THE CODE ON WAGES, 2019 
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ARRANGEMENT OF SECTIONS 
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CHAPTER I 

PRELIMINARY 

SECTIONS  

1.  Short title, extent and commencement. 
2.  Definitions. 
3.  Prohibition of discrimination on ground of gender. 
4.  Decision as to disputes with regard to same or similar nature of work. 

CHAPTER II 

MINIMUM WAGES 

5.  Payment of minimum rate of wages. 
6.  Fixation of minimum wages. 
7.  Components of minimum wages. 
8.  Procedure for fixing and revising minimum wages. 
9.  Power of Central Government to fix floor wage. 
10.  Wages of employee who works for less than normal working day. 
11.  Wages for two or more classes of work. 
12.  Minimum time rate wages for piece work. 
13.  Fixing hours of work for normal working day. 
14.  Wages for overtime work. 

CHAPTER III 
PAYMENT OF WAGES 

15.  Mode of payment of wages. 
16.  Fixation of wage period. 
17.  Time limit for payment of wages. 
18.  Deductions which may be made from wages. 
19.  Fines. 
20.  Deductions for absence from duty. 
21.  Deductions for damage or loss. 
22.  Deductions for services rendered. 
23.  Deductions for recovery of advances. 
24.  Deductions for recovery of loans. 
25.  Chapter not to apply to Government establishments. 
CHAPTER IV 
PAYMENT OF BONES 

26.  Eligibility for bonus, etc. 
27.  Proportionate reduction in bonus in certain cases. 
28.  Computation of number of working days. 
29.  Disqualification for bonus. 
30.  Establishments to include departments, undertakings and branches. 
31.  Payment of bonus out of allocable surplus. 
32.  Computation of gross profits. 
33.  Computation of available surplus. 
34.  Sums deductible from gross profits. 

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SECTIONS 

35.  Calculation of direct tax payable by employer. 
36.  Set on and set off of allocable surplus. 
37.  Adjustment of customary or interim bonus against bonus payable under this Code. 
38.  Deduction of certain amounts from bonus payable. 
39.  Time limit for payment of bonus. 
40.  Application of this Chapter to establishments in public sector in certain cases. 
41.  Non-applicability of this Chapter. 

CHAPTER V 
ADVISORY BOARD 

42.  Central Advisory Board and State Advisory Boards. 
CHAPTER VI 
PAYMENT OF DUES CLAIMS AND AUDIT 

43.  Responsibility for payment of various dues. 
44.  Payment of various undisbursed dues in case of death of employee. 
45.  Claims under Code and procedure thereof. 
46.  Reference of disputes under this Code. 
47.  Presumption about accuracy of balance sheet and profit and loss account of corporations and 

companies. 

48.  Audit of account of employers not being corporations or companies. 
49.  Appeal. 
50.  Records, returns and notices. 

CHAPTER VII 
INSPECTORY-CUM-FACILITATOR 

51.  Appointment of Inspector-cum-Facilitators and their powers. 

CHAPTER VIII 
OFFENCES AND PENALTIES 

52.  Cognizance of offences. 
53.  Power of officers of appropriate Government to impose penalty in certain cases. 
54.  Penalties for offences. 
55.  Offences by companies. 
56.  Composition of offences. 

CHAPTER X 
MISCELLANEOUS 

57.  Bar of suits. 
58.  Protection of action taken in good faith. 
59.  Burden of proof. 
60.  Contracting out. 
61.  Effect of laws agreements, etc., inconsistent with this Code. 
62.  Delegation of powers. 
63.  Exemption of employer from liability in certain cases. 
64.  Protection against attachments of assets of employer with Government. 
65.  Power of Central Government to give directions. 
66.  Saving. 
67.  Power of appropriate Government to make rules. 
68.  Power to remove difficulties. 
69.  Repeal and savings. 

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THE CODE ON WAGES, 2019 

ACT NO. 29 OF  2019 

An Act to amend and consolidate the laws relating to wages and bonus and matters connected therewith 

or incidental thereto. 

BE it enacted by Parliament in the Seventieth Year of the Republic of India as follows:— 

[08th August, 2019.] 

CHAPTER I 

PRELIMINARY 

1. Short title, extent and commencement.—(1) This Act may be called the Code on Wages, 2019. 

(2) It extends to the whole of India. 

(3)  It  shall  come  into  force  on  such  date1  as  the  Central  Government  may,  by  notification  in  the 
Official Gazette appoint; and different dates may be appointed for different provisions of this Code and 
any reference in any such provision to the commencement of this Code shall be construed as a reference 
to the coming into force of that provision. 

2. Definitions.—In this Code, unless the context otherwise requires,— 

(a) “accounting year” means the year commencing on the 1st day of April; 

(b)  “Advisory  Board”  means  the  Central  Advisory  Board  or,  as  the  case  may  be,  the  State 

Advisory Board, constituted under section 42; 

(c) “agricultural income tax law” means any law for the time being in force relating to the levy of 

tax on agricultural income; 

(d) “appropriate Government” means, — 

(i)  in  relation  to,  an  establishment  carried  on  by  or  under  the  authority  of  the  Central 
Government or the establishment of railways, mines, oil field, major ports, air transport service, 
telecommunication,  banking  and  insurance  company  or  a  corporation  or  other  authority 
established by a Central Act or a central public sector undertaking or subsidiary companies set up 
by central public sector undertakings or autonomous bodies owned or controlled by the Central 
Government,  including  establishment  of  contractors  for  the  purposes  of  such  establishment, 
corporation  or  other  authority,  central  public  sector  undertakings,  subsidiary  companies  or 
autonomous bodies, as the case may be, the Central Government; 

(ii) in relation to any other establishment, the State Government; 

(e)  “company”  means  a  company  as  defined  in  clause  (20)  of section  2 of  the  Companies  Act, 

2013 (18 of 2013); 

(f) “contractor”, in relation to an establishment, means a person, who— 

(i)  undertakes  to  produce  a  given  result  for  the  establishment,  other  than  a  mere  supply  of 

goods or articles of manufacture to such establishment, through contract labour; or 

(ii) supplies contract labour for any work of the establishment as mere human resource and 

includes a sub-contractor; 

(g) “contract labour” means a worker who shall be deemed to be employed in or in connection 
with the work of an establishment when he is hired in or in connection with such work by or through 

1.18th December, 2020,--Sub-section (1), (2), (3), (10) and (11) of section 42 (to the extent relate to the central Advisory Board); 
clauses (s) and (t) of sub-section (2) of section 67 (to the extent they relate to the Central advisory Board); section 69 [to the 
extent it relates to section 7 and 9 (to the extent relate to the Central Government) and section 8 of the Minimum Wages Act, 
1948 (11 of 1948)], vide notification No. S.O. 4604(E), dated 18th December, 2020, see Gazette of India, Extraordinary, Part II, 
sec. 3(ii). 

