Wage Revision and Fixation Under India’s Code on Wages 2019: A Complete Guide to Periodic Reviews”

Introduction

Wage revision and fixation have remained central to India’s industrial relations framework since independence. The question of fair remuneration for workers has evolved from basic subsistence wages to structured periodic reviews that balance worker welfare with employer capacity. At the heart of this evolution lies a delicate equilibrium between ensuring dignified living standards for workers and maintaining the financial viability of enterprises. The introduction of the Code on Wages, 2019, which received Presidential assent on 8th August 2019, marks a watershed moment in India’s labour law landscape by consolidating four separate wage-related legislations into a unified framework for wage revision and fixation across all sectors.

The Code on Wages 2019 replaces the Minimum Wages Act, 1948, the Payment of Wages Act, 1936, the Payment of Bonus Act, 1965, and the Equal Remuneration Act, 1976, bringing uniformity to wage determination across all sectors. While the code was notified in 2019, its implementation has been gradual, with the Central Government finally announcing its enforcement from 21st November 2025 [2]. This implementation represents one of the most significant labour law reforms since independence, affecting over 500 million workers across organized and unorganized sectors. Understanding the mechanisms of wage revision and fixation under the Code on Wages 2019 becomes crucial for both employers and employees navigating India’s changing industrial landscape.

Historical Context and Legislative Evolution

India’s journey toward structured wage determination began with the Minimum Wages Act, 1948, which established the principle that certain scheduled employments required minimum wage protection regardless of an employer’s ability to pay. This legislation was born from the recognition that market forces alone could not protect vulnerable workers from exploitation. The Act empowered both Central and State governments to fix and revise minimum wages for scheduled employments, creating a dual regulatory structure that continues to this day. However, the fragmented nature of wage legislation created complexities, with different laws governing different aspects of remuneration, leading to confusion and compliance challenges for employers.

The Minimum Wages Act, 1948, underwent numerous amendments over the decades, with periodic revisions attempted to keep pace with inflation and changing economic conditions. The Act categorized wages into minimum time rates, minimum piece rates, guaranteed time rates, and overtime rates, providing flexibility in wage determination based on work patterns. Yet, enforcement remained weak, with studies indicating that approximately 42 percent of wage earners received wages below the stipulated minimum wage floor [3]. This enforcement gap highlighted the need for a more robust framework that could extend wage protections universally while simplifying compliance mechanisms.

The Code on Wages, 2019, emerged from a larger initiative to consolidate India’s 44 labour laws into four comprehensive codes. Finance Minister Nirmala Sitharaman emphasized during the 2019 Union Budget speech that this consolidation would standardize definitions, streamline registration and filing processes, and reduce disputes arising from fragmented legislation. The wage code specifically introduces the concept of a national floor wage, which ensures that no state can fix minimum wages below a centrally determined baseline. This floor wage can vary across geographical areas based on regional cost of living differences, but it establishes a uniform minimum standard across the country.

The Code on Wages, 2019: Key Provisions

Universal Application and Floor Wage Mechanism

The most transformative aspect of the Code on Wages, 2019, is its universal application to all workers regardless of sector or wage ceiling. Unlike the Minimum Wages Act, 1948, which applied only to scheduled employments, the new code extends minimum wage protections to all categories of workers across organized and unorganized sectors. This expansion brings millions of previously uncovered workers under the protective umbrella of wage regulation, including gig workers, platform workers, and those engaged in unscheduled industries.

The introduction of a national floor wage represents a paradigm shift in wage determination. Under the code, the Central Government fixes a floor wage after obtaining advice from the Central Advisory Board and consulting with State Governments. The minimum rates of wages fixed by appropriate governments under the code cannot be less than this floor wage. Importantly, if existing minimum wages are already higher than the floor wage, they cannot be reduced, protecting workers from any downward revision. Different floor wages may be fixed for different geographical areas, acknowledging regional variations in living costs and economic conditions.

Periodic Revision Mechanism

Wage revision under India’s Code on Wages, 2019 mandates that minimum wages must be reviewed by central and state governments through a structured mechanism, while fixation of these wages occurs at intervals not exceeding five years. This five-year maximum revision period ensures that wages remain responsive to changing economic conditions, inflation rates, and cost of living adjustments. While fixing minimum wages, governments may consider factors including skill levels of workers and difficulty of work. The code provides for different wage structures including time work, piece work, and guaranteed time rates, offering flexibility in wage determination based on the nature of employment.

