Universal minimum wages and floor wage: equalising protection
For the first time, the Code guarantees a statutory right to minimum wages for all employees, extending coverage beyond scheduled employments to every sector. This universalisation protects casual workers, migrants and daily wagers who were previously vulnerable to underpayment.
Complementing universal minimums, the Code mandates a central “floor wage” — a baseline fixed by the Centre based on minimum living standards. States must ensure their notified minimum wages are not below this floor, reducing inter-state wage undercutting and narrowing regional disparities.
Fair pay structure that rewards skill and arduousness
The Code instructs appropriate governments to fix minimum rates for time work and piece work, calibrated by skill level, geographical area and the nature of work. Wages may include a basic rate and allowances; where allowances exceed a notified threshold, the excess is to be included in the wage for social security calculations.
Redefining wage components increases the social security base for provident fund, gratuity and bonus calculations—raising future benefits for employees and making formal employment more attractive.
Timely payments, proof and bonus: protections strengthened
The Code tightens employer liability and timely payment norms. Wages must be paid at prescribed intervals—daily, weekly, fortnightly or monthly—and termination dues within two working days. Section 43 makes employers directly accountable for unpaid wages, while Section 50(3) mandates wage slips (electronic or physical) to enhance transparency and reduce disputes.
Annual bonus provisions apply to employees earning below government-specified ceilings, with a statutory minimum of 8.33% and a maximum of 20% of wages—ensuring profit-sharing and improved morale.
Working hours, overtime and piece-rate safeguards
To guard against overwork, the Code limits normal work to 48 hours a week (with provisions on daily limits and rest intervals). Employers must pay overtime at not less than twice the normal wage for hours beyond regular working time, discouraging exploitative practices and valuing employee time.
For piece-rate workers, the minimum time-rate provision prevents wage manipulation and guarantees income stability—particularly important in manufacturing, textiles and construction sectors.
Decriminalisation, compliance and inspector-cum-facilitators
The Code moves towards compliance-first enforcement. Many minor offences that previously invited criminal penalties can now be compounded with civil fines, and first-time non-serious offences may be eligible for composition. This approach emphasises correction over punishment while retaining safeguards for workers’ rights.
To further ease compliance, the Code creates the role of Inspector-cum-Facilitator, blending enforcement with guidance—helping employers and workers understand their rights and obligations and reducing the adversarial nature of inspections.
Gender inclusion and broader social impact
Section 3 of the Code explicitly prohibits gender-based discrimination in recruitment, wages and employment conditions, extending protection to transgender persons. Equal pay for equal work and prohibition of unfair wage disparity promote workplace equality and lift household incomes.
To ensure women’s participation in wage policy, Section 42 requires that one-third of members on Central and State Advisory Boards be women bringing diverse perspectives to wage fixation and revisions.
Growth, formalisation and worker dignity
By standardising definitions, introducing single-window compliance (single registration, license and return) and replacing opaque inspection systems with web-based random checks, the Code aims to foster a compliance-oriented ecosystem that balances worker protection with enterprise ease of doing business.
These reforms improve labour market formalisation, increase investor confidence and, crucially, enhance incomes and job quality—key drivers of inclusive economic growth and dignity of labour.
