Changes in Compliance Checklist Under the Code on Wages (Central) Rules, 2026

The notification of the Code on Wages (Central) Rules, on May 8^th, 2026 marks an important milestone in India’s long-running labour law reform exercise. While the Code on Wages, 2019 was enacted nearly seven years ago as the first of the four Labour Codes, employers have been awaiting the final subordinate legislation necessary to operationalise several provisions of the Code.

The Central Rules provide the procedural framework for implementation of the Code in sectors and establishments where the Central Government is the appropriate Government. These include industries such as railways, mines, oilfields, major ports, air transport services, telecommunications, banking and insurance, central public sector undertakings and their contractors, among others. For establishments falling under State Government jurisdiction, corresponding State Rules, which are yet to be notifed, will continue to be relevant.

Although many of the concepts introduced under the Final Rules were already contemplated in the Draft Rules issued in December 2025, the Final Rules reflect certain important policy choices. These include a move away from a statutorily prescribed formula for minimum wage determination, greater emphasis on electronic compliance mechanisms, and a more employee-centric process for imposition of fines and wage deductions. Collectively, these changes provide valuable insight into the direction in which wage regulation and labour administration are evolving.

Set out below are some of the key changes introduced by the Final Rules and their practical implications for employers.

Key Changes from the Draft Rules

Manner of calculating minimum wage rate

The Draft Rules prescribed fixation of the minimum rate of wages on the day basis keeping in view the standard working class family of 3 adult consumption units, net intake of 2700 calories per day per consumption unit, 66 meters of cloth per year, housing rent expenditure at 10 % of food and clothing expenditure, fuel/electricity/ other miscellaneous expenditure at 20 % of minimum wage, educational/medical/recreational/ contingent expenditure at 25 % of minimum wage. The Final 2026 Rules omit the detailed statutory formula prescribed under the Draft Rules and instead provides that the minimum rate of wages shall be fixed by the day basis keeping in view the criteria which shall be separately specified by the Central Government by special or general order.

Implications for Businesses

The omission of the detailed statutory formula gives the Central Government greater flexibility while revising minimum wages in the future. Employers should closely monitor any special or general orders issued by the Central Government prescribing the criteria for wage fixation, as future revisions may not necessarily follow the methodology contained in the Draft Rules.

Hours of work for normal working day

The Draft Rules prescribed that the number of hours of work to constitute a normal working day would be as per general or special orders issued from time to time. Accordingly, the Draft Rules did not expressly prescribe what constitutes the normal daily working hours. However, the 2026 Final Rules specifies that the number of hours of work to constitute a normal working day for an employee whose wage period is on a daily basis, will be 8 hours, while the rest intervals must be governed by the notification issued in this regard under Occupational Safety, Health and Working Conditions Code, 2020. Further, the 2026 Final Rules specifies that the number of weekly working hours for employees whose wage period is other than on a daily basis must not exceed 48 hours. Thus, the Final Rules introduce an express statutory weekly cap of 48 hours.

Implications for Businesses

Employers should review working hour policies, shift schedules and overtime practices, particularly where employees are not engaged on a daily wage basis. The express recognition of an 8-hour normal working day and a 48-hour weekly cap may require organisations to revisit internal policies and ensure consistency across locations and categories of employees.

Mode of filing returns

The 2026 Final Rules clarify that every employer of an establishment covered under the Code must electronically file returns in the prescribed forms under the Occupational, Safety Health and Working Conditions Code, 2020. While the Draft Rules permitted digital submissions, it did not standardise the mode of return filing in this manner. The Final Rules bring greater clarity and uniformity by expressly mandating employers to file returns electronically.

Implications for Businesses

The move towards mandatory electronic filing reinforces the Government’s broader push towards digitised labour law compliance. Employers should assess whether their existing HR, payroll and compliance systems are capable of generating and maintaining records in the formats required under the Occupational Safety, Health and Working Conditions Code framework.

Payment of wages for less than normal working day

While the Draft Rules maintained that an employee is not entitled to receive wages for a full normal working day, if he is not entitled to receive such wage under any other labour law for the time being in force, the 2026 Final Rules lays down that an employee will not be entitled to receive wages for a full normal working day, where the employee has agreed to work on a part-time basis as per the terms of the employment or is otherwise disentitled under any other labour law in force.

Implications for Businesses

The express recognition of part-time employment provides greater clarity for employers engaging employees under flexible work arrangements. Employers should ensure that employment contracts clearly specify part-time arrangements and working hour expectations so as to minimise disputes regarding wage entitlement.

Shift from authority approval to employee notice mechanism for fines and deductions

The Draft Rules maintained that when the employer makes any deduction on account of absence from duty, he must intimate electronically or by registered post of such deduction to the Inspector-cum-Facilitator within 10 days from the date of such deduction explaining therein the reason thereof. The 2026 Final Rules instead prescribes that the employer, upon intending to make any deduction must intimate electronically or in writing to the employee concerned regarding his intention of making such deduction and seek the employee’s reply within 7 days. In case no reply is received from the employee concerned within 7 days, the employer must make such deduction and intimate the same to the employee within 15 days of the date of such deduction.

Similarly, for imposition of fines, the Draft Rules required the employer to electronically or in writing furnish an intimation containing detailed particulars for seeking approval for the imposition of fine from the Deputy Chief Labour Commissioner (Central). The Final Rules maintain that for such fine imposition, the employer must intimate the employee concerned specifying therein the particulars of acts and omissions done by the employee warranting the imposition of fine, for showing cause within 7 days.

Implications for Businesses

The Final Rules reflect a shift from a regulator-facing approval process towards a documented employee-facing due process mechanism. Employers should review disciplinary procedures, deduction policies and fine registers to ensure that appropriate notices, opportunities to respond and records of employee communications are maintained.

Simplification of Minimum Wage Framework

The Draft Rules contained detailed provisions relating to family composition, occupational classification and wage fixation methodology. Several of these detailed provisions, including the prescribed statutory criteria for minimum wage computation and occupational classification framework, do not appear in the Final Rules in the same form. Instead, the Final Rules leave significant aspects to be specified separately by the Central Government through future notifications or orders. 

Implications for Businesses

While the Final Rules are shorter and simpler, employers should not assume that regulatory requirements have been diluted. Instead, organisations may need to monitor future notifications more closely because important operational details may now be introduced through executive orders rather than through the Rules themselves.

The notification of the Code on Wages (Central) Rules, 2026 represents more than just the finalisation of a long-pending set of rules. It signals the beginning of the operational phase of India’s wage law reforms under the Labour Codes framework. While many of the changes introduced by the Final Rules focus on procedure rather than substantive wage entitlements, they nevertheless have a direct bearing on how employers manage wage administration, working hours, disciplinary processes and compliance reporting. Employers covered by the Central Government regime should therefore review their policies, payroll practices and compliance processes to ensure readiness under the new framework, while establishments under State Government jurisdiction should closely track the progress of corresponding State Rules.

The notification of the Code on Wages (Central) Rules, 2026 makes one reality undeniable, that is, relying on manual processes and manual oversight to manage labor compliance is now a high stakes liability. To protect your organization from systemic legal risks, real-time tracking is imperative. Discover how Komrisk, Lexplosion’s pioneering cloud-based compliance management solution, automates the monitoring of fast-evolving central notifications, safeguards your digital workflows, and ensures your business always remains effortlessly on the right side of the law.

Author: Gaurav Chakrabarti

Co-Author: Aditya Saraswat

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