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a  contractor,  with  or  without  the  knowledge  of  the  principal  employer  and  includes  inter-State 
migrant worker but does not include a worker (other than part-time employee) who— 

(i)  is  regularly  employed  by  the  contractor  for  any  activity  of  his  establishment  and  his 
employment  is  governed  by  mutually  accepted  standards  of  the  conditions  of  employment 
(including engagement on permanent basis), and 

(ii) gets periodical increment in the pay, social security coverage and other welfare benefits in 

accordance with the law for the time being in force in such employment; 

(h) “co-operative  society” means  a  society  registered  or  deemed  to  be  registered  under  the  Co-
operative Societies Act, 1912 (2 of 1912), or any other law for the time being in force relating to co-
operative societies in any State; 

(i) “corporation” means any body corporate established by or under any Central Act, or State Act, 

but does not include a company or a co-operative society; 

(j) “direct tax” means— 

(i) any tax chargeable under the— 

(A) Income-tax Act, 1961 (43 of 1961); 

(B) Companies (Profits) Surtax Act, 1964 (7 of 1964); 

(C) Agricultural income tax law; and 

(ii)  any  other  tax  which,  having  regard  to  its  nature  or  incidence,  may  be  declared  by  the 

Central Government, by notification, to be a direct tax for the purposes of this Code; 

(k) “employee” means, any person (other than an apprentice engaged under the Apprentices Act, 
1961  (52  of  1961)),  employed  on  wages  by  an  establishment  to  do  any  skilled,  semi-skilled  or 
unskilled, manual, operational, supervisory, managerial, administrative, technical or clerical work for 
hire or reward, whether the terms of employment be express or implied, and also includes a person 
declared to be an employee by the appropriate Government, but does not include any member of the 
Armed Forces of the Union; 

(l) “employer” means a person who employs, whether directly or through any person, or on his 
behalf  or  on  behalf  of  any  person,  one  or  more  employees  in  his  establishment  and  where  the 
establishment is carried on by any department of the Central Government or the State Government, 
the  authority  specified,  by  the  head  of  such  department,  in  this  behalf  or  where  no  authority,  is  so 
specified  the  head  of  the  department  and  in  relation  to  an  establishment  carried  on  by  a  local 
authority, the chief executive of that authority, and includes,— 

(i) in relation to an establishment which is a factory, the occupier of the factory as defined in 
clause  (n)  of section  2 of  the  Factories  Act,  1948  (63  of  1948)  and,  where  a  person  has  been 
named as a manager of the factory under clause (f) of sub-section (1) of section 7 of the said Act, 
the person so named; 

(ii)  in  relation  to  any  other  establishment,  the  person  who,  or  the  authority  which,  has 
ultimate control over the affairs of the establishment and where the said affairs is entrusted to a 
manager or managing director, such manager or managing director; 

(iii) contractor; and 

(iv) legal representative of a deceased employer; 

(m)  “establishment”  means  any  place  where  any  industry,  trade,  business,  manufacture  or 

occupation is carried on and includes Government establishment; 

(n) “factory” means a factory as defined in clause (m) of section 2 of the Factories Act, 1948 (63 

of 1948); 

(o)  “Government  establishment”  means  any  office  or  department  of  the  Government  or  a  local 

authority; 

(p) “Income-tax Act” means the Income-tax Act, 1961 (43 of 1961); 

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(q) “industrial dispute” means,— 

(i) any  dispute  or  difference  between  employers  and  employers,  or  between  employers  and 
workers  or  between  workers  and  workers  which  is  connected  with  the  employment  or  non-
employment or the terms of employment or with the conditions of labour, of any person; and 

(ii) any dispute or difference between an individual worker and an employer connected with, 

or arising out of, discharge, dismissal, retrenchment or termination of such worker; 

(r) “Inspector-cum-Facilitator” means a person appointed by the appropriate Government under 

sub-section (1) of section 51; 

(s) “minimum wage” means the wage fixed under section 6; 

(t) “notification” means a notification published in the Gazette of India or in the Official Gazette 
of a State, as the case may be, and the expression “notify” with its grammatical variations and cognate 
expressions shall be construed accordingly; 

(u) “prescribed” means prescribed by rules made by the appropriate Government; 

(v)  “same  work  or  work  of  a  similar  nature”  means  work  in  respect  of  which  the  skill,  effort, 
experience  and  responsibility  required  are  the  same,  when  performed  under  similar  working 
conditions  by  employees  and  the  difference  if  any,  between  the  skill,  effort,  experience  and 
responsibility required for employees of any gender, are not of practical importance in relation to the 
terms and conditions of employment; 

(w) “State” includes a Union territory; 

(x)  “Tribunal”  shall  have  the  same  meaning  as  assigned  to  it  in  clause  (r)  of section  2 of  the 

Industrial Disputes Act, 1947 (14 of 1947); 

(y)  “wages”  means  all  remuneration  whether  by  way  of  salaries,  allowances  or  otherwise, 
expressed in terms of money or capable of being so expressed which would (42 of 2005), if the terms 
of employment, express or implied, were fulfilled, be payable to a person employed in respect of his 
employment or of work done in such employment, and includes, — 

(i) basic pay; 

(ii) dearness allowance; and 

(iii) retaining allowance, if any,  

but does not include— 

(a)  any  bonus  payable  under  any  law for the time  being  in  force,  which  does  not  form 

part of the remuneration payable under the terms of employment; 

(b)  the  value  of  any  house-accommodation,  or  of  the  supply  of  light,  water,  medical 
attendance or other amenity or of any service excluded from the computation of wages by a 
general or special order of the appropriate Government; 

(c)  any  contribution  paid  by  the  employer  to  any  pension  or  provident  fund,  and  the 

interest which may have accrued thereon; 

