions cannot exceed 50% of wages.
Excess deduction is carried to next wage cycle.

4.3 Fines

Prior approval from Deputy Commissioner of Labour required.
Notice of fines must be displayed in English & Telugu.

4.4 Deductions for Loss/Damage

Employer must explain in writing
Employee must be given opportunity to respond

4.5 Advances &Loans

Recovery installments capped at 50% of wages.

5️⃣ Chapter IV – Advisory Board & Committees

This chapter establishes procedures for:

State Advisory Board composition
Meeting rules, quorum, voting, minutes
Appointment of committees under Section 8
Term of office (2 years), resignation, disqualification

The Board includes:

Employer representatives
Employee representatives
Independent professionals
State Government officials

One‑third of all members must be women.

6️⃣ Chapter V – Payment of Dues & Claims

6.1 Nomination (Form VII)

Employees must nominate family members for receiving dues in case of death.

6.2 Un-disbursed Dues

If dues remain unpaid:

Employer deposits amount with Deputy Commissioner of Labour
Public notice issued for claimants
After 7 years, amount transferred under AP Labour Welfare Fund Act

6.3 Claims Procedure

Claims can be filed in Form II
Authority issues notice via Form VIII
Ex‑parte decision possible if employer does not appear

6.4 Appeals

Filed through Form III
Employer must deposit awarded amount before appeal is admitted

7️⃣ Chapter VI – Registers & Wage Slip

Employers must maintain:

Mandatory Registers (physical or electronic):

Form I – Employee Register
Form IV – Wages, Overtime, Fines & Deductions
Form IX – Attendance & Muster Roll

Registers must be preserved for 5 years.

Wage Slip (Form V)

Must be issued before wage payment
Can be emailed / digitally generated

8️⃣ Chapter VII – Miscellaneous Provisions

8.1 Contract Labour – Principal Employer Responsibility

Principal employer must ensure:

Payment of wages
Payment of minimum bonus if contractor fails

8.2 Annual Returns

Employers must file annual returns electronically through OSHWC Code formats.

📌 Summary – Why These Rules Matter for Employers & HR

These draft rules:

✔ Bring uniform wage standards across AP

✔ Strengthen compliance obligations for employers

✔ Require better record‑keeping & digital documentation

✔ Provide stronger protection to contract labour

✔ Simplify wage claim and appeal processes

✔ Enable updated skill‑based wage structuring

As a Manager–HR, these rules directly impact:

Wage structuring
Payroll compliance
Contract labour management
HR documentation practices
Internal audit & labour inspections

FAQs - Code on Wages, 2019

FAQs - Code on Wages, 2019 official link

The Ministry of Labour & Employment has released official FAQs on the new Labour Codes, and these clarifications are highly relevant for HR, payroll, and leadership teams planning their compliance roadmap. These FAQs reduce interpretation risks and give employers clearer policy direction, but they also signal the need to revisit salary structures, appointment letters, payroll logic, contractor engagement, and HR policies in a time‑bound manner. For HR leaders, this is the right time to move from basic awareness to structured readiness through policy reviews, system changes, and focused communication with employees. FAQs on Labour Codes

FAQs on Labour Codes

Q1. Which rules will be applicable during the transition period?

Ans: As per Section 6 of General Clauses Act, 1897, old rules will remain in force till final notification of new rules under the Code, to the extent these are in line with Codes.

Q2. What does the term “wages” mean?

Ans: Wages include all remuneration payable to an employee such as Basic Pay, Dearness Allowance, and Retaining Allowance. If other allowances exceed 50% of total remuneration, the excess amount is added back to wages.

Q3. Definition of wages and the components it would cover.

Ans: Wages include Basic Pay, Dearness Allowance, and Retaining Allowance. If allowances (except gratuity and retrenchment compensation) exceed 50%, the excess is added back. Performance incentives, ESOPs, and reimbursements are excluded.

Q4. What is the 50% rule for allowances?

Ans: If allowances exceed 50% of total remuneration, the excess is added back to wages for statutory purposes.

Q5. Whether Leave Encashment be part of allowances?