The Variable Dearness Allowance (VDA) mechanism continues under the new code, with the Central Government revising VDA twice annually based on changes in the Consumer Price Index for industrial workers. The most recent revision, effective from 1st October 2024, increased minimum wages across various categories, with unskilled workers’ daily wage reaching Rs. 783 and highly skilled workers’ wages touching Rs. 1,035 per day [4]. This biannual revision mechanism ensures that workers’ purchasing power remains protected against inflation, even between the five-yearly major wage revisions.

Judicial Interpretation: The Industry-Cum-Region Test

Foundational Principles from Supreme Court Jurisprudence

Indian courts have developed a rich jurisprudence around wage fixation, establishing principles that balance worker interests with employer capacity. The Supreme Court has consistently held that wage fixation must progress from minimum basic wages to need-based fair wages and ultimately to living wages. In landmark judgments, the Court articulated that minimum wages represent the floor below which no employer can operate, regardless of profitability or financial condition. Fair wages, meanwhile, must consider the industry’s capacity to pay while seeking to maintain and increase employment levels.

The industry-cum-region test has emerged as the cornerstone of judicial analysis in wage revision disputes. This test requires tribunals and courts to compare wages with similar industrial units in the same region, ensuring parity and preventing exploitation. However, this comparison cannot occur in a vacuum. The Supreme Court has emphasized that while wage scales should generally not be lower than comparable units in the region, the financial capacity of the employer remains a crucial factor that cannot be ignored.

The VVF India Ltd. Decision and Financial Capacity

The 2024 Supreme Court judgment in VVF Ltd. Employees Union v. M/s. VVF India Ltd. [5] crystallized the importance of employer financial capacity in wage determination. In this case, the employees’ union sought wage revisions to bring Mumbai workmen on par with counterparts in the Taloja unit of the same company. The Bombay High Court had directed certain wage revisions, but the Supreme Court reversed this decision, emphasizing that the High Court had failed to adequately consider the employer’s financial health despite evidence of losses.

The Supreme Court observed that while applying the industry-cum-region test for wage revision, the employer’s financial capacity must be considered alongside regional and industry benchmarks. The Court relied on its earlier decisions in A.K. Bindal v. Union of India and Mukand Ltd. v. Mukand Staff & Officers Association, which established that provisions for taxation and reserves must take second place to wage fixation and gratuity schemes, but this does not mean financial capacity can be entirely ignored. The judgment clarified that employers must account for their financial health when setting or revising wages, and transparent processes in wage determination help manage employee expectations and reduce disputes.

Implementation Challenges and State-Level Harmonization

The implementation of the Code on Wages, 2019, presents significant challenges despite its progressive framework. The code came into force on such date as the Central Government may appoint through official gazette notification, allowing for phased implementation of different provisions. This staggered approach acknowledges the complexity of transitioning from multiple state-specific wage regulations to a unified national framework. The Central Government announced full implementation from 21st November 2025, but the success of this implementation depends heavily on state-level rule-making and administrative preparedness.

Each state must now notify its own rules under the code, creating potential for significant variations between states on aspects like specific minimum wage rates, thresholds for applicability, and welfare schemes. This creates a risk of non-uniform regulatory environment, particularly for companies operating across multiple states. The challenge becomes acute in sectors like construction, agriculture, and domestic work, where state-level variations have historically been substantial. Employers must navigate these varied requirements while ensuring compliance with the overarching national floor wage and the five-year revision mandate.

The technological infrastructure required for effective implementation cannot be understated. The code envisions unified registration portals, electronic wage payment systems, and digital record-keeping mechanisms. The successful operation of these systems is crucial for enforcement, yet many states lack the robust technological platforms needed for seamless operation. Additionally, the code’s coverage of gig and platform workers requires new classification systems and contribution mechanisms that are still being developed. The transition from the old regime to the new code requires extensive training of labour inspectors, employers, and workers themselves about their rights and obligations under the reformed framework.

Impact on Different Worker Categories

Organized Sector Workers

Wage revision and fixation under India’s Code on Wages, 2019 affects different worker categories in distinct ways, with the framework creating both opportunities and challenges across organized and unorganized sectors. The principle of periodic wage revision remains intact, with the five-year maximum interval providing predictability for collective bargaining negotiations. However, the code’s universal application means that wage determination becomes more standardized, with clear benchmarks based on the national floor wage. Fixed-term employees, who were previously in a grey area, now receive explicit recognition with benefits on par with permanent workers, including gratuity eligibility after just one year of service instead of the previous five-year requirement.

