Minimum Wages Act, 1948: Status, Applicability, and 2026 Compliance Guide
Table of Contents
The Minimum Wages Act, 1948 was repealed with effect from 21 November 2025, the day the Code on Wages, 2019 commenced and absorbed it along with three other wage laws. However, a key compliance challenge for employers is that the national floor wage intended to anchor the new system under this Code has not yet been announced, so states continue to set their own minimum wage rates largely as before.
Key Takeaways
- Understand the structural repeal of the 1948 Act and its absorption into the Code on Wages, 2019.
- Review the timeline of statutory changes and implementation gaps.
- Identify the current operational status of the National Floor Wage.
- Compare the applicability of scheduled employment under the old Act with the universal coverage under the new Code.
- Evaluate wage revision rules alongside the statutory 50% basic wage requirement.
- Examine updated penalty frameworks and implement the compliance checklist.
What is the Minimum Wages Act, 1948?
The Minimum Wages Act, 1948 was India’s primary law for fixing and enforcing minimum wage rates for workers in specified employments. It empowered the appropriate government to set minimum wages and established rules for wage fixation, revision, and enforcement.
The Act governed the fixation, revision, and enforcement of minimum wages through statutory notifications and advisory board consultations until 21 November 2025, when it was subsumed by the Code on Wages, 2019.
What did the Minimum Wages Act, 1948 Cover?
| Feature | Statutory Provision / Description |
|---|---|
| Scheduled employments | Minimum wages applied only to occupations specifically listed in a government schedule |
| Appropriate government | Central Government for central-sphere industries, State Governments for the rest |
| Wage-fixing methods | Committee method or notification method, both requiring consultation before a rate took effect |
| Revision interval | Reviewed or revised at intervals not exceeding five years, under Section 3(1)(b) |
| Enforcement | Inspectors, claims authorities, and a criminal penalty for underpayment under Section 22 |
Establishments engaged in trades excluded from a state’s notification schedule fell outside the Act’s statutory purview, leaving large parts of the service economy and the unorganized workforce without a statutory wage floor.
Has the Minimum Wages Act, 1948 been Repealed?
Yes. The Code on Wages, 2019 came into force on 21 November 2025, replacing the Minimum Wages Act, 1948, the Payment of Wages Act, 1936, the Payment of Bonus Act, 1965, and the Equal Remuneration Act, 1976.
Legal proceedings initiated, claims filed, and rights accrued under the repealed enactments remain protected under saving and transition clauses.
The Repeal Timeline at a Glance
| Date | What Happened |
|---|---|
| 8 August 2019 | Code on Wages, 2019 receives presidential assent |
| 21 November 2025 | Code commences; this Act, along with three other wage laws, stands repealed |
| May 2026 | Central Rules, 2026 notified, operationalizing wage-fixation mechanics |
| 2026 (ongoing) | Floor wage under Section 9 still not notified |
During the six-month interim between commencement and the notification of the central rules, employers continued to apply existing minimum wage rates while the statutory rate-fixation mechanism under the new Code was being operationalized.
From Scheduled Employment to Universal Coverage
The old Act’s scheduled-employment model is gone. Minimum wage coverage under the new Code no longer depends on whether an occupation was named in a state schedule.
| Coverage | Old Act (1948) | New Code |
|---|---|---|
| Who is covered | Only workers in scheduled employments | Every employee, across every sector |
| Non-Standard Workforce (Gig & Platform Workers) | Not covered | Brought within the wage-floor framework |
| Central-sphere industries | Railways, mines, ports, banking, and similar sectors | Same central-sphere list, now under the Code |
| Unscheduled & Private Sector Employments | State-notified scheduled employments only | State minimum wages apply regardless of occupation |
The National Floor Wage: Law in Force, Rate Not Yet Set
Section 9 of the Code provides for a national floor wage to be fixed by the Central Government, with different rates possible for different geographical areas. However, no floor wage has been notified yet, so states continue to set and revise their own minimum wage rates.
Consequently, state-notified minimum wage rates remain the mandatory baseline. Payroll departments must continue tracking state-level Gazette notifications until a statutory national floor wage is formally notified.
Wage Revision and the 50% Rule
Two mechanics carried over largely unchanged, and one is new to most employers’ payroll structures.
| Mechanic | Statutory Mandate |
|---|---|
| Revision interval | Still not exceeding five years, per Section 8(4), matching the old Act’s own ceiling |
| Variable Dearness Allowance | Revised twice a year, before 1 April and 1 October, against the Consumer Price Index for Industrial Workers |
| The 50% rule | Basic salary, Dearness Allowance (DA), and retaining allowance must aggregate to a minimum of 50% of the total cost-to-company (CTC)/remuneration package |
Compliance with the 50% wage rule extends beyond basic wage thresholds and directly impacts contributions to the Provident Fund (PF), Gratuity, and other statutory liabilities. Employers may need to rebalance salary structures where basic pay and applicable allowances fall below the required 50% of total remuneration.
