India — Statutory Benefits & Leave

The Code on Wages, 2019 (Act No. 29 of 2019) is the foundational statute governing wage payment, minimum wages, bonus, and pay equity for all employees in India. Enacted on 8 August 2019 and brought into force on 21 November 2025, the Code consolidates and repeals four legacy wage-related statutes: the Payment of Wages Act, 1936; the Minimum Wages Act, 1948; the Payment of Bonus Act, 1965; and the Equal Remuneration Act, 1976. It is the first of four new Labour Codes designed to simplify India's previously fragmented labour-law framework of 29 central statutes.

Universal coverage. Section 5 establishes a statutory right to minimum wages for all employees in every sector — organised and unorganised, public and private — irrespective of wage ceiling or industry schedule. Prior to the Code, minimum-wage protections applied only to "scheduled employments," covering roughly 30–40% of the workforce. The Code extends minimum-wage protection to the entire labour force, including agricultural workers, domestic workers (where state minimum-wage notifications include those categories), painters, restaurant staff, and other informal-sector employees who were previously excluded.

Who is covered. The Code defines "employee" broadly: any person employed on wages in any kind of work, whether manual, skilled, technical, operational, clerical, or supervisory (excluding apprentices under the Apprentices Act, 1961). The term "worker" — a subset relevant to certain procedural provisions — is similarly expansive and includes sales-promotion employees and working journalists. Section 1(2) provides that the Code extends to the whole of India.

Concurrent jurisdiction. Labour is a concurrent-list subject under the Constitution of India. The Code allocates minimum-wage fixation and enforcement responsibilities between the central government (for industries such as railways, mines, and oil fields) and state governments (for all other employments). Each appropriate government fixes, reviews, and revises minimum wages within its jurisdiction, subject to the floor-wage baseline (discussed below).

Floor wage. Section 9, read with Rule 11 of the central draft rules, introduces a statutory floor wage to be fixed by the central government based on minimum living standards (including food, clothing, and essential expenses) and revised at regular intervals. Minimum wages notified by state or central governments must be higher than the floor wage; where an existing minimum wage already exceeds the floor, the government may not reduce it. The floor-wage mechanism aims to create a national baseline and reduce the dispersion of minimum-wage rates, which previously numbered more than 2,000 across states and employment categories.

Revised wage definition and the 50% cap. Section 2(y) standardises the definition of "wages" for purposes of the Code and cross-Code social-security calculations (provident fund, employees' state insurance, gratuity). Wages comprise basic pay, dearness allowance, and retaining allowance. Nine categories are explicitly excluded (house rent allowance, conveyance allowance, overtime allowance, bonus payable to employees, reimbursements for special expenses, employer contributions to provident fund or pension, and gratuity, among others). Critically, the first proviso to Section 2(y) provides that if the total value of excluded components exceeds 50% of the employee's total remuneration, the excess over 50% is deemed wages and added back. This 50% cap came into effect on 21 November 2025 and materially affects employers' cost-to-company structures and statutory-contribution calculations.

Gender pay equity. Section 3 prohibits discrimination on the basis of gender (expressly including transgender identity) in matters of recruitment, wages, or employment conditions for the same work or work of a similar nature. Work is deemed similar when the skill, effort, experience, and responsibility required are the same and have a practical bearing on the terms and conditions of employment.

Commencement and implementation status. The Code received presidential assent on 8 August 2019 but was not brought into force for more than six years. Section 1(3) empowers the central government to appoint different commencement dates for different provisions; certain advisory-board provisions were notified in December 2020, but the Code's substantive wage-payment, minimum-wage, and bonus provisions came into effect only on 21 November 2025 via official gazette notification. As of May 2026, the central government has published draft rules (initially on 30 December 2025) for public comment, and over 30 states and Union Territories have published or finalised their own implementing rules. Employers must comply with the Code's requirements from the 21 November 2025 effective date, notwithstanding the delayed finalisation of certain procedural rules.