Ans: No. Leave encashment is not part of allowances as per Section 2(y) of Code on Wages, 2019.

Q6. Does this definition of wages apply to all labour laws?

Ans: Yes. This single definition applies across all four Labour Codes uniformly for statutory calculations.

Q7. Explain the allowance rule with a clear illustration.

Ans: Example: Total remuneration ₹76,000; Basic + DA ₹20,000; Allowances ₹40,000; Other components ₹16,000. Max allowance allowed: ₹38,000. Excess ₹2,000 added back to wages for compliance.

Q8. Whether Gratuity calculation will be applicable prospectively or retrospectively?

Ans: Gratuity applies prospectively from 21st Nov, 2025 (date of enforcement of the Code).

Q9. Clarification on gratuity calculation for December year-end companies.

Ans: Gratuity applies from 21st Nov, 2025. Establishments may make provisions as per accounting norms.

Q10. When is gratuity payable to an employee?

Ans: On termination, superannuation, resignation, death, disablement, expiration of fixed-term contract, or other notified events.

Q11. Are there special provisions for gratuity?

Ans: Completion of five years is not required in cases of death, disablement, or fixed-term expiration. For minors, gratuity is deposited with a competent authority.

Q12. How is gratuity calculated?

Ans: 15 days’ wages per completed year based on last drawn wages. Special cases apply for piece-rated, seasonal, and fixed-term employees. Max gratuity: ₹20 lakhs.

Q13. Does gratuity affect other agreements or awards?

Ans: No. Employees retain rights to better gratuity terms under awards, agreements, or contracts.

Q14. Whether a person drawing ₹18,000 or more is covered under OSH & WC Code?

Ans: No. Supervisory employees earning above ₹18,000 are excluded from the definition of worker.

Q15. Clarity on Core and Non-core activities.

Ans: Defined under OSH & WC Code, 2020 [Section 57]. Contract labour may be engaged for intermittent or time-bound core activities.

Q16. Whether Journey Allowance for ISMW within the State may be allowed?

Ans: Yes. Employers must pay to-and-fro journey allowance once a year from native place to place of employment.

Q17. How will ESI coverage be governed until finalisation of Rules?

Ans: The definition of wage applies from 21st Nov, 2025 with Code enforcement.

Draft Code on wages (Central) rules, 2025 - Key highlights

Background: On 21 November 2025, the Government of India notified the implementation of the four labour codes. On 31 December 2025, the Central Government pre-published the Draft Code on Wages (Central) Rules, 2025 inviting objections/suggestions within 45 days of public availability.

Chapter-wise, Section-wise & Rule-wise Summary

Chapter I — Preliminary

Rule 1: Short title; extent = whole of India; commencement = on publication in the Official Gazette.
Rule 2: Definitions. Terms not defined in these Rules carry meanings assigned in the Code on Wages, 2019.

Chapter II — Minimum Wages (Code sections 6, 8, 13, 14)

Rule 3 (Sec. 6(5)): Manner of calculating minimum rate of wages on a day basis using the following normative basket:
- Standard working-class family = 1 earning member + spouse + 2 children (equivalent to 3 adult consumption units).
- 2700 calories/day per consumption unit.
- 66 meters cloth/year per family.
- Housing rent = 10% of food & clothing expenditure.
- Fuel, electricity & miscellaneous = 20% of minimum wage.
- Education, medical, recreation & contingencies = 25% of minimum wage.
- Conversion: Hourly = Day ÷ 8; Monthly = Day × 26. Rounding: factors of ½ and more → next figure; less than ½ → ignored. In a 5‑day week, compute day rate from the hourly rate.
Rule 4: Fixation norms—geographical area, experience, and skill level (Unskilled/Semi‑skilled/Skilled/Highly Skilled). A Technical Committee (DG Employment—Chair; JS Wage; CLC(C); JS Skill; 2 technical experts; 2 employer & 2 employee skill experts; Director/Dy. Secy as Member‑Secretary) advises categorization and updates Schedule E.
Rule 5: VDA revision calculated twice annually—once before 1 April and again before 1 October—using the Average CPI‑IW published by Labour Bureau.
Rule 6 (Sec. 13): Normal working day & spread-over as per general/special orders issued from time to time.
Rule 7 (Sec. 13): Weekly day of rest (one per week). Substitution allowed before/after rest day with a full day’s rest. Ceiling: no arrangement resulting in more than 10 consecutive days of work without a whole-day rest. Pay rules: rest day wages at preceding day’s rate; if working on rest day with substitution, rest day work is at overtime rate and substituted day at normal rate. Special provisos for 6‑day week (divisor 26) and piece‑rate workers; disputes decided by CLC(C)/DCLC(C).
Rule 8: Night shifts—rest day means a 24-hour consecutive period from shift end; post‑midnight hours count to the previous day.
Rule 9 (Sec. 13(2)): Extent/conditions permitting exceedance of normal limits for emergency, preparatory/complementary, intermittent, technical completion, or work dependent on natural forces.
Rule 10 (Sec. 14): Longer wage period = month.