(d) any conveyance allowance or the value of any travelling concession; 

(e) any sum paid to the employed person to defray special expenses entailed on him by 

the nature of his employment; 

(f) house rent allowance; 

(g) remuneration payable under any award or settlement between the parties or order of a 

court or Tribunal; 

(h) any overtime allowance; 

(i) any commission payable to the employee; 

(j) any gratuity payable on the termination of employment; 

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(k) any retrenchment compensation or other retirement benefit payable to the employee or 

any ex gratia payment made to him on the termination of employment: 

Provided  that,  for  calculating  the  wages  under  this  clause,  if  payments  made  by  the 
employer to the employee under clauses (a) to (i) exceeds one-half, or such other per cent. as 
may  be  notified  by  the  Central  Government,  of  the  all  remuneration  calculated  under  this 
clause, the amount which exceeds such one-half, or the per cent. so notified, shall be deemed 
as remuneration and shall be accordingly added in wages under this clause:  

Provided further that for the purpose of equal wages to all genders and for the purpose of 
payment of wages, the emoluments specified in clauses (d), (f), (g) and (h) shall be taken for 
computation of wage. 

Explanation.—Where  an  employee  is  given  in  lieu  of  the  whole  or  part  of  the  wages 
payable to him, any remuneration in kind by his employer, the value of such remuneration in 
kind  which  does  not  exceed  fifteen  per  cent.  of  the  total  wages  payable  to  him,  shall  be 
deemed to form part of the wages of such employee; 

(z) “worker” means any person (except an apprentice as defined under clause (aa) of section 2 of 
the  Apprentices  Act,  1961  (52  of  1961))  employed  in  any  industry  to  do  any  manual,  unskilled, 
skilled, technical, operational, clerical or supervisory work for hire or reward, whether the terms of 
employment be express or implied, and includes— 

(i)  working  journalists  as  defined  in  clause  (f)  of section  2 of  the  Working  Journalists  and 
other Newspaper Employees (Conditions of Service) and Miscellaneous Provisions Act, 1955 (45 
of 1955); and 

(ii)  sales  promotion  employees  as  defined  in  clause  (d)  of section  2 of the  Sales  Promotion 
Employees  (Conditions  of  Service)  Act,  1976  (11  of  1976),  and  for  the  purposes  of  any 
proceeding under this Code in relation to an industrial dispute, includes any such person who has 
been  dismissed,  discharged  or  retrenched  or  otherwise  terminated  in  connection  with,  or  as  a 
consequence  of,  that  dispute,  or  whose  dismissal,  discharge  or  retrenchment  has  led  to  that 
dispute,  

but does not include any such person— 

(a) who is subject to the Air Force Act, 1950 (45 of 1950), or the Army Act, 1950 (46 of 

1950), or the Navy Act, 1957 (62 of 1957); or 

(b) who is employed in the police service or as an officer or other employee of a prison; 

or 

(c) who is employed mainly in a managerial or administrative capacity; or 

(d)  who  is  employed  in  a  supervisory  capacity  drawing  wage  of  exceeding  fifteen 
thousand rupees per month or an amount as may be notified by the Central Government from 
time to time. 

3. Prohibition of discrimination on ground of gender.—(1) There shall be no discrimination in an 
establishment or any unit thereof among employees on the ground of gender in matters relating to wages 
by the same employer, in respect of the same work or work of a similar nature done by any employee. 

(2) No employer shall, — 

(i) for the purposes of complying with the provisions of sub-section (1), reduce the rate of wages 

of any employee; and 

(ii) make any discrimination on the ground of sex while recruiting any employee for the same 
work or work of similar nature and in the conditions of employment, except where the employment 
of women in such work is prohibited or restricted by or under any law for the time being in force. 

4.  Decision  as  to  disputes with  regard to same  or similar  nature  of work.—Where there  is  any 
dispute as to whether a work is of same or similar nature for the purposes of section 3, the dispute shall be 
decided by such authority as may be notified by the appropriate Government. 

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CHAPTER II 

MINIMUM WAGES 

5. Payment of minimum rate of wages.—No employer shall pay to any employee wages less than 

the minimum rate of wages notified by the appropriate Government. 

6.  Fixation  of  minimum  wages.—(1)  Subject  to  the  provisions  of  section  9,  the  appropriate 
Government shall fix the minimum rate of wages payable to employees in accordance with the provisions 
of section 8. 

(2)  For  the  purposes  of  sub-section  (1),  the  appropriate  Government  shall  fix  a  minimum  rate  of 

wages— 

(a) for time work; or 

(b) for piece work. 

(3) Where employees are employed on piece work, for the purpose of sub-section (1), the appropriate 
Government shall fix a minimum rate of wages for securing such employees a minimum rate of wages on 
a time work basis. 

(4) The minimum rate of wages on time work basis may be fixed in accordance with any one or more 

of the following wage periods, namely:— 

(i) by the hour; or 

(ii) by the day; or 

(iii) by the month. 

(5)  Where  the  rates  of  wages  are  fixed  by  the  hour  or  by  the  day  or  by  the  month,  the  manner  of 

calculating the wages shall be such, as may be prescribed. 

(6)  For  the  purpose  of  fixation  of  minimum  rate  of  wages  under  this  section,  the  appropriate 

Government,— 

(a)  shall  primarily  take  into  account  the  skill  of  workers  required  for  working  under  the 

categories of unskilled, skilled, semi-skilled and highly-skilled or geographical area or both; and 

(b) may, in addition to such minimum rate of wages for certain category of workers, take into 
account  their  arduousness  of  work  like  temperature  or  humidity  normally  difficult  to  bear, 
hazardous  occupations  or  processes  or  underground  work  as  may  be  prescribed  by  that 
Government; and 

(c) the norms of such fixation of minimum rate of wages shall be such as may be prescribed. 

(7) The number of minimum rates of wages referred to in sub-section (6) may, as far as possible, be 

kept at minimum by the appropriate Government. 

