Wages
Also called: Wage
Under Section 2(y) of the Code on Wages, 2019, all remuneration in money or money's worth payable for employment, including basic pay, dearness allowance and retaining allowance, but excluding listed items.
Explained
Section 2(y) of the Code on Wages, 2019 defines wages as all remuneration, whether by way of salaries, allowances or otherwise, expressed in terms of money or capable of being so expressed, which would be payable to a person employed in respect of his employment or work done in it if the terms of employment were fulfilled. It expressly includes basic pay, dearness allowance and retaining allowance. The Code on Social Security, 2020 (Section 2(88)), the Industrial Relations Code, 2020 (Section 2(zq)) and the Occupational Safety, Health and Working Conditions Code, 2020 (Section 2(zzj)) use the same core definition.
The clause then excludes items such as statutory bonus not forming part of remuneration, the value of house accommodation and amenities, employer's contribution to pension or provident fund, conveyance allowance, special expenses, house rent allowance, remuneration under an award or settlement, overtime allowance, commission, gratuity, and retrenchment compensation or other retirement benefits.
Two provisos limit the exclusions. Under the first, if the payments excluded under clauses (a) to (i) exceed one-half of the total remuneration, or such other percentage as the Central Government notifies, the excess is deemed to be remuneration and added to wages. Under the second, for equal wages to all genders and for payment of wages, conveyance allowance, house rent allowance, award remuneration and overtime are counted. Under the Explanation, remuneration in kind up to fifteen per cent of total wages is deemed part of wages.
The Code replaces, under Section 69, the Payment of Wages Act, 1936, the Minimum Wages Act, 1948, the Payment of Bonus Act, 1965 and the Equal Remuneration Act, 1976. It bars gender discrimination in wages (Section 3), empowers the Central Government to fix a floor wage (Section 9), fixes time limits for payment (Section 17) and allows only authorised deductions (Section 18). In civil execution, Section 60(1)(h) of the CPC exempts wages of labourers and domestic servants from attachment. In People's Union for Democratic Rights v. Union of India (1982) the Court held that work for less than the minimum wage is forced labour under Article 23. Examiners test the inclusions, exclusions and the fifty per cent rule.
What the law says
(y) “wages” means all remuneration whether by way of salaries, allowances or otherwise, expressed in terms of money or capable of being so expressed which would (42 of 2005), if the terms of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment, and includes, —
(i) basic pay;
(ii) dearness allowance; and
(iii) retaining allowance, if any,
Clause (y) defines wages, with exclusions and the one-half proviso
(1) There shall be no discrimination in an establishment or any unit thereof among employees on the ground of gender in matters relating to wages by the same employer, in respect of the same work or work of a similar nature done by any employee.
(2) No employer shall, —
(i) for the purposes of complying with the provisions of sub-section (1), reduce the rate of wages of any employee; and
Prohibition of gender discrimination in wages
(1) The Central Government shall fix floor wage taking into account minimum living standards of a worker in such manner as may be prescribed:
Provided that different floor wage may be fixed for different geographical areas.
(2) The minimum rates of wages fixed by the appropriate Government under section 6 shall not be less than the floor wage and if the minimum rates of wages fixed by the appropriate Government earlier is more than the floor wage, then, the appropriate Government shall not reduce such minimum rates of wages fixed by it earlier.
Floor wage fixed by the Central Government
(1) The Payment of Wages Act, 1936 (4 of 1936), the Minimum Wages Act, 1948 (11 of 1948), the Payment of Bonus Act, 1965 (21 of 1965) and the Equal Remuneration Act, 1976 (25 of 1976) are hereby repealed.
(2) Notwithstanding such repeal, anything done or any action taken under the enactments so repealed including any notification, nomination, appointment, order or direction made there under or any amount of wages provided in any provision of such enactments for any purpose shall be deemed to have been done or taken or provided for such purpose under the corresponding provisions of this Code and shall be in force to the extent they are not contrary to the provisions of this Code till they are repealed under the corresponding provisions of this Code or by the notification to that effect by the Central Government.
(3) Without prejudice to the provisions of sub-section (2), the provisions of section 6 of the General Clauses Act, 1897 (10 of 1897) shall apply to the repeal of such enactments.
Repeal of the four earlier wage laws
Section 2, Social Security Code
(88) “wages” means all remuneration, whether by way of salaries, allowances or otherwise, expressed in terms of money or capable of being so expressed which would, if the terms of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment, and includes,—
(a) basic pay;
(b) dearness allowance; and
(c) retaining allowance, if any,
Clause (88) adopts the same core definition of wages
(iii) as respects any other [servant of the [Government]] or a servant of any other *** local authority, the State Government.] [Explanation IV—For the purposes of this proviso, “wages” includes bonus, and “labourer” includes a skilled unskilled or semi-skilled labourer.
Explanation V—For the purposes of this proviso, the expression “agriculturist” means a person who cultivates land personally and who depends for his livelihood mainly on the income from agricultural land, whether as owner, tenant, partner or agricultural labourer.
Explanation VI—For the purposes of Explanation V, an agriculturist shall be deemed to cultivate land personally, if he cultivates land—
(a) by his own labour, or
(b) by the labour of any member of his family, or
(c) by servants or labourers on wages payable in cash or in kind (not being as a share of the produce), or both.] 13[(1A) Notwithstanding anything contained in any other law for the time being in force, an agreement by which a person agrees to waive the benefit of any exemption under this section shall be void.]
Wages of labourers and domestic servants exempt from attachment
Example
For example, if an employee's total remuneration is 100 and the excluded allowances under clauses (a) to (i) come to 60, the excess of 10 above one-half is added to wages under the first proviso, so wages are computed as 50.
For the exam
- Section 2(y) Code on Wages: includes basic pay, dearness allowance and retaining allowance.
- Excluded items above one-half of total remuneration are added back to wages (first proviso).
- Remuneration in kind up to 15 per cent of total wages counts as wages.
- Section 69 repeals the Payment of Wages, Minimum Wages, Payment of Bonus and Equal Remuneration Acts.
- PUDR (1982): payment below minimum wage is forced labour under Article 23.
280 questions in the Law Maker question bank use this term. Practise Labour & Industrial Law questions
Judgments
Related terms
- WorkmanA person employed to do manual, skilled, technical, operational, clerical or supervisory work for hire or reward. The Industrial Relations Code, 2020 now uses the term worker in Section 2(zr).
- Industrial disputeA dispute between employers, employers and workers, or workers, connected with employment, non-employment, terms of employment or conditions of labour, including an individual termination dispute (Section 2(q) IRC).
- RetrenchmentTermination by the employer of a worker's service for any reason other than disciplinary punishment, excluding retirement, non renewal or end of contract, end of fixed term and ill health. Section 2(zh) of the IR Code, 2020.
- StrikeCessation of work by persons employed in an industry acting in combination, or a concerted refusal to work, including concerted casual leave by 50% or more workers on a day. Section 2(zk), IR Code.
- Trade unionUnder Section 2(zl) of the Industrial Relations Code, 2020, any combination formed primarily to regulate relations between workers and employers, workers and workers, or employers and employers.
Further reading
Checked 6 November 2026. Statutory text is quoted from the Bare Acts library, taken from India Code. See the full glossary.