The Code on Wages, 2019

What it does

The Code on Wages, 2019 is Act No. 29 of 2019. It deals with how wages are fixed, how they are paid and what may be deducted, with the payment of bonus, and with equal remuneration without discrimination on the ground of gender. It is one of four labour codes, with the Code on Social Security, 2020, the Industrial Relations Code, 2020 and the Occupational Safety, Health and Working Conditions Code, 2020.

A central feature is the definition of wages. Under the Code, the components excluded from wages cannot exceed half of total remuneration, as the site's note on the labour codes records. That definition is used to compute other dues, so it does more work than a payroll definition alone.

Who it binds

Employers and employees in establishments to which the Code applies, in every sector and not only in factories. It is not confined by an employment threshold of the kind that limited the older minimum wage and payment of wages Acts to scheduled employments. The Central Government is the appropriate Government for some establishments and the State Governments for the rest, and each has made rules.

What moved out of it

The Code replaced four Acts: the Payment of Wages Act, 1936, the Minimum Wages Act, 1948, the Payment of Bonus Act, 1965 and the Equal Remuneration Act, 1976. Those Acts are repealed. A claim that arose while one of them was in force is dealt with as the Code's repeal and savings provision allows, so older bonus or minimum wage claims are not read as new Code claims.

Gratuity is not in this Code. It is under the Code on Social Security, 2020, which replaced the Payment of Gratuity Act, 1972. The two codes meet on gratuity because the wages definition in this Code supplies the base on which the gratuity is calculated.

What has changed, and when

The four labour codes were brought into force on 21 November 2025. The Central Government notified final rules under all four on 8 May 2026. The rules are what turn the statutory text into working forms, returns and procedures. The site's note on the labour codes records both dates.

What turns on it in practice

The point the site's note on the labour codes makes for the employment practice is that the wage definition is a balance sheet question as much as a payroll one. A company that has kept basic pay low and allowances high finds that the excluded components cannot exceed half of remuneration, so the wage base rises. Gratuity, which on the Code on Social Security now accrues for a fixed-term employee after one year in place of five, is computed on that higher base. The note works an example for a cohort of 300 fixed-term engineers and arrives at a provision of about INR 1.38 crore for one year of service that previously accrued nothing.

The second point is that a salary structure designed under the old Acts can fail the new test without any change in what the employee is paid. Restructuring is a matter of how the pay is labelled, and a review of the structure against the half limit comes before anything else. For pay, bonus and deduction disputes, the period in question decides whether the Code or one of the repealed Acts is the starting point, with the Code's savings provision settling the cases that straddle the date.