Chapter III — Floor Wages (Code section 9)

Rule 11: Fixing floor wage—Central Government consults the Central Advisory Board (CAB) on minimum living standards and circulates the advice to States; views of States and CAB are considered before notification. Review: ordinarily every ≤5 years with periodic cost‑of‑living adjustments.

Chapter IV — Payment of Wages (Code sections 10, 18–24)

Rule 12: Circumstances under the proviso to Sec. 10 when full normal day wages are not payable.
Rule 13 (Sec. 18(4)): If authorized deductions exceed 50% of monthly wages, carry forward excess; ensure any month’s total recovery stays ≤ 50%.
Rule 14 (Sec. 19(1)): Authority: Deputy Chief Labour Commissioner (Central) having jurisdiction.
Rule 15 (Sec. 19(2)): Fine notice must be displayed physically/electronically in Hindi, English & local language at conspicuous places; copy sent to the Inspector‑cum‑Facilitator.
Rule 16 (Sec. 19(3)): Approval of fines: employer intimates DCLC(C) with details; DCLC(C) gives hearing to both sides and disposes within 30 days—failing which the proposal is deemed approved.
Rule 17 (Sec. 20(2) proviso): When a deduction is made under the proviso, employer must intimate the Inspector‑cum‑Facilitator within 10 days; Inspector examines and, if contravention, initiates action within 30 days.
Rule 18 (Sec. 21(2)): For damage/loss recovery: employer gives written explanation of value and attribution, provides opportunity to the employee; if deduction is made, intimate the employee within 15 days.
Rule 19 (Sec. 23(b),(c)): Advance recovery (money or unearned wages) in employer‑determined instalments; any/all instalments in a wage period must not exceed 50% of wages (also subject to Rule 13). Record particulars in Form‑IV.
Rule 20 (Sec. 24): Loan recovery & interest as per extant Central Government instructions/guidelines on loan extent and rates.

Chapter V — Payment of Bonus (Code sections 26–36, 32–34)

Rule 21 (Sec. 26(7)(i)): Set‑on/set‑off for the 6th accounting year — illustrated in Schedule A.
Rule 22 (Sec. 26(7)(ii)): Set‑on/set‑off for the 7th accounting year — per Schedule A.
Rule 23 (Sec. 32(a)): Gross profit (banking company) — computation per Schedule B.
Rule 24 (Sec. 32(b)): Gross profit (other establishments) — computation per Schedule C.
Rule 25 (Sec. 34(c)): Further sums (prior charges) to be deducted — employer‑wise in Schedule D.
Rule 26 (Sec. 36(1)): Carry forward excess allocable surplus up to 20% of total salary/wage — set‑on for up to 4 succeeding accounting years as per Schedule A.
Rule 27 (Sec. 36(2)): Carry forward deficiency where minimum bonus cannot be paid — set‑off up to 4 succeeding accounting years as per Schedule A.

