"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 be payable to a person employed in respect of employment or work done, and includes:

• (i) Basic pay
• (ii) Dearness allowance
• (iii) Retaining allowance, if any

But does NOT include:

"Employee" means any person (other than an apprentice engaged under the Apprentices Act, 1961) employed on wages by an establishment to do any of the following types of work for hire or reward, whether the terms of employment are express or implied:

• Skilled, semi-skilled or unskilled work
• Manual or operational work
• Supervisory, managerial or administrative work
• Technical or clerical work

Also includes: A person declared to be an employee by the appropriate Government.

"Employer" means a person who employs, whether directly or through any person, or on his behalf or on behalf of any person, one or more employees in his establishment. It includes:

"Worker" means any person (except an apprentice) employed in any industry to do any of the following for hire or reward (express or implied terms):

• Manual, unskilled, skilled, technical or operational work
• Clerical or supervisory work

Also includes:

• Working journalists (as defined in Working Journalists Act, 1955)
• Sales promotion employees (as defined in Sales Promotion Employees Act, 1976)
• A person dismissed/retrenched in connection with an industrial dispute

Does NOT include:

"Establishment" means any place where any industry, trade, business, manufacture or occupation is carried on. It includes Government establishments (defined separately as any office or department of the Government or a local authority — Cl. 2(o)).

"Factory" has the same meaning as in Clause (m) of Section 2 of the Factories Act, 1948 — i.e., any premises where manufacturing process is carried on using power with 10 or more workers, or without power with 20 or more workers.

"Appropriate Government" determines which level of government — Central or State — has jurisdiction over a particular establishment.

"Contractor" in relation to an establishment means a person who:

• Undertakes to produce a given result for the establishment (other than mere supply of goods) through contract labour; or
• Supplies contract labour for any work of the establishment as mere human resource

Includes sub-contractors.

"Contract Labour" means a worker who is hired in or in connection with the work of an establishment through a contractor, with or without the knowledge of the principal employer. Includes inter-state migrant workers.

Does NOT include a worker (other than part-time employee) who:

1. Is regularly employed by the contractor for any activity of the contractor's own establishment; and
2. Has mutually accepted standards of employment conditions (including permanent engagement); and
3. Gets periodical pay increments, social security coverage, and other welfare benefits as per law

"Accounting Year" means the year commencing on the 1st day of April — i.e., the Indian financial year from 1 April to 31 March of the following calendar year.

This definition is critical for bonus calculations, as:

• Bonus eligibility (30 working days) is assessed within the accounting year
• Gross profits, available surplus, and allocable surplus are all computed per accounting year
• Bonus must be paid within 8 months from the close of the accounting year (i.e., by 30 November)
• Set on/set off carries forward across up to 4 consecutive accounting years

"Same work or work of a similar nature" means work in respect of which:

• The skill, effort, experience and responsibility required are the same
• The work is performed under similar working conditions by employees
• The difference, if any, between the skill/effort/experience/responsibility required for employees of any gender are not of practical importance in relation to the terms and conditions of employment

"Industrial Dispute" means:

1. Any dispute or difference between employers and employers, or between employers and workers, or between workers and workers, which is connected with the employment or non-employment or the terms of employment or conditions of labour of any person; and
2. Any dispute or difference between an individual worker and an employer connected with, or arising out of, discharge, dismissal, retrenchment or termination of such worker

"Direct Tax" means any tax chargeable under:

• The Income-tax Act, 1961
• The Companies (Profits) Surtax Act, 1964
• Any Agricultural Income Tax Law
• Any other tax declared by the Central Government to be a "direct tax" for the purposes of this Code

"Inspector-cum-Facilitator" means a person appointed by the appropriate Government under Clause 51(1) of the Code. This is a redesigned role that combines enforcement powers with a facilitation mandate — replacing the old "Inspector" who had purely enforcement powers.

Dual role:

• Facilitation: Advise employers and workers on compliance, explain the Code's requirements, bring defects to Government's notice
• Enforcement: Inspect establishments, examine workers, require information, search and seize records relevant to offences

Key features:

• Deemed a public servant under the Indian Penal Code
• Inspections may be conducted through a web-based randomised inspection scheme — reducing scope for arbitrary or harassing inspections
• Must give the employer a written show-cause notice before initiating prosecution for most contraventions (except repeat violations within 5 years)
• Can file claims on behalf of employees under Clause 45

No employer shall pay any employee less than the minimum rate of wages notified by the appropriate Government. The minimum wage is fixed by:

• Central Government — for Central Govt. establishments, railways, mines, oil fields, major ports, air transport, telecom, banking, insurance companies, and Central PSUs
• State Government — for all other establishments

The Central Government also fixes a Floor Wage (a national minimum) taking into account minimum living standards of a worker. State Governments cannot fix minimum wages below the floor wage. Different floor wages may be fixed for different geographical areas.

