The Code on Wages (Central) Rules, 2026, notified on 8 May 2026, represent the finalisation of the Draft Code on Wages (Central) Rules, 2025.
Applicability of the Central Rules
These Rules are Central Rules and therefore apply to establishments for which the Central Government is the “appropriate Government” under the Code on Wages, 2019. This includes establishments carried on by or under the authority of the Central Government, and establishments such as railways, mines, oil fields, major ports, air transport services, telecommunication, banking and insurance companies, Central PSUs, subsidiaries of Central PSUs, autonomous bodies owned or controlled by the Central Government, and contractors working for such establishments. The Code separately provides that, for “any other establishment,” the State Government is the appropriate Government.
Accordingly, private establishments, shops, commercial establishments, factories and other establishments falling under the State Government jurisdiction will continue to be governed by the existing applicable rules and notifications until the respective State Governments notify their own Code on Wages Rules or related implementation notifications. Therefore, employers must first identify whether their establishment falls under Central or State jurisdiction before applying the 2026 Central Rules.
Major Changes from the Draft Rules
i. Method of calculating minimum wages
The Draft Rules had prescribed a detailed wage-calculation basket, including a standard working-class family of three adult consumption units, 2700 calories per consumption unit per day, 66 metres of cloth per year, housing rent at 10% of food and clothing expenditure, fuel/electricity/miscellaneous expenses at 20%, and education/medical/recreation/contingency expenses at 25%.
In the Final Rules, these specific criteria have been removed. Instead, the minimum wage is to be fixed on a daily basis by considering criteria that will be separately specified by the Central Government by special or general order.
ii. Normal Working Hours
The Draft Rules stated that the number of hours constituting a normal working day would be as per general or special orders issued from time to time. Under draft rules, what constitutes normal working hours is not mentioned, and the flexibility so provided under the Code was missing under the draft rules.
Whereas the Final Rules are more specific for employees whose wage period is daily, the normal working day is eight hours, and for employees whose wage period is other than daily, weekly working hours must not exceed forty-eight hours. It means more flexibility is provided to the employer and may open the door for new normal working hours, like 4 days a week. This is very useful for the nature of jobs that demand a timeline instead of working hours, such as IT/IT-related project-based assignments, manufacturing units to accelerate the unit economics, etc.
iii. Specific provisions related to Contractual employees
A further practical addition is the provision dealing with contractual employees. The Final Rules specifically provide that where employees are engaged through a contractor, the establishment must pay the contractor the amount payable in respect of wages of such employees in accordance with the Code. This places a clear compliance responsibility on principal establishments to ensure that wage obligations are financially enabled and not defeated by non-payment to contractors.
iv. Clarifying the situation on ‘part-time employees’
The Final Rules clarify that an employee is not entitled to wages for a full normal working day where the employee has agreed to work on a part-time basis as per the terms of employment, or is otherwise not entitled under any other labour law. This clarification is useful for service-sector employers, retail, hospitality, logistics, platform-linked operations and other establishments using flexible staffing arrangements.
v. Done away with authority’s approval for ‘fines and deductions’
The Draft Rules contemplated greater involvement of the Deputy Chief Labour Commissioner or Inspector-cum-Facilitator in certain deduction/fine procedures.
The Final Rules instead emphasise employer-level due process wherein the employer must intimate the concerned employee electronically or in writing, provide details of the act or omission, allow seven days for a response, and impose fine or deduction only after charges are established.
vi. Mandatory Digital filing
Every employer shall now be required to file the return electronically to which the Code on Wages is applicable.
Conclusion
The Final Rules move away from a highly prescriptive draft model and adopt a more flexible and implementation-oriented framework. The biggest deviations are the removal of the detailed minimum-wage consumption formula, clearer working-hour rules, recognition of electronic compliance, specific treatment of contractor wage payments, and express recognition of part-time work. However, their applicability is limited to establishments under Central Government jurisdiction. Establishments governed by State Governments should continue to follow existing applicable State rules and notifications until their respective State Governments notify corresponding rules under the Code on Wages.