The code’s provisions on bonus calculations remain largely similar to the Payment of Bonus Act, 1965, but bring greater clarity to dispute resolution. All employees whose wages do not exceed a government-notified monthly amount are entitled to an annual bonus of at least 8.33 percent of wages or Rs. 100, whichever is higher. Employers must also distribute a portion of gross profits among employees. These provisions, while not revolutionary, benefit from the code’s simplified compliance and dispute resolution mechanisms.

Unorganized Sector and Gig Workers

The true transformative potential of the Code on Wages, 2019, lies in its impact on unorganized and gig workers. Previously excluded from minimum wage protections due to their employment in unscheduled industries, millions of workers now gain access to statutory minimum wages and periodic revisions. The code recognizes gig workers and platform workers explicitly, requiring aggregators to contribute to social security funds. This recognition addresses the growing precarity in India’s expanding gig economy, where workers often lack basic employment protections.

For agricultural workers, domestic workers, and those in informal manufacturing, the universal floor wage provides unprecedented protection. However, the effectiveness of these protections depends entirely on enforcement mechanisms. The code strengthens inspector powers and imposes penalties ranging from Rs. 500 to Rs. 10,000 per underpaid employee, with imprisonment up to six months in severe cases [6]. Yet, the practical challenges of monitoring compliance in the unorganized sector remain formidable, requiring innovative approaches like worker helplines, community monitoring systems, and integration with digital payment platforms to track wage payments.

Gender Equality and Equal Remuneration

The Code on Wages, 2019, consolidates the provisions of the Equal Remuneration Act, 1976, prohibiting gender-based discrimination in wages for the same work or work of a similar nature. This prohibition now extends explicitly to transgender persons, marking an important step toward inclusive labour policies. Employers cannot discriminate on the ground of gender in matters relating to wages when the work performed is identical or of a similar nature. This provision applies universally across all employments covered by the code, eliminating sectoral gaps that existed under the previous regime.

The code also mandates that one-third of members on advisory boards, committees, and sub-committees must be women, ensuring female representation in wage-fixing deliberations. Additionally, the code permits women to work night shifts across all sectors, including mines and hazardous industries, subject to safety measures and consent provisions. This opening of employment opportunities must be accompanied by equal pay protections, ensuring that expanded access does not result in exploitation through lower wages. The code’s equal remuneration provisions provide legal recourse for workers facing gender-based wage discrimination, with claims authorities empowered to adjudicate disputes and order compensation.

Wage Payment Mechanisms and Timelines

The Code on Wages, 2019, modernizes wage payment mechanisms while retaining protections against delayed or incomplete payments. Wages may be paid through coins, currency notes, cheques, direct bank account credits, or electronic modes. This flexibility acknowledges the growing digitization of financial transactions while ensuring that workers without bank accounts can still receive wages through traditional means. Employers must fix wage periods as daily, weekly, fortnightly, or monthly, providing clarity on payment schedules.

The code specifies strict timelines for wage payment. For establishments with fewer than 1,000 workers, wages must be paid before the seventh day after the end of the wage period. For larger establishments employing 1,000 or more workers, payment must occur before the tenth day. These timelines prevent the accumulation of wage arrears and protect workers from financial uncertainty. Violations attract penalties, with claims authorities empowered to direct payment of delayed wages along with compensation.

Permissible deductions from wages remain regulated, with the code specifying that total deductions cannot exceed 50 percent of an employee’s total wage. Deductions may be made for fines, absence from duty, accommodation provided by the employer, recovery of advances, or other specified grounds. This cap on deductions prevents excessive wage garnishment that could leave workers unable to meet basic needs. The transparency requirements around deductions, including maintenance of detailed registers and records, further protect worker interests.

Compliance Requirements and Record-Keeping

Employers face enhanced compliance obligations under the Code on Wages, 2019, including detailed record-keeping requirements. Registers and records must document employee particulars, work performed, wages paid, receipts given, and other prescribed details. These records serve multiple purposes: facilitating government inspections, supporting wage dispute resolution, and ensuring transparency in employer-employee relationships. The shift toward digital record-keeping under the code promises to reduce paperwork burdens while improving accessibility for enforcement authorities.