Chapter VI — Central Advisory Board (Code section 42)

Rule 28: Composition — 12 employer reps + 12 employee reps; independent persons include Chairperson, 2 MPs, 4 wage/labour professionals, 1 presiding officer of a Central Industrial Tribunal, and 2 State Advisory Board Chairs (rotation). 5 State Government reps (Principal Secretary/Secretary/Commissioner). Independent ≤ 1/3 of total; women = 1/3 of members.
Rule 29: Additional functions — advise on minimum wages for working journalists and sales promotion employees.
Rules 30–37: Meetings & procedure:
- Chair may call meetings; on written requisition by ≥ 1/2 members, meeting within 30 days.
- Notice: 15 days (7 days for emergent meetings).
- Quorum: at least 1/3 members present including at least one representative each of employers and employees.
- Voting: show of hands; secret ballot if demanded/decided; Chair has casting vote.
- Proceedings: circulated as early as possible and at least 7 days before the next meeting.
- Witnesses: may be summoned; paid allowances per civil court scale.
Rule 38: Central Government may constitute committees under Sec. 8(1)(a).
Rules 39–45 (Sec. 42(11)): Terms & administration:
- Term: normally 2 years; continue till successor.
- TA/HA: at Central Govt Group‑A rates.
- Eligibility: re‑nomination not more than two terms.
- Resignation: by notice; effective on acceptance or after 30 days, whichever earlier.
- Cessation: absence in 3 consecutive meetings without prior intimation.
- Disqualification: unsound mind; undischarged insolvent; conviction for offence involving moral turpitude. Government’s decision is final.

Chapter VII — Payment of Dues & Claims (Code section 44)

Rule 46: Nomination (Form‑VII):
- If employee has a family, nomination must be in favour of the spouse or spouse first followed by family members; nomination in favour of a non‑family member is invalid.
- On marriage, a fresh nomination towards the spouse is mandatory; any earlier nomination becomes invalid.
- For minor nominees, appoint a guardian (preferably a major family member).
- After death/unknown whereabouts: if amount due could not be paid to the nominee until 3 months from the date payable, employer deposits with DCLC(C); DCLC disburses to the nominee within 2 months of deposit after identity verification.
Rule 47: Deposit of undisbursed dues (no nomination/other reasons): deposit with DCLC(C) after 6 months of the amount becoming payable and before the 15th day after the last day of the six‑month period; via bank transfer/crossed demand draft.
Rule 48: Dealing with undisbursed dues:
- Invest in Central/State Govt securities or as fixed deposits in a scheduled bank.
- Exhibit public notice for ≥ 15 days on the notice board and publish in two local vernacular newspapers.
- Release the amount to the decided claimant after giving an opportunity of being heard.
- If unclaimed for 7 years, deal as directed by the Central Government.

Chapter VIII — Forms, Registers & Wage Slip (Code sections 45, 49, 50, 53, 56)

Rule 49 (Sec. 45(5)): Single application in Form‑II (manual/electronic). Authority serves Form‑VIII notice to the employer with date for appearance & documents. If employer fails to appear, application may be decided ex‑parte. If applicant fails to appear without reasonable cause, application may be dismissed.
Rule 50 (Sec. 49(1)): Appeal in Form‑III (electronic/registered post). Condition: employer’s appeal is admitted only if the claim amount is deposited with the appellate authority at filing.
Rule 51 (Sec. 50(1)): Registers to be maintained electronically or physically:
- Form‑I: Employee Register (core fields include employee code, name, gender, DOB, designation, skill category, employment type, pay, promotions, mobile, UAN, PAN, ESIC, Aadhaar, bank account & IFSC, nominee & family details, addresses, service book, exit data, identification mark, photo, signature).
- Form‑IV: Register of Wages/Overtime/Advances/Fines/Deductions (covers wage period, days worked, overtime hours/production, rate & amount of basic/DA/allowances/overtime, deductions—EPF/ESIC/Income Tax/Insurance/others—recovery of fines/damage/loss, net payment, receipt/transaction ID, nature & date of offence, fine amount, damage/loss value; employer's signature if physical).
- Form‑IX: Attendance Register‑cum‑Muster Roll (employee details, shift/section, daily time in/out grid, totals of days worked & overtime hours, tours/assignments, register keeper’s signature for physical maintenance).
Preservation: Keep registers for 5 years after the date of last entry.
Rule 52 (Sec. 50(3)): Wage slip in Form‑V (electronic or physical) issued on or before payment of wages; fields include employee name/designation/UAN/bank A/c, wage period, rate of wages (basic/DA/allowances), attendance/units, overtime wages, gross wages, deductions (PF/ESI/others), net wages, employer/pay‑in‑charge signature.
Rule 53 (Sec. 53(1)): Enquiry for offences: officer issues summons; if offender pleads guilty → impose penalty per Code; if not, record witness statements on oath, permit cross‑examination, take documentary evidence, then decide after hearing both parties.
Rule 54 (Sec. 56(1)): Composition of offences in Form‑VI before notified Gazetted Officer; if compoundable and agreed, offence is compromised for 50% of the maximum fine; payable within 30 days of the composition order. If prosecution already instituted, send a copy to the Sec. 53 officer.

