The Code on Wages, 2019 consolidates four earlier central laws, the Payment of Wages Act, Minimum Wages Act, Payment of Bonus Act and Equal Remuneration Act, into one wage-related statute, part of India’s four labour codes.

What actually changed for HR

The Code’s most consequential change for payroll structuring is Section 2(y), which caps allowances excluded from the legal definition of “wages” at 50% of total pay, meaning basic plus dearness allowance must together make up at least half of CTC, raising the base PF and gratuity contributions get calculated on for salary structures built around a low basic. It also universalizes minimum-wage and timely-payment protections to all employees, removing the wage ceilings the older Acts applied only below, and broadens the equal-pay standard to bar discrimination on “gender” rather than the older Act’s narrower “sex.” Bonus eligibility runs on a wage ceiling the Ministry of Labour and Employment notified at ₹21,000 a month. The Code took central effect on 21 November 2025, with state-level rules still rolling out through 2026.

Frequently asked questions

Is the Minimum Wages Act still separately in force?

No, it’s one of the four laws the Code on Wages consolidated and replaced, though its core protections carry forward inside the new Code.

Does the 50% rule apply to every company right now?

It applies as central rules take effect, with state-level compliance mechanics still transitioning through 2026, worth confirming current status for your specific state.

What replaced the Equal Remuneration Act specifically?

Its equal-pay principle is now housed in this Code’s Sections 3 and 4, broadened to a gender-neutral standard.

See the 50% wage rule in detail, and check current state-by-state implementation status.