Minimum Wages and the Floor Wage under the Code on Wages

A minimum wage is the lowest rate an employer may lawfully pay, whatever its financial position. Under the old law it applied only to scheduled employments; Chapter II of the Code on Wages makes it a right of every employee, and adds a national floor wage below which no State may fix its rates. This note explains the concept and its constitutional basis, how rates are fixed, revised and structured, the floor wage, the rules on hours and overtime, and the leading cases.

1. Concept and Constitutional Basis

Figure 1: Levels of wages recognised in Indian law

• Express Newspapers v Union of India (1958). Drawing on the Fair Wages Committee (1948), the Court distinguished the minimum, fair and living wage. The minimum wage must provide for bare subsistence and some measure of education, medical needs and amenities.
• Bijay Cotton Mills v State of Ajmer (1955). Fixing minimum wages is a reasonable restriction on the employer's freedom of trade, even if some employers cannot pay.
• Crown Aluminium Works v Workmen (1958). An employer who cannot pay the minimum wage has no right to engage labour.
• Unichoyi v State of Kerala (1961). The employer's capacity to pay is irrelevant to the minimum wage.
• PUDR v Union of India (1982) and Sanjit Roy v State of Rajasthan (1983). Payment below the minimum wage is forced labour under Article 23, even for workers on famine relief works.
• Workmen v Reptakos Brett (1991). To the norms of the 15th Indian Labour Conference (1957), the Court added a component of 25% for children's education, medical needs, recreation, old age and marriage.

2. The Right and Its Fixation

• Section 5. No employer shall pay any employee less than the minimum rate of wages notified by the appropriate Government. This applies to all employees, not only scheduled employments.
• Section 6. The appropriate Government fixes minimum time rates, piece rates, guaranteed time rates and overtime rates, by the hour, day or month.

Figure 2: Fixing and revising minimum wages, sections 6 and 8

• Committees, s.8(2). Employers and employees are represented equally, and independent members may not exceed one-third of the total.
• Advice. The Central and State Advisory Boards under s.42 advise the Governments on fixing and revising minimum wages (Topic 9)

Components, section 7

Figure 3: Three ways of structuring a minimum wage

3. The Floor Wage, Section 9

• Fixation. The Central Government fixes the floor wage taking into account the minimum living standards of a worker; different floor wages may be fixed for different geographical areas.
• Effect, s.9(2). Minimum rates fixed by the appropriate Government must not be lower than the floor wage, and rates already higher than the floor wage must not be reduced.
• Consultation, s.9(3). Before fixing it, the Central Government may obtain the advice of the Central Advisory Board and consult State Governments.
• Background. Before the Code, the Centre used a non-statutory national floor level minimum wage, last set at ₹178 a day in 2019. Check for the latest notification under s.9 before citing a figure.

4. Hours, Overtime and Computation

Figure 4: Computation under the Code on Wages (Central) Rules, 2026

• Section 10. An employee who works less than a normal working day is paid for a full day, unless the shortfall is due to his own unwillingness to work.
• Sections 11 and 12. Work in two or more classes is paid at the rate for each class for the time spent; a piece worker must earn at least the minimum time rate.
• Section 13. The appropriate Government fixes the number of hours in a normal working day and provides a weekly day of rest, with payment for it.
• Section 14. Work beyond the normal working day is paid at an overtime rate of not less than twice the normal rate of wages.
• Criteria in the Rules. The draft Rules prescribed the 15th ILC norms (three consumption units, 2,700 calories, 66 metres of cloth). The final Central Rules of 2026 dropped them, leaving the criteria to be specified by separate order.

5. Frequently Asked Questions

What is the difference between minimum wage and floor wage?

The floor wage is a national base fixed by the Central Government under section 9, taking into account minimum living standards. Minimum wages are fixed by the appropriate Government, usually the State, under section 6 for different skills and areas. Minimum wages cannot be fixed below the floor wage, and existing minimum wages above it cannot be reduced.

Can an employer plead inability to pay the minimum wage?

No. In Crown Aluminium Works v Workmen (1958) and Unichoyi v State of Kerala (1961) the Supreme Court held that the minimum wage must be paid irrespective of the employer's capacity to pay; an employer who cannot pay it has no right to engage labour.

Is paying less than the minimum wage a constitutional violation?

Yes. In PUDR v Union of India (1982), the Asiad workers' case, the Supreme Court held that labour or service provided for remuneration less than the minimum wage is forced labour prohibited by Article 23. In Sanjit Roy v State of Rajasthan (1983) it applied the same principle to workers employed on famine relief works, rejecting an exemption from minimum wages.

How is the hourly and monthly minimum wage computed under the Central Rules?

Under the Code on Wages (Central) Rules, 2026, the minimum wage is fixed on a daily basis. The hourly rate is the daily rate divided by eight, and the monthly rate is the daily rate multiplied by twenty-six.

6. Related Topics

• Topic 2: Constitutional Framework of Labour Law. Articles 23 and 43.
• Topic 6: Payment of Wages. When and how wages must be paid.
• Topic 30: Hours of Work, Leave and Overtime. Working hours under the OSH Code.