Chapter IX — Miscellaneous

Rule 55: Where employees are engaged through a contractor, the principal employeramount payable to the contractor in respect of the employees’ wages per the Code.
Rule 56: Central Government may appoint a Technical Advisory Committee for fixing minimum wages for working journalists.
Rule 57 (Sec. 26): If the contractor fails to pay minimum bonus, the principal employer—on written information and after confirming failure—shall pay the minimum bonus to such employees.
Rule 58: Annual return to be filed electronically in the relevant form under OSHWC Rules; send an electronic copy also to the Labour Bureau.

Key Figures, Minimums & Maximums (Quick Reference)

Minimum wage inputs: 2700 calories/day; 66 m cloth/year/family; housing 10%; fuel/electricity/misc 20%; education/medical/recreation/contingencies 25%.
Workday conversions: Hourly = day ÷ 8; Monthly = day × 26; rounding: ≥ ½ → next figure; < ½ → ignore; 5‑day week uses hourly to derive day rate.
VDA revision: compute before 1 April and 1 October every year using Average CPI‑IW.
Bonus: minimum 8.33% of annual wages; maximum 20%; set‑on/set‑off carried up to 4 years.
Deductions cap: ≤ 50% of wages in any month; excess carried forward; advance recovery instalments also within the 50% cap.
Rest day substitution ceiling: not more than 10 consecutive days of work without a whole-day rest.
Composition of offences: pay 50% of maximum fine within 30 days of composition order.
Register preservation: retain for 5 years after last entry.
CAB quotas: independent ≤ 1/3 of total; 1/3 of members are women.

Major Due Dates & Time-bound Actions

Objections/suggestions to the Draft Rules: within 45 days from public availability of the Gazette notification.
Fine approval decision: within 30 days of employer’s intimation; otherwise deemed approved.
Deduction intimation (Sec. 20(2) proviso): employer → Inspector within 10 days; Inspector action (if contravention) within 30 days.
Damage/loss deduction: intimate to employee within 15 days after deduction.
Undisbursed dues (no nomination or other reasons): deposit after 6 months, before the 15th day following the six‑month period.
Nominee dues (death/unknown): deposit with DCLC if unpaid for 3 months; DCLC disburses within 2 months of deposit.
Public notice (undisbursed dues): display for ≥ 15 days and publish in two local vernacular newspapers.
Unclaimed amounts: after 7 years, dealt with as directed by the Central Government.
Appeal by employer: admitted only if claim amount deposited at the time of filing.
Composition of offence: pay within 30 days of composition order.
VDA computation cycle: before 1 April and 1 October each year.