Source: Code on Wages, 2019 (Act No. 29 of 2019) Source: PIB Factsheet: Code on Wages, 2019 Safeguards Workers (23 Nov. 2025) Source: Ministry of Labour & Employment FAQs - Code on Wages (Jan. 2026)

Fixation responsibility and geographic/skill-based classification. Section 6 of the Code on Wages, 2019 requires the "appropriate Government" — central or state — to fix minimum wages for all employees within its jurisdiction. Labour is a concurrent-list subject under the Constitution of India (Seventh Schedule, List III, Entry 23), and the Code allocates minimum-wage authority by industry. The central government fixes minimum wages for employments specified in Part A of the Schedule (railways, mines, oil fields, major ports, air transport services, and any employment under the direct authority of the central government), while state governments fix minimum wages for all other employments within their territory. Section 6(1) permits the appropriate government to fix minimum wages by time-work (hourly, daily, monthly wage periods) and piece-work, and to classify employments by: (a) skill: unskilled, semi-skilled, skilled, and highly skilled; and (b) geographical area: zone, State, district, or any smaller unit. The Code does not prescribe uniform categories; each appropriate government may adopt its own classification scheme when fixing minimum wages for the employments under its jurisdiction.

Revision cycle. Section 7 mandates that the appropriate government shall review and revise minimum wages "ordinarily at an interval not exceeding five years." The five-year maximum is a statutory obligation; the government may revise wages more frequently but must not allow more than five years to elapse without revision. In the central sphere, the Ministry of Labour & Employment has historically revised minimum wages for central-sphere employments on a semi-annual basis (effective 1 April and 1 October each year), incorporating a variable dearness allowance (VDA) linked to the All-India Consumer Price Index for Industrial Workers. This practice predated the Code and continues under it. State governments adopt diverse revision schedules; some states publish annual or semi-annual VDA adjustments, while others issue fixed revisions at multi-year intervals.

Procedural safeguards — Section 8. When fixing minimum wages for the first time or revising existing minimum wages, Section 8(1) requires the appropriate government to follow one of two procedures: (a) appoint committees and sub-committees composed of representatives of employers and employees (in equal numbers) and independent persons (not exceeding one-third of the total), consult those committees, and publish the proposals in the Official Gazette for public objection; or (b) publish the proposals directly in the Official Gazette and specify a period (not less than two months from the date of notification) within which written representations or objections may be received, and consider all representations received before final notification. Most state governments use the gazette-publication route (method b) for speed; the central government has used both methods depending on the employment category. After considering committee advice or public representations, the appropriate government issues a final notification in the Official Gazette under Section 8(6), and the minimum wage takes effect from the date specified in that notification.

Components of minimum wages — basic rate, allowances, and all-inclusive rate. Section 6(3) permits minimum wages to consist of: (a) a basic rate of wages and a special allowance (commonly called the dearness allowance or VDA) at a rate to be adjusted at intervals not exceeding one year, to account for increases in the cost of living; or (b) a basic rate with the cash value of concessions in respect of essential commodities supplied at concessional rates (where the employer provides subsidized food, housing, or other supplies); or (c) an all-inclusive rate allowing for the basic rate, cost-of-living allowance, and the value of concessions. Employers must pay whichever rate structure the government has notified for the applicable employment category. The central government's current minimum-wage notifications for central-sphere employments adopt the basic-plus-VDA structure and publish revised VDA rates semi-annually.

Where to find applicable minimum wages. Central-sphere minimum-wage notifications are published in the Gazette of India and hosted on the Ministry of Labour & Employment's wage portal at labour.gov.in (navigate to "Minimum Wages — Central Sphere"). State governments publish minimum-wage notifications in the respective State Official Gazette; many states also maintain online portals listing current minimum wages by employment category, skill level, and geographic zone. Because minimum wages are employment-specific and skill-specific, an employer must identify: (1) whether the employment falls under central or state jurisdiction (refer to Part A and Part B of the Schedule to the Code); (2) the skill classification of each role (unskilled, semi-skilled, skilled, highly skilled); and (3) the applicable geographic zone or district. Multi-state employers commonly face dozens of distinct minimum-wage rates across their workforce.