7.    Components  of  minimum  wages.—(1)  Any  minimum  rate  of  wages  fixed  or  revised  by  the 

appropriate Government under section 8 may consist of— 

(a) a basic rate of wages and an allowance at a rate to be adjusted, at such intervals and in such 
manner  as  the  appropriate  Government  may  direct,  to  accord  as  nearly  as  practicable  with  the 
variation  in  the  cost  of  living  index  number  applicable  to  such  workers  (hereinafter  referred  to  as 
“cost of living allowance”); or 

(b) a basic rate of wages with or without the cost of living allowance, and the cash value of the 
concessions in respect of supplies of essential commodities at concession rates, where so authorised; 
or 

(c) an all-inclusive rate allowing for the basic rate, the cost of living allowance and the cash value 

of the concessions, if any. 

(2)  The  cost  of  living  allowance  and  the  cash  value  of  the  concessions  in  respect  of  supplies  of 
essential  commodities  at  concession  rate  shall  be  computed  by  such  authority,  as  the  appropriate 

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Government may by notification, appoint, at such intervals and in accordance with such directions as may 
be specified or given by the appropriate Government from time to time. 

8. Procedure for fixing and revising minimum wages.—(1) In fixing minimum rates of wages for 
the first time or in revising minimum rates of wages under this Code, the appropriate Government shall 
either— 

(a)  appoint  as  many  committees  as  it  considers  necessary  to  hold  enquiries  and  recommend  in 

respect of such fixation or revision, as the case may be; or 

(b)  by  notification  publish  its  proposals  for  the  information  of  persons  likely  to  be  affected 
thereby and specify a date not less than two months from the date of the notification on which the 
proposals shall be taken into consideration. 

(2)  Every  committee  appointed  by  the  appropriate  Government  under  clause  (a)  of  sub-section  (1) 

shall consist of persons— 

(a) representing employers; 

(b) representing  employees  which shall be  equal  in  number  of  the  members  specified  in  clause 

(a); and 

(c) independent persons, not exceeding one-third of the total members of the committee. 

(3) After considering the recommendation of the committee appointed under clause (a) of sub-section 
(1) or, as the case may be, all representations received by it before the date specified in the notification 
under clause (b) of that sub-section, the appropriate Government shall by notification fix, or as the case 
may be, revise the minimum rates of wages and unless such notification otherwise provides, it shall come 
into force on the expiry of three months from the date of its issue: 

Provided that where the appropriate Government proposes to revise the minimum rates of wages in 
the  manner  specified  in  clause  (b)  of  sub-section  (1),  it  shall  also  consult  concerned  Advisory  Board 
constituted under section 42. 

(4)  The  appropriate  Government  shall  review  or  revise  minimum  rates  of  wages  ordinarily  at  an 

interval not exceeding five years. 

9. Power of Central Government to fix floor wage.—(1) The Central Government shall fix floor 

wage taking into account minimum living standards of a worker in such manner as may be prescribed: 

Provided that different floor wage may be fixed for different geographical areas. 

(2) The minimum rates of wages fixed by the appropriate Government under section 6 shall not be 
less than the floor wage and if the minimum rates of wages fixed by the appropriate Government earlier is 
more  than  the  floor  wage,  then,  the  appropriate  Government  shall  not  reduce  such  minimum  rates  of 
wages fixed by it earlier. 

(3)  The  Central  Government  may,  before  fixing  the  floor  wage  under  sub-section  (1),  obtain  the 
advice  of  the  Central  Advisory  Board constituted  under  sub-section (1)  of section  42  and consult  State 
Governments in such manner as may be prescribed. 

10.    Wages of employee who works for less than normal working  day.—If  an  employee  whose 
minimum rate of wages has been fixed under this Code by the day works on any day on which he was 
employed for a period of less than the requisite number of hours constituting a normal working day, he 
shall, save as otherwise hereinafter provided, be entitled to receive wages in respect of work done on that 
day, as if he had worked for a full normal working day: 

Provided that he shall not be entitled to receive wages for a full normal working day, — 

(i)  in  any  case  where  his  failure  to  work  is  caused  by  his  unwillingness  to  work  and  not  by  the 

omission of the employer to provide him with work; and 

(ii) in such other cases and circumstances, as may be prescribed. 

11. Wages for two or more classes of work.—Where an employee does two or more classes of work 
to  each  of  which  a  different  minimum  rate  of  wages  is  applicable,  the  employer  shall  pay  to  such 

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employee in respect of the time respectively occupied in each such class of work, wages at not less than 
the minimum rate in force in respect of each such class. 

12.  Minimum  time  rate  wages  for  piece  work.—Where  a  person  is  employed  on  piece  work  for 
which minimum time rate and not a minimum piece rate has been fixed under this Code, the employer 
shall pay to such person wages at not less than the minimum time rate. 

13. Fixing hours of work for normal working day.—(1) Where the minimum rates of wages have 

been fixed under this Code, the appropriate Government may— 

(a) fix the number of hours of work which shall constitute a normal working day inclusive of one 

or more specified intervals; 

(b)  provide  for  a  day  of  rest  in  every  period  of  seven  days  which  shall  be  allowed  to  all 
employees or to any specified class of employees and for the payment of remuneration in respect of 
such days of rest; 

(c) provide for payment for work on a day of rest at a rate not less than the overtime rate. 

(2) The provisions of sub-section (1) shall, in relation to the following classes of employees apply, 

only to such extent and subject to such conditions as may be prescribed, namely:— 

(a) employees engaged in any emergency which could not have been foreseen or prevented; 

(b) employees engaged in work of the nature of preparatory or complementary work which must 
necessarily  be  carried  on  outside  the  limits  laid  down  for  the  general  working  in  the  employment 
concerned; 

(c) employees whose employment is essentially intermittent; 

(d) employees engaged in any work which for technical reasons has to be completed before the 

duty is over; and 

(e) employees engaged in a work which could not be carried on except at times dependent on the 

irregular action of natural forces. 

(3)  For  the  purposes  of  clause  (c)  of  sub-section  (2),  employment  of  an  employee  is  essentially 
intermittent when it is declared to be so by the appropriate Government on the ground that the daily hours 
of duty of the employee, or if there be no daily hours of duty as such for the employee, the hours of duty 
normally include periods of inaction during which the employee may be on duty but is not called upon to 
display either physical activity or sustained attention. 

14. Wages for overtime work.—Where an employee whose minimum rate of wages has been fixed 
under this Code by the hour, by the day or by such a longer wage-period as may be prescribed, works on 
any day in excess of the number of hours constituting a normal working day, the employer shall pay him 
for every hour or for part of an hour so worked in excess, at the overtime rate which shall not be less than 
twice the normal rate of wages. 

