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Labour Ministry notifies draft on minimum wages

Topics Covered: Welfare schemes for vulnerable sections of the population by the Centre and States and the performance of these schemes; mechanisms, laws, institutions and bodies constituted for the protection and betterment of these vulnerable sections.

Labour Ministry notifies draft on minimum wages

The Union Labour and Employment Ministry has published the draft rules framed for the implementation of the Code on Wages Act, 2019.


  • The latest draft rules are similar to the preliminary draft published in November 2019 with one major change. The Ministry has changed the work requirement for eligibility for minimum wages and other benefits from nine hours to eight.
  • The latest draft clarified the issue as the nine hours mentioned earlier included one hour of rest, which has now been mentioned separately from the eight working hours.

Criteria for determination of minimum wages:

  • A net intake of 2,700 calories per day per consumption unit, 66 metre of cloth per year per standard working class family, which includes a spouse and two children apart from the earning worker – an equivalent to three adult consumption units.
  • Housing rent expenditure to constitute 10% of the food and clothing expenditure; fuel, electricity and other miscellaneous items of expenditure to constitute 20% minimum wage and expenditure for children education, medical requirement, recreation and expenditure on contingencies to constitute 25% of minimum wage.

When the rate of wages for a day is fixed, then such amount shall be divided by eight for fixing the rate of wages for an hour and multiplied by twenty six for fixing the rate of wages for a month and in such division and multiplication the factors of one-half and more than one-half shall be rounded as next figure and the factors less than one-half shall be ignored.

About the Code on Wages Act:

The code will amalgamate the Payment of Wages Act, 1936, the Minimum Wages Act, 1948, the Payment of Bonus Act, 1965, and the Equal Remuneration Act, 1976.

  1. The wage code universalises the provisions of minimum wages and timely payment of wages to all employees, irrespective of the sector and wage ceiling.
  2. It ensures the “right to sustenance” for every worker and intends to increase the legislative protection of minimum wage from existing about 40% to 100% workforce.
  3. It also introduces the concept of statutory floor wage which will be computed based on minimum living conditions and extended qualitative living conditions across the country for all workers.
  4. While fixing the minimum rate of wages, the central government shall divide the concerned geographical area into three categories – metropolitan area, non-metropolitan area and the rural area.
  5. Wages includesalary, allowance, or any other component expressed in monetary terms. This does not include bonus payable to employees or any travelling allowance, among others.
  6. The minimum wages decided by the central or state governments must be higher than the floor wage.
  7. Payment of wages: Wages will be paid in (i) coins, (ii) currency notes, (iii) by cheque, (iv) by crediting to the bank account, or (v) through electronic mode.  The wage period will be fixed by the employer as either: (i) daily, (ii) weekly, (iii) fortnightly, or (iv) monthly.

 Advisory boards:

The central and state governments will constitute advisory boards.

  1. The Central Advisory Board will consist of: (i) employers, (ii) employees (in equal number as employers), (iii) independent persons, and (iv) five representatives of state governments.
  2. State Advisory Boards will consist of employers, employees, and independent persons.  Further, one-third of the total members on both the central and state Boards will be women.  The Boards will advise the respective governments on various issues including: (i) fixation of minimum wages, and (ii) increasing employment opportunities for women.


Prelims Link:

  1. Composition and functions of the Central Advisory Board established under Code on wages act.
  2. What is a floor wage and who sets it?
  3. Who decides the minimum wages?
  4. What constitutes wages under the act?
  5. Criteria for determination of minimum wages.

Mains Link:

Write a note on code on wages Act, 2019.

Sources: the Hindu.