Advisory Boards. Sections 42–43 establish Central and State Advisory Boards to advise the respective governments on minimum-wage fixation and revision. The Central Advisory Board comprises equal numbers of employer and employee representatives, independent persons (not exceeding one-third), and five representatives of state governments; one-third of all members must be women (Section 42(2)). State Advisory Boards mirror this structure without the state-government representative quota. The Boards' role is consultative; final fixation authority rests with the appropriate government.

Interaction with the floor wage. Section 9(2) provides that minimum wages fixed by the appropriate government under Section 6 shall not be less than the floor wage fixed by the central government under Section 9(1). As of 30 May 2026, the central government has not yet notified a floor wage under the Code; the Ministry of Labour's draft rules published in December 2025 propose a floor-wage determination process based on the minimum living standard (food, clothing, housing, education, medical care, and other essential expenses), but no final floor-wage figure has been gazetted. Once notified, state governments will be required to ensure that all minimum wages they fix or revise meet or exceed the floor wage; where an existing minimum wage is already higher than the floor wage, the government may not reduce it (Section 9(2), second limb). Until the floor wage is notified, state governments retain full discretion (subject to the five-year revision requirement) to fix minimum wages by employment and skill category.

Enforcement and employer obligations. Section 5 prohibits employers from paying wages less than the minimum wage notified for the employee's classification. Underpayment is a criminal offence under Section 58; conviction carries a fine up to ₹50,000 (Section 58(1)(a)) and, for continuing contraventions, an additional fine up to ₹1,000 per day. Employees may also file claims under Section 48 for recovery of unpaid minimum wages; the claim authority may direct payment with simple interest at the rate notified by the appropriate government and (in cases of malicious or vexatious withholding) compensation up to ten times the amount due (Section 49(4)).

Source: Code on Wages, 2019 (Act No. 29 of 2019), ss. 6–9, 42–43, 48–49, 58 Source: PIB Factsheet: Code on Wages, 2019 Safeguards Workers (23 Nov. 2025) Source: Ministry of Labour & Employment, FAQs on Labour Codes (16 Mar. 2026)

Entitlement and accrual rate. Section 79(1) of the Factories Act, 1948 establishes a statutory right to annual leave with wages (commonly called earned leave or privilege leave) for factory workers who have worked for a period of 240 days or more in a factory during a calendar year. An adult worker who meets the 240-day threshold is entitled to leave during the subsequent calendar year at the rate of one day for every twenty days of work performed in the previous calendar year. A child worker (a person below 15 years of age) accrues leave at the higher rate of one day for every fifteen days worked. The leave is earned in one calendar year and taken in the next; a worker who works the full year (approximately 300 actual workdays after excluding weekly offs and public holidays) accrues roughly 15 days of earned leave for the following year.

What counts toward the 240-day threshold. Certain periods of absence count as "days on which the worker has worked" for purposes of computing the 240-day eligibility threshold, but do not earn additional leave days. Explanation 1 to Section 79(1) includes: (a) any days of lay-off by agreement, contract, or standing order; (b) in the case of a female worker, maternity leave for any number of days not exceeding twelve weeks; and (c) leave earned in the year prior to the year in which the leave is enjoyed. A worker on maternity leave or on prior earned leave thus accumulates service days toward the 240-day threshold but does not earn additional leave for those periods.

Pro-rated leave for mid-year joiners. Section 79(2) provides that a worker whose service commences otherwise than on the first day of January is entitled to leave with wages at the applicable rate (one day per twenty or fifteen, depending on adult/child status) if the worker has worked for two-thirds of the total number of days in the remainder of the calendar year. For example, a worker who joins on 1 July and works for the balance of the year accrues leave pro rata based on the days actually worked, provided the two-thirds threshold is met.

Leave is exclusive of holidays. Explanation 2 to Section 79(1) provides that the leave admissible under the section shall be exclusive of all holidays whether occurring during or at either end of the period of leave. If a worker takes 10 days of earned leave and a public holiday falls within that period, the public holiday does not count against the 10-day leave balance.