CHAPTER III 

PAYMENT OF WAGES 

15.  Mode  of  payment  of wages.—All  wages shall be  paid  in  current coin  or  currency  notes  or  by 

cheque or by crediting the wages in the bank account of the employee or by the electronic mode: 

Provided  that  the  appropriate  Government  may,  by  notification,  specify  the  industrial  or  other 
establishment,  the  employer  of  which  shall  pay  to  every  person  employed  in  such  industrial  or  other 
establishment, the wages only by cheque or by crediting the wages in his bank account. 

16. Fixation of wage period.—The employer shall fix the wage period for employees either as daily 
or  weekly  or  fortnightly  or  monthly  subject  to  the  condition  that  no  wage  period  in  respect  of  any 
employee shall be more than a month: 

Provided that different wage periods may be fixed for different establishments. 

17. Time limit for payment of wages.—(1) The employer shall pay or cause to be paid wages to the 

employees, engaged on— 

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(i) daily basis, at the end of the shift; 

(ii) weekly basis, on the last working day of the week, that is to say, before the weekly holiday; 

(iii) fortnightly basis, before the end of the second day after the end of the fortnight; 

(iv) monthly basis, before the expiry of the seventh day of the succeeding month. 

(2) Where an employee has been— 

(i) removed or dismissed from service; or 

(ii)  retrenched  or  has  resigned  from  service,  or  became  unemployed  due  to  closure  of  the 

establishment,  

the wages payable to him shall be paid within two working days of his removal, dismissal, retrenchment 
or, as the case may be, his resignation. 

(3)  Notwithstanding  anything  contained  in  sub-section  (1)  or  sub-section  (2),  the  appropriate 
Government  may,  provide  any  other  time  limit  for  payment  of  wages  where  it  considers  reasonable 
having regard to the circumstances under which the wages are to be paid. 

(4) Nothing contained in sub-section (1) or sub-section (2) shall affect any time limit for payment of 

wages provided in any other law for the time being in force. 

18. Deductions which may be made from wages.—(1) Notwithstanding anything contained in any 
other law for the time being in force, there shall be no deductions from the wages of the employee, except 
those as are authorised under this Code. 

Explanation.— For the purposes of this sub-section, — 

(a)  any  payment  made  by  an  employee  to  the  employer  or  his  agent  shall  be  deemed  to  be  a 

deduction from his wages; 

(b) any loss of wages to an employee, for a good and sufficient cause, resulting from— 

(i) the withholding of increment or promotion, including the stoppage of an increment; or 

(ii) the reduction to a lower post or time-scale; or 

(iii) the suspension, shall not be deemed to be a deduction from wages in a case where the 
provisions made by the employer for such purposes are satisfying the requirements specified in 
the notification issued by the appropriate Government in this behalf. 

(2) Deductions from the wages of an employee shall be made in accordance with the provisions of 

this Code, and may be made only for the following purposes, namely:— 

(a) fines imposed on him; 

(b) deductions for his absence from duty; 

(c) deductions for damage to or loss of goods expressly entrusted to the employee for custody; or 
for  loss  of  money  for  which  he  is  required  to  account,  where  such  damage  or  loss  is  directly 
attributable to his neglect or default; 

(d) deductions for house-accommodation supplied by the employer or by appropriate Government 
or any housing board set up under any law for the time being in force, whether the Government or 
such  board  is  the  employer  or  not,  or  any  other  authority  engaged  in  the  business  of  subsidising 
house-accommodation  which  may  be  specified  in  this  behalf  by  the  appropriate  Government  by 
notification; 

(e)  deductions  for  such  amenities  and  services  supplied  by  the  employer  as  the  appropriate 
Government or any officer specified by it in this behalf may, by general or special order, authorise 
and such deduction shall not exceed an amount equivalent to the value of such amenities and services. 

Explanation.—For  the  purposes  of  this  clause,  the  expression  “services”  does  not  include  the 

supply of tools and raw materials required for the purposes of employment; 

(f) deductions for recovery of— 

10 

 
(i) advances of whatever nature (including advances for travelling allowance or conveyance 

allowance), and the interest due in respect thereof, or for adjustment of overpayment of wages; 

(ii) loans made from any fund constituted for the welfare of labour, as may be prescribed by 

the appropriate Government, and the interest due in respect thereof; 

(g) deductions for recovery of loans granted for house-building or other purposes approved by the 

appropriate Government and the interest due in respect thereof; 

(h)  deductions  of  income-tax  or  any  other  statutory  levy  levied  by  the  Central  Government  or 
State Government and payable by the employee or deductions required to be made by order of a court 
or other authority competent to make such order; 

(i) deductions for subscription to, and for repayment of advances from any social security fund or 
scheme constituted by law including provident fund or pension fund or health insurance scheme or 
fund known by any other name; 

(j) deductions for payment of co-operative society subject to such conditions as the appropriate 

Government may impose; 

(k) deductions made, with the written authorisation of the employee, for payment of the fees and 
contribution  payable  by  him  for  the  membership  of  any  Trade  Union  registered  under  the  Trade 
Unions Act, 1926 (16 of 1926); 

(l)  deductions  for  recovery  of  losses  sustained  by  the  railway  administration  on  account  of 

acceptance by the employee of counterfeit or base coins or mutilated or forged currency notes; 

(m) deductions for recovery of losses sustained by the railway administration on  account of the 
failure of the employee to invoice, to bill, to collect or to account for the appropriate charges due to 
the railway administration whether in respect of fares, freight, demurrage, wharf age and cranage or 
in respect of sale of food in catering establishments or in respect of commodities in grain shops or 
otherwise; 

(n) deductions for recovery of losses sustained by the railway administration on account of any 
rebates or refunds incorrectly granted by the employee where such loss is directly  attributable to his 
neglect or default; 

(o) deductions, made with the written authorisation of the employee, for contribution to the Prime 
Minister's National Relief Fund or to such other fund as the Central Government may, by notification, 
specify. 

(3) Notwithstanding anything contained in this Code and subject to the provisions of any other law 
for the time being in force, the total amount of deductions which may be made under sub-section (2) in 
any wage period from the wages of an employee shall not exceed fifty per cent. of such wages. 