Inspector-cum-facilitators appointed under the code have powers to inspect workplaces, examine registers, and investigate complaints. The code envisions a shift from purely punitive inspection regimes to facilitative approaches that help employers achieve compliance through guidance and support. However, inspectors retain enforcement powers, including the ability to initiate penalty proceedings for violations. The balance between facilitation and enforcement remains crucial for the code’s success, requiring careful training of inspection staff and clear procedural guidelines.

Future Directions and Living Wage Concept

Beyond the immediate provisions of the Code on Wages, 2019, India is exploring how wage revision and fixation can incorporate living wage concepts in collaboration with the International Labour Organization. A living wage exceeds basic minimum wages by covering essential social expenditures including housing, food, healthcare, education, and clothing. This concept represents the aspirational endpoint of wage policy, moving beyond subsistence to dignity and full participation in society. While implementation timelines remain uncertain, the dialogue around living wages signals a maturation of India’s labour rights discourse.

The five-year revision mechanism under the code provides a framework within which living wage considerations could be gradually incorporated. Each revision cycle offers an opportunity to assess progress toward living wage standards, benchmarking against international best practices and domestic cost-of-living studies. However, achieving living wages requires more than statutory mandate; it demands economic growth, productivity improvements, and equitable distribution of economic gains. The code’s emphasis on worker skill development and industry capacity building supports these broader objectives.

Conclusion

Wage revision and fixation under the Code on Wages, 2019, represents a fundamental restructuring of India’s labour law framework. By establishing universal minimum wage coverage, mandating periodic revisions at intervals not exceeding five years, and introducing a national floor wage, the code addresses long-standing gaps in worker protection. The consolidation of four separate legislations into a unified code simplifies compliance while strengthening enforcement mechanisms. The Supreme Court’s emphasis on balancing the industry-cum-region test with employer financial capacity provides clear guidance for adjudicating wage disputes.

Yet, the code’s success depends on effective implementation at state levels, robust technological infrastructure, and genuine commitment to enforcement in the unorganized sector where the majority of India’s workforce labors. The recognition of gig workers and platform workers, the prohibition of gender-based wage discrimination, and the streamlined payment mechanisms all point toward a more inclusive and modern labour regime. As the code comes into full force from November 2025, its impact will unfold over years, shaping not just wage levels but the broader character of industrial relations in India. The mechanisms established for periodic wage reviews will be tested through economic cycles, requiring vigilance from workers, employers, and government alike to ensure that the promise of fair wages translates into lived reality for India’s working millions.

References

[1] Code on Wages, 2019. The Gazette of India. Ministry of Law and Justice, 8 August 2019. Available at: https://labour.gov.in/sites/default/files/the_code_on_wages_2019_no._29_of_2019.pdf 

[2] “Four Labour Codes Come into Force from Today, Reforming 29 Existing Laws.” DD News, 21 November 2025. Available at: https://ddnews.gov.in/en/centre-implements-four-labour-codes-overhauling-29-existing-laws/ 

[3] “Minimum Wages Act 1948.” Wikipedia, November 2025. Available at: https://en.wikipedia.org/wiki/Minimum_Wages_Act_1948 

[4] “Latest Minimum Wages in India 2025.” ClearTax, 24 March 2025. Available at: https://cleartax.in/s/minimum-wages-in-india 

[5] VVF Ltd. Employees Union v. M/s. VVF India Ltd., 2024 INSC 293, Supreme Court of India, 15 April 2024. Available at: https://www.verdictum.in/court-updates/supreme-court/the-vvf-ltd-employees-union-v-vvf-india-limited-2024-insc-293-employees-union-wage-structure-1530686 

[6] “Minimum Wages Act 1948: Rules and Applicability.” ClearTax, 21 April 2025. Available at: https://cleartax.in/s/minimum-wages-act 

[7] “Code on Wages, 2019.” PRS Legislative Research, November 2025. Available at: https://prsindia.org/billtrack/the-code-on-wages-2019 

[8] “Analysis of Major Employment Law Decisions and Policy Changes in India (2024).” ICLG Employment & Labour Laws, 6 March 2025. Available at: https://iclg.com/practice-areas/employment-and-labour-laws-and-regulations/02-analysis-of-major-employment-law-decisions-and-policy-changes-in-india-2024 

[9] “A Guide to Minimum Wage in India.” India Briefing, November 2025. Available at: https://www.india-briefing.com/news/guide-minimum-wage-india-19406.html/