Forms — Purpose & Key Fields

Form‑I (Employee Register): Employee code, name, surname, gender, DOB, place of birth, nationality, education, DOJ, designation, skill category (HS/S/SS/US), employment type (Permanent/Temporary/Fixed Term/Trainee/Badli), posting, pay, promotions, mobile, UAN, PAN, nominee & family, EPS/NPS, ESIC IP, Aadhaar, bank account & IFSC, addresses, service book no., exit date & reason, ID mark, photo, signature, remarks.
Form‑II (Single Application under Sec. 45(5)): Applicant details; employer status; reliefs claimed (difference between payable & paid wages, rest day remuneration, overtime wages, illegal deductions); declaration; annexures.
Form‑III (Appeal under Sec. 49(1)): Order particulars; facts; grounds; declaration of non‑pendency; reliefs; enclosures; admission condition: claim amount deposit.
Form‑IV (Register of Wages/OT/Advances/Fines/Deductions): Wage period, days worked, overtime hours/production, rates & amounts (basic/DA/allowances/OT), EPF/ESIC/tax/insurance/others, recovery of fines/damage/loss, net pay, payment date, bank TXN ID, offence description with date, fine amount, damage/loss value; employer signature when maintained physically.
Form‑V (Wage Slip): Establishment details; period; employee name/designation/UAN/bank account; wage period; rate of wages (basic/DA/allowances); attendance/units; overtime; gross; deductions (PF/ESI/others); net wages; employer/pay‑in‑charge signature.
Form‑VI (Composition Application, Sec. 56(1)): Applicant particulars; offence details; Code section; maximum fine; prosecution pendency; first offence/prior offences; other information.
Form‑VII (Nomination): Employee details; nominees, relationship, DOB, shares; guardian for minors; employer certification; declarations (no family / parents dependent).
Form‑VIII (Notice to Respondent): Authority/Appellate authority notice format with appearance date, document & witness instructions, default/absence consequences.
Form‑IX (Attendance Register‑cum‑Muster Roll): Employee and shift details; daily time in/out grid; totals; overtime; tours/assignments; register keeper signature when physical.

Schedules (Detail)

Schedule A: Year‑wise set‑on/set‑off illustration. Assumes aggregate minimum bonus = 8.33% of annual wages (example ₹1,04,167) and maximum bonus = 20% (example ₹2,50,000). Shows carry‑forward, lapses, and utilisation across years.
Schedule B (Banking): Gross profit computation—add back provisions (bonus, depreciation, reserves), add back specific items (prior bonus, gratuity beyond funded/actual payouts, excess donations, capital items, overseas losses, RBI‑certified amounts), add income credited to reserves (excluding capital items, overseas profits), deduct capital receipts/profits, overseas profits, foreign banking investment income, reserve debits, head‑office overhead apportionment, tax refunds/excess provisions, cash subsidy reserves; final GP for bonus = Item 5 minus Item 6. Explanation on “approved gratuity fund.”
Schedule C (Others): Gross profit computation mirroring Schedule B with adjustments relevant to non‑banking entities (direct taxes provision add‑back; agricultural income‑tax references where applicable).
Schedule D (Prior Charges):
- Companies (non‑banking): Preference dividend (actual rate); 8.5% of paid‑up equity; 6% of reserves (including carried profits). For foreign companies, 8.5% of net fixed + current assets in India after current liabilities (excluding head‑office payables/interest).
- Banking companies: Preference dividend; 7.5% of paid‑up equity; 5% of reserves; sums transferred to statutory reserves (Section 17 of Banking Regulation Act) or RBI‑directed reserves (whichever higher). Foreign banking companies use proportional working funds method.
- Corporations: 8.5% of paid‑up capital; 6% of reserves.
- Co‑operative societies: 8.5% of capital invested; sums carried to reserve fund per co‑operative laws.
- Others (incl. firms/individuals/HUFs): 8.5% of capital invested. Firm remuneration proviso: ≤ 25% of gross profits (post‑depreciation) to partners taking part in business; if agreement provides remuneration:
  - If total remuneration < 25%: pay the agreed amount, subject to ₹5,00,000 per partner cap.
  - If total remuneration > 25%: deduct the agreed percentage or ₹5,00,000 per partner—whichever is less.
  Individual/HUF: deduct ≤ 25% of gross profits (post‑depreciation) or ₹5,00,000, whichever is less.
- Explanation: Defines “reserves” inclusions/exclusions (e.g., tax payables, admissible depreciation, declared dividends).
Schedule E: Occupational skill categorization lists covering Unskilled, Semi‑skilled, Skilled, Highly Skilled (e.g., helpers, watchmen, fitters, electricians, welders, drivers, operators, supervisors, security guards, etc.). Note: An employee may be elevated to a higher skill category upon attaining higher skill; Technical Committee may update via notification.