(4) Where the total deductions authorised under sub-section (2) exceed fifty per cent. of the wages, 

the excess may be recovered in such manner, as may be prescribed. 

(5) Where any deduction is made by the employer from the wages of an employee under this section 
but not deposited in the account of the trust or Government fund or any other account, as required under 
the provisions of the law for the time being in force, such employee shall not be held responsible for such 
default of the employer. 

19. Fines.—(1) No fine shall be imposed on any employee save in respect of those acts and omissions 
on  his  part  as  the  employer,  with  the  previous  approval  of  the  appropriate  Government  or  of  such 
authority as may be prescribed, may have specified by notice under sub-section (2). 

(2)  A  notice  specifying  such  acts  and  omissions  shall  be  exhibited  in  such  manner  as  may  be 

prescribed, on the premises in which the employment is carried on. 

(3) No fine shall be imposed on any employee until such employee has been given an opportunity of 
showing cause against the fine or otherwise than in accordance with such procedure as may be prescribed 
for the imposition of fines. 

11 

 
(4) The total amount of fine which may be imposed in any one wage-period on any employee shall 
not exceed an amount equal to three per cent. of the wages payable to him in respect of that wage-period. 

(5) No fine shall be imposed on any employee who is under the age of fifteen years. 

(6) No fine imposed on any employee shall be recovered from him by installments or after the expiry 

of ninety days from the day on which it was imposed. 

(7) Every fine shall be deemed to have been imposed on the day of the act or omission in respect of 

which it was imposed. 

(8) All fines and all realisations thereof shall be recorded in a register to be kept in such manner and 
form as may be prescribed; and all such realisations shall be applied only to such purposes beneficial to 
the persons employed in the establishment as are approved by the prescribed authority. 

20.  Deductions  for  absence  from  duty.—(1)  Deductions  may  be  made  under  clause  (b)  of  sub-
section (2) of section 18 only on account of the absence of an employee from the place or places where by 
the terms of his employment, he is required to work, such absence being for the whole or any part of the 
period during which he is so required to work. 

(2) The amount of such deduction shall in no case bear to the wages payable to the employed person 
in respect of the wage-period for which the deduction is made in a larger proportion than the period for 
which he was absent bears to the total period within such wage-period during which by the terms of his 
employment he was required to work: 

Provided that, subject to any rules made in this behalf by the appropriate Government, if ten or more 
employed persons acting in concert absent themselves without due notice (that is to say without giving 
the  notice  which  is  required  under  the  terms  of  their  contracts of  employment)  and  without  reasonable 
cause, such deduction from any such person may include such amount not exceeding his wages for eight 
days as may by any such terms be due to the employer in lieu of due notice. 

Explanation.— For the purposes of this section, an employee shall be deemed to be absent from the 
place where he is required to work if, although present in such place, he refuses, in pursuance of a stay-in 
strike or for any other cause which is not reasonable in the circumstances, to carry out his work. 

21. Deductions for damage or loss.—(1) A deduction under clause (c) or clause (n) of sub-section 
(2)  of  section  18  for  damage  or  loss  shall  not  exceed  the  amount  of  the  damage  or  loss  caused  to  the 
employer by negligence or default of the employee. 

(2)  A  deduction  shall  not  be  made  under  sub-section  (1)  until  the  employee  has  been  given  an 
opportunity of showing cause against the deduction or otherwise than in accordance with such procedure 
as may be prescribed for the making of such deductions. 

(3) All such deductions and all realisations thereof shall be recorded in a register to be kept in such 

form as may be prescribed. 

22. Deductions for services rendered.—A deduction under clause (d) or clause (e) of sub-section (2) 
of section 18 shall not be made from the wages of an employee, unless the house-accommodation amenity 
or service has been accepted by him as a term of employment or otherwise and such deduction shall not 
exceed an amount equivalent to the value of the house-accommodation amenity or service supplied and 
shall be subject to such conditions as the appropriate Government may impose. 

23. Deductions for recovery of advances.—Deductions under clause (f) of sub-section (2) of section 
18 for recovery of advances given to an employee shall be subject to the following conditions, namely:— 

(a) recovery of advance of money given to an employee before the employment began shall be 
made from the first payment of wages to him in respect of a complete wage-period but no recovery 
shall be made of such advances given for travelling expenses; 

(b)  recovery  of  advance  of  money  given  to  an  employee  after  the  employment  began  shall  be 

subject to such conditions as may be prescribed; 

(c)  recovery  of  advances  of  wages  to  an  employee  not  already  earned  shall  be  subject  to  such 

conditions as may be prescribed. 

12 

 
24. Deductions for recovery of loans.—Deductions under clause (g) of sub-section (2) of section 18 
for recovery of loans granted to an employee, regulating the extent to which such loans may be granted 
and the rate of interest payable thereon, shall be such as may be prescribed. 

25. Chapter not to apply to Government establishments.—The provisions of this Chapter shall not 
apply to the Government establishments unless the appropriate Government, by notification, applies such 
provisions to the Government establishments specified in the said notification. 

CHAPTER IV 

PAYMENT OF BONES 

26.  Eligibility  for  bonus,  etc.—(1)  There  shall  be  paid  to  every  employee,  drawing  wages  not 
exceeding such amount per mensem, as determined by notification, by the appropriate Government, by 
his employer, who has put in at least thirty days work in an accounting year, an annual minimum bonus 
calculated at the rate of eight and one-third per cent. of the wages earned by the employee or one hundred 
rupees,  whichever  is  higher  whether  or  not the  employer  has  any  allocable surplus  during  the  previous 
accounting year. 

(2)  For  the  purpose  of  calculation  of  the  bonus  where  the  wages  of  the  employee  exceeds  such 
amount per mensem, as determined by notification by the appropriate Government, the bonus payable to 
such  employee  under  sub-sections  (1)  and  (3)  shall  be calculated  as  if  his  wage  were  such  amount,  so 
determined by the appropriate Government or the minimum wage fixed by the appropriate Government, 
whichever is higher. 

(3)  Where  in  respect  of  any  accounting  year  referred  to  in  sub-section  (1),  the  allocable  surplus 
exceeds  the  amount  of  minimum  bonus  payable  to  the  employees  under  that  sub-section,  the  employer 
shall, in lieu of such minimum bonus, be bound to pay to every employee in respect of that accounting 
year,  bonus  which  shall  be  an  amount  in  proportion  to  the  wages  earned  by  the  employee  during  the 
accounting year, subject to a maximum of twenty per cent. of such wages. 