Carry-forward limits. Section 79(5) permits a worker to carry forward unused earned leave to the next calendar year, subject to caps. An adult worker may carry forward a maximum of 30 days of earned leave; a child worker may carry forward a maximum of 40 days. Any leave balance beyond these limits lapses at the end of the calendar year. However, if a worker applied in writing for leave in accordance with the procedural requirements (discussed below) and the leave was refused improperly by the employer, that refused leave may be carried forward without any limit until such time as the worker is permitted to take it (Section 79(5), proviso).

Application and notice requirements. A worker may at any time apply in writing to the manager of the factory, not less than 15 days before the date on which the worker wishes leave to begin, to take all or any portion of the leave allowable during the calendar year (Section 79(6)). If the worker is employed in a public utility service as defined in clause (n) of Section 2 of the Industrial Disputes Act, 1947 (railways, postal and telegraph services, ports, water and power supply, hospitals, banking, public transport), the advance-notice period extends to 30 days. The number of times in which leave may be taken during any year shall not exceed three (Section 79(6), second proviso). This restriction prevents excessive fragmentation; a worker must consolidate leave into at most three separate blocks per year.

Wages during leave. Section 80 of the Factories Act specifies that a worker shall be paid during earned-leave periods at a daily rate equivalent to the daily average of the worker's total full-time earnings for the days on which the worker actually worked during the month immediately preceding the leave, exclusive of any overtime and bonus but inclusive of dearness allowance and the cash equivalent of any advantage accruing through the concessional sale to the worker of food grains and other articles. The wage calculation is backward-looking and reflects the worker's actual recent earnings pattern.

Payment in advance. Section 81 requires that a worker who has been allowed leave for not less than four days (in the case of an adult) or five days (in the case of a child) shall, before the leave begins, be paid the wages due for the period of the leave allowed. Advance payment ensures the worker has funds available during the leave period.

Leave encashment on termination. Section 79(3) provides that if a worker is discharged, dismissed, quits employment, is superannuated, or dies while in service during the course of the calendar year, the worker (or the worker's heir or nominee, as the case may be) is entitled to wages in lieu of the quantum of leave to which the worker was entitled immediately before discharge, dismissal, quitting, superannuation, or death, calculated at the rates specified in Section 79(1), even if the worker had not worked for the entire 240-day period making the worker eligible to avail of such leave. Payment must be made: (i) where the worker is discharged, dismissed, or quits employment, before the expiry of the second working day from the date of such event; and (ii) where the worker is superannuated or dies while in service, before the expiry of two months from the date of superannuation or death.

Interaction with higher leave entitlements. Section 78(2) provides that the provisions of Chapter VIII (annual leave with wages) shall not operate to the prejudice of any right to which a worker may be entitled under any other law or under the terms of any award, agreement, or contract of service. Where an award, agreement, or contract provides for longer annual leave with wages than provided in the Factories Act, the worker is entitled to the quantum of leave specified in the award, agreement, or contract; but in relation to matters not provided for (or provided for less favourably) in such award, agreement, or contract, the provisions of the Factories Act apply. This ensures that the statutory leave is a floor, not a ceiling.

Scope — factory workers only. The Factories Act, 1948 applies only to factories as defined in Section 2(m): any premises where ten or more workers are working (or were working on any day of the preceding twelve months) and in any part of which a manufacturing process is being carried on with the aid of power, or where twenty or more workers are so working or were so working and a manufacturing process is carried on without the aid of power. India's workforce is fragmented across multiple statutory frameworks. Non-factory employees — including those in shops, commercial establishments, information-technology services, and other service-sector employments — are governed by state-specific Shops and Establishments Acts, which prescribe separate (and often less generous) leave entitlements. An employer standing up operations in India must identify which statute applies to each category of worker; IT-services employees, for example, typically fall under state Shops & Establishments legislation (which varies widely by state) rather than the Factories Act.

Enforcement and penalties. Section 82 provides that any sum required to be paid by an employer under Chapter VIII but not paid is recoverable as delayed wages under the provisions of the Payment of Wages Act, 1936 (now largely superseded by the Code on Wages, 2019, which came into force on 21 November 2025). Inspectors appointed under the Factories Act monitor compliance; state governments also prescribe register-keeping requirements under Section 83.

Source: Factories Act, 1948 (Act No. 63 of 1948), ss. 78–82