What it consolidates and who it covers
Before the Code, wage law in India was split across four Acts with different coverage: minimum wages applied only to scheduled employments, the Payment of Wages Act only below a wage ceiling, and the Bonus Act only to establishments above a headcount. The Code on Wages applies its minimum wage and timely-payment provisions to all employees in all establishments, organised or not, while keeping the Bonus Act's eligibility and calculation thresholds.
The Code was passed in 2019 and brought into force on 21 November 2025 together with the Industrial Relations Code, the Code on Social Security and the OSH and Working Conditions Code. Central and state rules are still being notified, so provisions of the older Acts continue to apply wherever rules under the Code are not yet in place.
Provisions every payroll must reflect
The single biggest change is the definition of wages: basic, DA and retaining allowance must be at least 50% of total remuneration, with any excess of excluded allowances added back. That definition feeds EPF, gratuity, bonus and overtime, so a salary structure with a 30% basic no longer shrinks statutory costs.
The other provisions are operational. Overtime must be paid at not less than twice the normal rate. Monthly-paid employees must receive wages by the 7th of the following month. Employers must issue wage slips and maintain registers of wages, overtime and fines in the prescribed form, electronically where rules allow. Deductions are limited to the kinds the Code permits, such as statutory contributions, authorised recoveries and absence from duty.
- Wages = basic + DA + retaining allowance, at least 50% of total remuneration
- Central government sets a floor wage; the appropriate government sets minimum wages above it by skill and area
- Overtime at not less than twice the normal wage rate
- Wages for monthly-paid workers by the 7th of the next month
- Wage slips and wage registers are mandatory; equal remuneration regardless of gender
What changes in practice for an SME
Three work items follow. First, review the wage master so basic plus DA is at least half of gross for every grade. Second, confirm the overtime rate in the payroll system is double the hourly rate derived from wages, not a flat allowance. Third, move payslips and registers into a format that meets the prescribed form, which for most companies means generating them from software rather than an unlabelled Excel sheet.
Because state rules are arriving in stages, keep a compliance calendar that tracks which rules are notified for each state you operate in, and continue to follow the older Acts for anything not yet covered.
A machine operator earns ₹30,000 gross with basic of ₹12,000 and allowances of ₹18,000. Under the 50% rule, deemed wages become ₹15,000. His hourly wage on a 26-day, 8-hour basis is ₹15,000 ÷ 26 ÷ 8, about ₹72.12, so each overtime hour must be paid at no less than ₹144.23. Under the old 30% basic, an employer who paid overtime on basic alone would have paid about ₹115.38 an hour, an underpayment of nearly ₹29 per hour that the Code closes.
Attend Mitra derives overtime hours from attendance records and applies the overtime rate set in payroll settings, so the double-rate calculation is on the salary components you define as wages. The run produces payslip PDFs and a salary register that serve as the wage slip and wage register records.