Minimum wages may be fixed/revised as: Factors considered for fixation include: skill level (unskilled/semi-skilled/skilled/highly-skilled), geographical area, arduousness of work (temperature, hazardous occupations, underground work).

The appropriate Government must either:

1. Committee Method: Appoint advisory committees (with equal employer and employee representation + up to 1/3 independent members) to enquire and recommend
2. Notification Method: Publish proposals for public comment, specifying a date not less than two months ahead for consideration

After considering recommendations/representations, the Government notifies the minimum wages, which come into force on expiry of three months from the notification date (unless otherwise specified).

Where minimum wages have been fixed, the appropriate Government may:

• Fix the number of hours constituting a normal working day (including intervals)
• Provide for a day of rest in every 7-day period, with remuneration for that day
• Provide for payment for work on rest days at not less than the overtime rate

Overtime: Where an employee works in excess of normal working day hours, the employer must pay at an overtime rate not less than twice the normal rate of wages.

• Piece Work: Where a minimum time rate (not a piece rate) is fixed, the employer must pay wages at not less than the minimum time rate. This ensures piece-rate workers are protected by a floor.
• Two or More Classes of Work: If an employee does different classes of work to which different minimum rates apply, the employer must pay wages for the time spent on each class at not less than the respective minimum rate for that class.
• Time Work: May be fixed by hour, day, or month; the calculation method is prescribed by rules.

All wages shall be paid in:

• Current coin or currency notes (cash)
• Cheque
• By crediting wages to the employee's bank account
• Electronic / digital mode

The appropriate Government may, by notification, specify establishments where wages must be paid only by cheque or bank credit (i.e., cashless mandatorily).

No, the provisions of Chapter III (Payment of Wages) do not automatically apply to Government establishments. They apply only if the appropriate Government issues a specific notification extending these provisions to a specified Government establishment.

Only the following deductions are authorized under Cl. 18(2):

Strict procedural requirements govern imposition of fines:

• Fines may only be imposed for specified acts and omissions pre-approved by the appropriate Government (or prescribed authority)
• A notice specifying such acts/omissions must be exhibited on the premises
• The employee must be given an opportunity to show cause before any fine is imposed
• Total fines in any wage period must not exceed 3% of wages for that period
• No fine on an employee under the age of 15 years
• No fine recoverable by instalments or after 90 days from imposition
• All fines and realizations must be recorded in a register and used only for purposes beneficial to employees (not retained by employer)

Deductions for absence are permitted only for actual absence from the place of work required under the terms of employment. The deduction amount must bear no greater proportion to wages than the period of absence bears to the total required working period.

Special Rule — Unauthorized Group Absence: If 10 or more employees acting in concert absent themselves without due notice and without reasonable cause, the deduction may include up to 8 days' wages (as if it were notice-period compensation due to the employer).

Eligibility: Every employee drawing wages not exceeding the notified ceiling (determined by the appropriate Government) who has worked for at least 30 days in the accounting year is entitled to bonus.

Step 1 — Gross Profits: Calculated in the prescribed manner (separately for banking companies vs. others).

Step 2 — Deductions from Gross Profits (Cl. 34):

• Depreciation admissible under Income Tax Act
• Direct tax liability for the accounting year
• Such further sums as may be prescribed

Step 3 — Available Surplus: Gross Profits minus deductions under Cl. 34 (plus tax differences from prior year adjustments in subsequent years)

Step 4 — Allocable Surplus:

• Banking company: 60% of available surplus
• Other establishment: 67% of available surplus

An employee is disqualified from receiving bonus if dismissed from service for:

• Fraud
• Riotous or violent behaviour while on the premises of the establishment
• Theft, misappropriation or sabotage of any property of the establishment
• Conviction for sexual harassment

Additionally, the employer may deduct from bonus any amount of financial loss caused by an employee's misconduct (Cl. 38) — but only from the bonus for that specific accounting year.

Bonus must be paid by crediting it to the employee's bank account within 8 months from the close of the accounting year.

The appropriate Government may, on application by the employer with sufficient cause, extend this period — but the total extension cannot exceed 2 years.

For the first 5 accounting years after an establishment starts selling goods/services, bonus is payable only in the accounting year in which the employer derives profit, and without the set on/set off mechanism.

For the 6th and 7th years, a modified set on/set off scheme applies that accounts for the prior 5–7 years' surplus/deficit.

From the 8th year onwards, the full normal bonus provisions (including set on/set off) apply as for any established entity.