Responsibilities & Compliance Checklist

Principal employer:
- Pay contractor amounts payable for employees’ wages under the Code (Rule 55).
- Ensure minimum bonus is paid when contractor fails (Rule 57).
Employers:
- Display multilingual notices; obtain fine approval (Rule 16); respect deduction limits and intimation timelines (Rules 13, 17–19).
- Maintain Form‑I, Form‑IV, Form‑IX electronically or physically; preserve for 5 years after last entry (Rule 51).
- Issue Form‑V (wage slip) on or before wage payment (Rule 52).
- Handle dues & deposits on death/unknown whereabouts or undisbursed cases per Rules 46–48 (including publication and investment norms).
- File Annual Return electronically and send a copy to the Labour Bureau (Rule 58).
Employees/Unions:
- May file Form‑II single application for claims under Sec. 45(5).
- May seek penalty proceedings under Sec. 53; offences can be compounded under Sec. 56 (Form‑VI).

Major Changes in the Code on Wages, 2019

Provision		Old laws		Code on Wages, 2019		Remarks
Coverage		Minimum Wages Act: Minimum wages are fixed for scheduled employments		Minimum wages will be applicable to all the establishments irrespective of scheduled establishments.		The Employer has to provide the minimum wages to all the employees.
		Payment of Wages Act: Applies to employees whose wages do not exceed Rs. 24,000/- per month.		Provisions regarding payment of wages will be applicable to all employees irrespective of salary limit.		Now, the wage ceiling of Rs.24,000/- has been removed for applicability.
		Payment of Bonus Act: Applies to establishments with 20 or more persons and for employees whose wages do not exceed Rs. 21,000/- per month.		Bonus will apply to employees whose wages do not exceed a monthly amount notified by central or state governments
Definition		Sec 2 (i) of MWA “employee" means any person who is employed for hire or reward to do any work, skilled or unskilled, manual or clerical, in a scheduled employment in respect of which minimum rates of wages have been fixed…		Sec 2 (k) : An 'Employee' is any person (other than an apprentice engaged under the Apprentices Act, 1961), employed on wages by an establishment to do any skilled, semi- skilled or unskilled, manual, operational, supervisory, managerial, administrative, technical or clerical work for hire or reward, whether the terms of employment be express or implied… Sec 2 (z): A 'Worker' refers to any person (except an apprentice as defined under clause (aa ) of section 2 of the Apprentices Act, 1961) employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, whether the terms of employment be express or implied, and includes …. But does not include any such person who is employed in a supervisory capacity drawing wages of exceeding INR 15,000/pm		All the employees are covered including supervisory and managerial categories.
Definition		Sec 2 (h) of MWA: “wages” means all remuneration, capable of being expressed in terms of money which would if the terms of the contract of employment express or implied, were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment 2[ and includes house rent allowance] but does not include- (i) the value of – (a) any house-accommodation, supply of light, water, medical attendance; or (b) any other amenity or any service excluded by general or special order of the appropriate Government; (ii) any contribution paid by the employer to any Pension Fund or Provident Fund or under any scheme of social insurance; (III) any travelling allowance or the value of any travelling concession; (iv) any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or (v) any gratuity payable on discharge.		Sec 2(y): "wages" means all remuneration, whether by way of salaries, allowances or otherwise, expressed in terms of money or capable of being so expressed which would, if the terms of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment, and includes,— (a) Basic pay; (b) Dearness allowance; and (c) Retaining allowance, if any, but does not include— (a) any bonus payable under any law for the time being in force, which does not form part of the remuneration payable under the terms of employment; (b) the value of any house-accommodation, or of the supply of light, water, medical attendance or other amenity or of any service excluded from the computation of wages by a general or special order of the appropriate Government; (c) any contribution paid by the employer to any pension or provident fund, and the interest which may have accrued thereon; (d) any conveyance allowance or the value of any travelling concession; (e) any sum paid to the employed person to defray special expenses entailed on him by the nature of his employment; (f) house rent allowance; (g) remuneration payable under any award or settlement between the parties or order of a court or Tribunal; (h) any overtime allowance; (i) any commission