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).