The bonus chapter (Ch. IV) does not apply to employees of:

• Life Insurance Corporation of India
• Seamen under the Merchant Shipping Act, 1958
• Dock workers registered under the Dock Workers Act, 1948
• Establishments under Central/State Government or local authorities
• Indian Red Cross Society and similar humanitarian institutions; their branches
• Universities and other educational institutions
• Hospitals, chambers of commerce, social welfare institutions (not for profit)
• Reserve Bank of India
• Notified public sector financial institutions
• Inland water transport establishments on cross-border routes
• Any other establishment specifically exempted by notification

Public Sector Exception: If a public sector establishment competes with private sector and earns at least 20% of gross income from such competitive goods/services, the bonus chapter applies to it as it would to private sector.

Clause 3 provides that there shall be no discrimination 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.

Additionally, an employer:

• Cannot reduce the rate of wages of any employee in order to comply with the equal remuneration obligation
• Cannot make any discrimination on the ground of sex while recruiting any employee for the same or similar work or in the conditions of employment — unless employment of women in that work is prohibited or restricted by law

If there is any dispute about whether a work is of the same or similar nature for the purposes of the equal wages provision, the dispute shall be decided by an authority notified by the appropriate Government for this purpose.

Central Advisory Board (CAB) — constituted by the Central Government, advises on:

• Fixation or revision of minimum wages and connected matters
• Increasing employment opportunities for women
• Extent to which women may be employed in specified establishments/employments
• Any other matter under the Code referred by the Central Government

State Advisory Board (SAB) — constituted by each State Government, with the same advisory functions at the State level. The SAB may further constitute committees and sub-committees.

Composition: Both boards are tripartite — representatives of employers, employees (equal numbers), and independent persons (not exceeding 1/3 of total). At least 1/3 of members must be women. An independent member is appointed as Chairperson.

The appropriate Government appoints one or more authorities (not below Gazetted Officer rank) to hear and determine claims. A claim can be filed by:

• The employee concerned
• Any registered Trade Union of which the employee is a member
• The Inspector-cum-Facilitator

Limitation Period: Claims must be filed within 3 years from the date the claim arose. The authority may condone delay on showing sufficient cause.

Group Claims: A single application may be filed on behalf of any number of employees in an establishment.

Any person aggrieved by an order of the claims authority may appeal to the Appellate Authority (appointed by the appropriate Government) within 90 days of the order. Delay beyond 90 days may be condoned on showing sufficient cause.

The Appellate Authority must be at least one rank higher than the claims authority. Appeals must be disposed of within 3 months (by endeavour).

Outstanding dues under the Appellate Authority's orders are recovered by the claims authority via the land revenue mechanism.

Every employer must:

• Maintain a register with details of persons employed, muster roll, wages, etc.
• Display a notice board at a prominent place showing: abstract of the Code, category-wise wage rates, wage period, date/time of wage payment, name and address of Inspector-cum-Facilitator
• Issue wage slips to employees in the prescribed form

The Inspector-cum-Facilitator (replacing the old "Inspector" concept) has a dual role — facilitation and enforcement. Powers include:

• Advise employers and workers on compliance with the Code
• Inspect establishments as assigned
• Examine any person reasonably believed to be a worker
• Require information about names and addresses
• Search, seize, or copy registers, records of wages, or notices relevant to an offence
• Bring to the notice of the Government any defects or abuses not covered by law

If amounts cannot be paid due to the employee's death or unknown whereabouts:

1. Amounts are paid to the nominated person as per the employee's nomination
2. If no nomination or if payment to nominee is not possible, amounts are deposited with the prescribed authority, who deals with them in the prescribed manner

Once the employer pays the nominee or deposits with the authority, the employer is discharged from liability for those amounts.

If an offence is committed by a company (including firms, LLPs, and associations), every person who at the time of the offence was in charge of and responsible for the conduct of the company's business, along with the company itself, shall be deemed guilty.

Defences available:

• The offence was committed without the person's knowledge
• The person exercised all due diligence to prevent the offence

Directors, managers, secretaries, or other officers who consented, connived, or were negligent are also personally liable.

Yes, offences not punishable with imprisonment may be compounded by a notified Gazetted Officer, at the application of the accused (before or after prosecution is instituted), for a sum of 50% of the maximum fine for that offence.

Compounding is NOT available for:

• Second or subsequent offences within 5 years (whether previously compounded or convicted)

If compounded before prosecution — no prosecution is initiated. If after — the court is notified and the accused is discharged. Failure to comply with the compounding order results in an additional penalty of 20% of the maximum fine.

No court shall take cognizance of an offence under the Code except on a complaint by or under the authority of:

• The appropriate Government or an authorized officer
• An employee
• A registered Trade Union
• An Inspector-cum-Facilitator

No court below a Metropolitan Magistrate or Judicial Magistrate of the First Class can try offences under this Code.

Administrative Penalty Power (Cl. 53): For offences punishable only with fines up to ₹50,000, the appropriate Government may appoint an officer (not below Under Secretary rank) to hold an enquiry and impose penalties directly — reducing the burden on subordinate courts.