payable to the employee; (j) any gratuity payable on the termination of employment; (k) any retrenchment compensation or other retirement benefit payable to the employee or any ex gratia payment made to him on the termination of employment, under any law for the time being in force: Provided that for calculating the wages under this clause, if payments made by the employer to the employee under sub-clauses (a) to (i) exceeds one-half, or such other per cent. as may be notified by the Central Government, of the all remuneration calculated under this clause, the amount which exceeds such one-half, or the per cent. so notified, shall be deemed as remuneration and shall be accordingly added in wages under this clause: Provided further that for the purpose of equal wages to all genders and for the purpose of payment of wages, the emoluments specified in sub-clauses (d), (f), (g) and (h) shall be taken for computation of wage. *Explanation.—Where an employee is given in lieu of the whole or part of the wages payable to him, any remuneration in kind by his employer, the value of such remuneration in kind which does not exceed fifteen percent* of the total wages payable to him, shall be deemed to form part of the wages of such employee;		· The Definition of Wages in all the 4 codes is the same.
	Floor Wages		There is no such provision		The Central Govt. shall fix floor wages taking into account minimum living standards of a worker in such manner as may be prescribed. Provided that different floor wage may be fixed for different geographical areas.
	Claim for Wages – Time limit		Any claim for wages could be made within 6 months.		Claim can be made within 3 years.
Time limit for payment of wages		Before the expiry of the 7th day of the succeeding month for establishments less than 1000 employees and before 10th day for the establishments more than 1000 employees		Before the expiry of the 7th day of the succeeding month for all establishments
Payment to an employee on separation		Within 2 working days of his termination of employment or closure of establishment		While retaining earlier provisions of 2 working days added retrenchment of an employee and also an employee resigning from his service
Disqualification for Bonus		Disqualification for bonus as an employee for dismissal misconducts i.e. fraud, riotous & disorderly behaviour, theft and misappropriation.		By retaining earlier provisions, also included: conviction for sexual harassment.
Inspections		Labour Dept is authorized to carry out surprise checks etc.		Appointment of an Inspector-cum-Facilitator not only to carry out inspections and provide information to employer for compliance. Inspection will be done on the basis of an inspection scheme which will include a web based inspection schedule.		An initiative in line with ease of doing business.
Inspectors territorial jurisdiction		Restricted Jurisdiction		The jurisdiction of inspectors or facilitators is widened under the Wage Code on Wages Act and ensured that an employer has to deal with a single inspector for compliance instead of one under each labour law.		The Act empowers the govt. to notify randomized selection process.
Provision		Current laws		Code on Wages, 2019		Remarks
Penalties under Minimum Wages Act.		Minimum Wages Offences include (i) paying employees less than minimum wages, and (ii) not providing for a day of rest in the week. Penalties include fine upto Rs.500/- and imprisonment upto 6 months.		Employers who pay less than what is due under the Code will pay a fine of upto Rs.50,000/-. If an employer is guilty of repeated offence within five years, penalties include imprisonment up to three months or a fine of up to Rs.1 lakh or both		· Penalty amount increased · Imprisonment tenure decreased.
Penalties under Payment of Wages Act		Offences include (i) non-payment of wages at specified time period, (ii) unauthorized deductions from wages. Penalties include fine upto Rs.7500/-.
Penalties under Payment of Bonus Act, 1965		In case a person or company does not comply with the Act, could be punished with imprisonment up to six months or fine upto Rs. 1000/-		Employers who do not comply with any other provision of the Code will pay a fine of up to Rs. 20,000/-. If an employer is guilty of the same offence again within five years, penalties incl. imprisonment up to one month or a fine of upto Rs.40,000/- or both.
Penalties under Equal Remuneration Act, 1976		Offences include: (i) non-maintenance of documents in relation to employees, and (ii) discrimination against women in recruitment. Penalties include fine up to Rs.20,000/ - or imprisonment upto 1 year.
Burden of proof in case of litigations		Lies with employees to prove their case		Lies with employer to defend their case.
Composition of offences		Not there in present laws		Employer can apply to the inspector for compound of offences charged on him.