Author’s Note. This article reviews Haryana Government Notification No. 2/25/26-2 Lab dated 9 April 2026 and examines whether its prohibition on segregating minimum wages into allowances can withstand scrutiny under the Code on Wages, 2019, especially in light of the Supreme Court’s decision in Hindustan Sanitaryware and Industries Ltd. v. State of Haryana (2019).
The Haryana Government’s notification dated 9 April 2026, issued under section 8(3) of the Code on Wages, 2019, revises minimum wages with effect from 1 April 2026. Its most contentious feature is Note 1, which declares that the notified minimum wages are “basic rates of minimum wages” and are “not permitted to be segregated into components in the form of allowances by the employer”.1
That direction is significant because it substantially reproduces the same regulatory idea that had already been tested before the Supreme Court in relation to Haryana’s earlier notifications.2
In our view, the latest notification is vulnerable for the same reason: the State may fix or revise minimum wages, but it cannot, through a notification, prohibit a wage structure that the parent statute itself contemplates.3
The Supreme Court’s judgment in Hindustan Sanitaryware and Industries Ltd. v. State of Haryana is the starting point. Deciding a challenge to earlier Haryana notifications under the Minimum Wages Act, 1948, the Court held that the Government had no power to alter the contractual structure of wages beyond fixing or revising the statutory minimum. The Court expressly ruled that the “prohibition on segregation of the wages into components” under the notification was not a valid exercise of power and further concluded that “the prohibition of segregation of wages into components in the form of allowances in the Notification is impermissible”.4
That reasoning remains highly persuasive under the Code on Wages, 2019. Section 7 of the Code specifically recognises that minimum wages may be structured in more than one lawful way: as a basic rate of wages plus cost of living allowance; as a basic rate, with or without cost of living allowance, plus the cash value of concessions; or as an all-inclusive rate.5
The statute therefore does not insist that every notified minimum wage must be paid only as a single indivisible basic amount. On the contrary, it expressly acknowledges component-based structures. Once Parliament has chosen that model, a State notification cannot outlaw, in absolute terms, segregation into allowances merely by characterising the notified rate as “basic minimum wages”.6
The statutory definition of “wages” points in the same direction. Section 2(y) defines wages broadly to include all remuneration “whether by way of salaries, allowances or otherwise”, while excluding specified components subject to the proviso that excess excluded amounts beyond the prescribed threshold are to be pulled back into the wage computation.7
The legislative response to aggressive wage structuring, therefore, is not a blanket prohibition on allowances; it is a computation rule that prevents artificial exclusions from depressing statutory wage liabilities. In other words, the Code regulates abuse through inclusion mechanics, not through an executive ban on allowance-based wage design.8
The distinction matters. A government fixing minimum wages is acting within express statutory authority. But a government directing that wages can never be segregated into allowances is doing something more: it is dictating the internal architecture of remuneration in a manner not clearly authorised by the Code. That is especially problematic where the employee may still be receiving wages that satisfy the statutory minimum when tested against the Code’s own definition. Once compliance is to be measured by the statute’s concept of wages, the executive cannot substitute that calibrated standard with an absolute prohibition of its own creation.9
The State may argue that such a prohibition is necessary to prevent employers from splitting wages into multiple heads in order to defeat labour protections. That concern is understandable, but the answer already lies within the Code itself. The inclusion of allowances within the definition of wages, coupled with the fifty per cent cap mechanism for excluded components, is the statutory tool designed to address sham structuring.10
What the State cannot do, consistently with the Code and the Supreme Court’s earlier ruling, is convert an anti-evasion concern into a wholesale ban on allowance-based structuring.11
Accordingly, the impugned portion of the 2026 Haryana notification appears open to serious challenge. It revives, in materially similar language, a restriction that the Supreme Court has already found impermissible; and it does so under a statutory regime that expressly recognises component-based minimum wage formulations. Haryana is fully competent to revise minimum wages and to ensure strict enforcement against underpayment. But insofar as Note 1 purports to forbid segregation of notified wages into allowances across the board, it likely travels beyond the authority conferred by the Code on Wages, 2019 and ought to be held impermissible.12
Footnote-style citations
1. Haryana Government, Labour Department, Notification No. 2/25/26-2 Lab, dated 9 April 2026, pp. 1–2 (Note 1).
2. Id.; see also Hindustan Sanitaryware and Industries Ltd. v. State of Haryana, Civil Appeal No. 2539 of 2010 and Civil Appeal No. 4454 of 2019, decided on 29 April 2019.
3. Code on Wages, 2019, sections 7 and 67.
4. Hindustan Sanitaryware and Industries Ltd. v. State of Haryana, supra, holding that “prohibition on segregation of the wages into components” was not valid and that prohibition of segregation into allowances was “impermissible”.
5. Code on Wages, 2019, section 7.
6. Id.
7. Code on Wages, 2019, section 2(y).
8. Id., proviso to section 2(y).
9. Compare Haryana Notification dated 9 April 2026, Note 1, with Code on Wages, 2019, sections 2(y), 7 and 8.
10. Code on Wages, 2019, section 2(y), first proviso.
11. Hindustan Sanitaryware, supra.
12. Haryana Notification dated 9 April 2026, Note 1; Hindustan Sanitaryware, supra; Code on Wages, 2019, sections 2(y), 7 and 8.
