The Central Government has released the draft Code on Wages (Central) Rules, 2026, for public consultation, proposing a comprehensive framework for wage regulation in central sector establishments. The Rules aim to operationalise the Code on Wages, 2019, which was notified on November 21, 2025, and consolidates four earlier labour laws.
Key Provisions of the Draft Rules
Floor Wage Fixation
The Rules provide for the fixation of a floor wage by the central government, based on minimum living standards, with consultation from the Advisory Board and state governments. The floor wage shall be fixed considering factors including food, clothing, housing, and other essentials. The central government may revise the floor wage every five years and adjust it periodically for variations in the cost of living.
Minimum Wage Calculation
The Rules provide for the fixation of minimum wages by the central government, which will specify the criteria for calculation through a special or general order. The minimum wage rate will be fixed on a daily basis. To determine the hourly rate, the daily rate will be divided by eight, and for the monthly rate, it will be multiplied by 26. For a working week shorter than six days, the hourly rate will be used to derive the daily minimum wage.
Working Hours and Rest Days
The Rules provide for an eight-hour work day for employees whose wage period is on a daily basis. For employees with other wage periods, the Rules prescribe a 48-hour work week. Every employee is entitled to at least one weekly rest day, normally Sunday for a six-day working week. An employee cannot work for more than 10 consecutive days without a full rest day. If an employee works on a rest day, the employer must provide a substituted rest day and pay overtime wages, subject to certain exceptions.
Dearness Allowance Revision
The variable dearness allowance will be revised twice yearly—before April 1 and before October 1—based on the Average Consumer Price Index for Industrial Workers.
Nomination on Death of Employee
The Rules mandate that if an employee has a family, the nomination for payment of dues must be made in favour of the spouse, followed by other family members. Nominations in favour of a person other than the employee's family will be invalid.
Potential Concerns
In some respects, the draft Rules may go beyond the scope of powers delegated under the Code. These include: (i) adding deposit conditions for appeals against decisions on claims arising under the Code, (ii) mandating who the employee may nominate for payment of dues, and (iii) reducing the proprietor's liability in cases where a contractor fails to pay bonus.
Applicability and Background
The Rules will apply to all central sector establishments, including railways, mines, oilfields, banking companies, and establishments carried on by or under the authority of the central government. The draft Rules propose to supersede rules framed under the repealed Acts, including the Payment of Wages (Procedure) Rules, 1973, the Minimum Wages (Central) Rules, 1950, and the Payment of Undisbursed Wages (Mines) Rules, 1989, as well as earlier rules under the Code on Wages, 2019.
The central government consolidated 29 labour laws into four Labour Codes: the Code on Wages, 2019; the Industrial Relations Code, 2020; the Code on Social Security, 2020; and the Occupational Safety, Health, and Working Conditions Code, 2020. The Code on Wages, 2019 regulates wage and bonus payments in all employments where any trade, industry, business, or manufacturing is carried on, replacing the Payment of Wages Act, 1936, the Minimum Wages Act, 1948, the Payment of Bonus Act, 1965, and the Equal Remuneration Act, 1976.