(4)  In  computing  the  allocable  surplus  under  this  section,  the  amount  set  on  or  the  amount  set  off 
under the provisions of section 36 shall be taken into account in accordance with the provisions of that 
section. 

(5) Any demand for bonus in excess of the bonus referred to in sub-section (1), either on the basis of 
production or productivity in an accounting year for which the bonus is payable shall be determined by an 
agreement or settlement between the employer and the employees, subject to the condition that the total 
bonus  including  the  annual  minimum  bonus  referred  to  in  sub-section  (1)  shall  not  exceed  twenty  per 
cent. of the wages earned by the employee in the accounting year. 

(6) In the first five accounting years following the accounting year in which the employer sells the 
goods produced or manufactured by him or renders services, as the case may be, from such establishment, 
bonus shall be payable only in respect of the accounting year in which the employer derives profit from 
such establishment and such bonus shall be calculated in accordance with the provisions of this Code in 
relation to that year, but without applying the provisions of section 36. 

(7) For the sixth and seventh accounting years following the accounting year in which the employer 
sells  the  goods  produced  or  manufactured  by  him  or  renders  services,  as  the  case  may  be,  from  such 
establishment, the provisions of section 36 shall apply subject to the following modifications, namely:-- 

(i) for the sixth accounting year set on or set off, as the case may be, shall be made, in the manner 
as may be prescribed by the Central Government, taking into account the excess or deficiency, if any, 
as the case may be, of the allocable surplus set on or set off in respect of the fifth and sixth accounting 
years; 

(ii) for the  seventh  accounting  year  set  on  or set  off,  as  the  case  may  be,  shall be  made, in the 
manner  as  may  be  prescribed  by  the  Central  Government,  taking  into  account  the  excess  or 
deficiency, if any, as the case may be, of the allocable surplus set on or set off in respect of the fifth, 
sixth and seventh accounting years. 

(8)  From  the  eighth  accounting  year  following the  accounting  year  in  which  the  employer sells  the 
goods produced or manufactured by him or renders services, as the case may be, from such establishment, 

13 

 
the provisions of section 36 shall apply in relation to such establishment as they apply in relation to any 
other establishment. 

Explanation 1.—For the purpose of sub-section (6), an employer shall not be deemed to have derived 

profit in any accounting year, unless— 

(a) he has made provision for depreciation of that year to which he is entitled under the Income-

tax Act or, as the case may be, under the agricultural income tax law; and 

(b) the arrears of such depreciation and losses incurred by him in respect of the establishment for 

the previous accounting years have been fully set off against his profits. 

Explanation 2.—For the purposes of sub-sections (6), (7) and (8), sale of the goods produced or 
manufactured during the course of the trial running of any factory or of the prospecting stage of any 
mine or an oil-field shall not be taken into consideration and where any question arises with regard to 
such  production  or  manufacture,  the  appropriate  Government  may,  after  giving  the  parties  a 
reasonable opportunity of representing the case, decide upon the issue. 

(9) The provisions of sub-sections (6), (7) and (8) shall, so far as may be, apply to new departments or 

undertakings or branches set up by existing establishments. 

27. Proportionate reduction in bonus in certain cases.—Where an employee has not worked for all 
the working days in an accounting year, the minimum bonus under sub-section (1) of section 26, if such 
bonus is higher than eight and one third per cent. of the salary or wage of the days such employee has 
worked in that accounting year, shall be proportionately reduced. 

28. Computation of number of working days.—For the purposes of section 27, an employee shall 

be deemed to have worked in an establishment in any accounting year also on the days on which,— 

(a)  he  has  been  laid  off  under  an  agreement  or  as  permitted  by  standing  orders  under  the 
Industrial  Employment  (Standing  Orders)  Act,  1946  (20  of  1946),  or  under  the  Industrial  Disputes 
Act, 1947 (14 of 1947), or under any other law applicable to the establishment; 

(b) he has been on leave with salary or wages; 

(c) he has been absent due to temporary disablement caused by accident arising out of and in the 

course of his employment; and 

(d) the employee has been on maternity leave with salary or wages, during the accounting year. 

29.  Disqualification  for  bonus.—Notwithstanding  anything  contained  in  this  Code,  an  employee 

shall be disqualified from receiving bonus under this Code, if he is dismissed from service for— 

(a) fraud; or 

(b) riotous or violent behaviour while on the premises of the establishment; or 

(c) theft, misappropriation or sabotage of any property of the establishment; or 

(d) conviction for sexual harassment. 

30.  Establishments 

include  departments,  undertakings  and  branches.—Where  an 
establishment consists of different departments or undertakings or has branches, whether situated in the 
same  place  or  in  different  places,  all  such  departments  or  undertakings  or  branches  shall  be  treated  as 
parts of the same establishment for the purpose of computation of bonus under this Code: 

to 

Provided that where for any accounting year a separate balance sheet and profit and loss account are 
prepared  and  maintained  in  respect  of  any  such  department  or  undertaking  or  branch,  then,  such 
department  or  undertaking  or  branch  shall  be  treated  as  a  separate  establishment  for  the  purpose  of 
computation  of  bonus,  under  this  Code  for  that  year,  unless  such  department  or  undertaking  or  branch 
was, immediately before the commencement of that accounting year treated as part of the establishment 
for the purpose of computation of bonus. 

31. Payment of bonus out of allocable surplus.—(1) The bonus shall be paid out of the allocable 
surplus which shall be an amount equal to sixty per cent. in case of a banking company and sixty-seven 

14 

 
per  cent.  in  case  of  other  establishment,  of  the  available  surplus  and  the  available  surplus  shall  be  the 
amount calculated in accordance with section 33. 

(2) Audited accounts of companies shall not normally be questioned. 

(3)  Where  there  is  any  dispute  regarding  the  quantum  of  bonus,  the  authority  notified  by  the 
appropriate  Government  having  jurisdiction  may  call  upon  the  employer  to  produce  the  balance  sheet 
before it, but the authority shall not disclose any information contained in the balance sheet unless agreed 
to by the employer. 