Who Sets Minimum Wages: The Advisory Board Structure
Fixing a rate was never a unilateral government decision, and that has not changed with the transition.
| Body | Role |
|---|---|
| Central a rate was never a unilateral government d Advisory Board | Advises the Central Government on central-sphere wage fixation and coordinates state-level boards |
| State Advisory Boards | Advise state governments on wages within their own territory |
| Tripartite representation | Equal numbers of employer and employee representatives, plus independent members |
The consultation requirement survived the transition intact. An employer should not treat a state’s minimum wage notification as final without checking whether the advisory board process behind it followed this structure, as any wage notification issued without statutory advisory board consultation remains subject to legal challenge.
Penalties for Underpayment: Old Act vs the Code on Wages, 2019
The penalty for paying less than the minimum wage changed shape entirely, not just in amount.
| This 1948 Act (Section 22) | New Code (Section 54) | |
|---|---|---|
| First offense | Imprisonment up to 6 months or fine up to ₹500, or both | Fine up to ₹50,000 |
| Repeat offense within 5 years | Same range applied again | Imprisonment up to 3 months or fine up to ₹1,00,000, or both |
| Other contraventions | Not separately graded | Fine up to ₹20,000, rising to imprisonment up to 1 month or fine up to ₹40,000 on repeat |
| Settlement option | Not available | Compounding permitted up to 50% of the maximum fine (Section 56) |
How Long do Workers have to Claim Unpaid Wages?
The window for filing an underpayment claim was extended considerably during this transition.
| Minimum Wages Act, 1948 (Section 20) | New Code (Section 45) | |
|---|---|---|
| Limitation period | 6 months from when the amount became due | 3 years from when the claim arises |
| Delay condonation | Permitted on sufficient cause | Permitted on sufficient cause |
Because underpayment claims can now surface up to three years later, employers must retain wage records and payslips well beyond the former six-month threshold.
A Compliance Checklist for Employers
- Update HR documents: Replace references to the Minimum Wages Act, 1948 with the Code on Wages, 2019.
- Monitor minimum wage notifications: Track state-notified minimum wages and monitor updates on the proposed national floor wage.
- Review the 50% rule: Ensure basic pay, dearness allowance, and retaining allowance meet the required threshold across each payroll component.
- Check worker coverage: Review compliance for gig and platform workers under the expanded wage framework.
- Monitor the national floor wage: Track its notification and reassess applicable state rates.
- Review VDA revisions: Ensure Variable Dearness Allowance is updated as required.
- Strengthen payroll compliance: Review underpayment exposure and applicable penalties under the new Code.
- Maintain pay equity: Continue compliance with equal pay for equal work.
- Retain wage records: Keep payslips and wage registers for at least three years.
Conclusion
The transition from the Minimum Wages Act, 1948 to the Code on Wages, 2019 marks a significant step towards a more unified and modern wage framework. As wage rules continue to evolve, organizations will need to stay prepared for new notifications, changing wage structures, and wider compliance requirements.
For employers, the focus should now move beyond meeting current requirements to building payroll processes that can adapt to future changes. factoHR helps businesses simplify payroll compliance by managing wage rates, VDA revisions, payroll components, and statutory requirements, helping organizations stay compliant as the regulatory landscape evolves.
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Frequently Asked Questions
What is the Minimum Wage in India in 2026?
There is no single nationwide minimum wage rate yet. Employers must follow the applicable minimum wage notified by the relevant Central or State Government.
Is there a Difference between Minimum Wage and Floor Wage?
Yes. Minimum wages are notified for specific categories or areas, while the national floor wage is intended to provide a minimum benchmark below which state or central minimum wages cannot fall once notified.
How is Minimum Wage Calculated in India?
Minimum wages may include components such as basic wages and Variable Dearness Allowance (VDA), depending on the applicable government notification. Employers should follow the wage structure prescribed for their establishment and employment category.
Does the New Wage Code Apply to Private Companies?
Yes. The Code on Wages, 2019 provides a broader wage framework covering employees across sectors, subject to its applicable provisions and definitions.
Can an Employer Pay below the State Minimum Wage?
No. Employers must comply with the applicable notified minimum wage. Once a national floor wage is set, state or central rates must also meet that floor.
What Salary Components are Included in the 50% Wage Rule?
Basic pay, dearness allowance, and retaining allowance are the key components considered under the 50% rule. Employers should review their payroll components against the Code’s definition of wages.
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