32. Computation of gross profits.—The gross profits derived by an employer from an establishment 

in respect of the accounting year shall,— 

(a) in the case of a banking company, be calculated in the manner as may be prescribed by the 

Central Government; 

(b)  in  any  other  case,  be  calculated  in  the  manner  as  may  be  prescribed  by  the  Central 

Government. 

33.  Computation  of  available  surplus.—The  available  surplus  in  respect  of  any  accounting  year 

shall be the gross profits for that year after deducting there from the sums referred to in section 34: 

Provided that the available surplus in respect of the accounting year commencing on any day in a year 
after  the  commencement  of  this  Code  and  in  respect  of  every  subsequent  accounting  year  shall  be  the 
aggregate of— 

(a)  the  gross  profits for  that accounting  year after  deducting  there  from  the  sums  referred  to in 

section 34; and 

(b) an amount equal to the difference between— 

(i) the direct tax, calculated in accordance with the provisions of section 35, in respect of an 
amount equal to the gross profits of the employer for the immediately preceding accounting year; 
and 

(ii)  the  direct  tax,  calculated  in  accordance  with  provisions  of  section  35,  in  respect  of  an 
amount  equal  to  the  gross  profits  of  the  employer  for  such  preceding  accounting  year  after 
deducting there from the amount of bonus which the employer has paid or is liable to pay to his 
employees in accordance with the provisions of this Code for that year. 

34.  Sums  deductible  from  gross  profits.—The  following  sums  shall  be  deducted  from  the  gross 

profits as prior charges, namely:— 

(a)  any  amount  by  way  of  depreciation  admissible  in  accordance  with  the  provisions  of  sub-
section (1) of section 32 of the Income-tax Act or in accordance with the provisions of the agricultural 
income-tax law, for the time being in force, as the case may be; 

(b) subject to the provisions of section 35, any direct tax which the employer is liable to pay for 

the accounting year in respect of his income, profits and gains during that year; 

(c) such further sums in respect of the employer as may be prescribed by the Central Government. 

35. Calculation of direct tax payable by employer.—For the purposes of this Code, any direct tax 
payable by the employer for any accounting year shall, subject to the following provisions, be calculated 
at the rates applicable to the income of the employer for that year, namely:— 

(a) in calculating such tax no account shall be taken of,— 

(i) any loss incurred by the employer in respect of any previous accounting year and carried 

forward under any law for the time being in force relating to direct taxes; 

(ii)  any  arrears  of  depreciation  which  the  employer  is  entitled  to  add  to  the  amount  of  the 
allowance  for  depreciation  for  any  succeeding  accounting  year  or  years  under  sub-section  (2) 
of section 32 of the Income-tax Act; 

15 

 
 
(b) where the employer is a religious or a charitable institution to which the provisions of section 
41 do not apply and the whole or any part of its income is exempt from the tax under the Income-tax 
Act,  then,  with  respect  to  the  income  so exempted,  such  institution  shall  be  treated  as  if  it  were  a 
company in which the public are substantially interested within the meaning of that Act; 

(c)  where  the  employer  is  an  individual  or  a  Hindu  undivided  family,  the  tax  payable  by  such 
employer under the Income-tax Act shall be calculated on the basis that the income derived by him 
from the establishment is his only income; 

(d) where the income of any employer includes any profits and gains derived from the export 
of any goods or merchandise out of India and any rebate on such income is allowed under any 
law  for the time  being  in  force relating  to direct  taxes,  then,  no account shall be  taken  of  such 
rebate; 

(e)  no  account  shall  be  taken  of  any  rebate  other  than  development  rebate  or  investment 
allowance or development allowance or credit or relief or deduction (not hereinbefore mentioned in 
this  section)  in  the  payment  of  any  direct  tax  allowed  under  any  law  for  the  time  being  in  force 
relating to direct taxes or under the relevant annual Finance Act, for the development of any industry. 

36.  Set  on  and  set  off  of  allocable  surplus.—(1)  Where  for  any  accounting  year,  the  allocable 
surplus  exceeds  the  amount  of  maximum  bonus  payable  to  the  employees  in  the  establishment  under 
section 26, then, the excess shall, subject to a limit of twenty per cent. of the total salary or wage of the 
employees employed in the establishment in that accounting year, be carried forward for being set on in 
the succeeding accounting year and so on up to and inclusive of the fourth accounting year to be utilised 
for the purpose of payment of bonus in such manner as may be prescribed by the Central Government. 

(2) Where for any accounting year, there is no available surplus or the allocable surplus in respect of 
that year falls short of the amount of minimum bonus payable to the employees in the establishment under 
section 26, and there is no amount or sufficient amount carried forward and set on under sub-section (1) 
which could be utilised for the purpose of payment of the minimum bonus, then, such minimum amount 
or  the  deficiency,  as  the  case  may  be,  shall  be  carried  forward  for  being  set  off  in  the  succeeding 
accounting year and so on up to and inclusive of the fourth accounting year in such  manner as may be 
prescribed by the Central Government. 

(3) The principle of set on and set off as may be provided in rules by the Central Government under 
this Code shall apply to all other cases not covered by sub-section (1) or sub-section (2) for the purpose of 
payment of bonus under this Code. 

(4) Where in any accounting year any amount has been carried forward and set on or set off under this 
section,  then,  in  calculating  bonus  for  the  succeeding  accounting  year,  the  amount  of  set  on  or  set  off 
carried forward from the earliest accounting year shall first be taken into account. 

37. Adjustment of customary or interim bonus against bonus payable under this Code.—Where 

in any accounting year,— 

(a) an employer has paid any puja bonus or other customary bonus to employee; or 

(b) an employer has paid a part of the bonus payable under this Code to an employee before the 

date on which such bonus becomes payable,  

then,  the  employer  shall  be  entitled  to  deduct  the  amount  of  bonus  so  paid  from  the  amount  of  bonus 
payable by him to the employee under this Code in respect of that accounting year and the employee shall 
be entitled to receive only the balance. 

38.  Deduction  of  certain  amounts  from  bonus  payable.—Where  in  any  accounting  year,  an 
employee is found guilty of misconduct causing financial loss to the employer, then, it shall be lawful for 
the  employer  to  deduct  the  amount  of  loss  from  the  amount  of  bonus  payable by  him  to  the  employee 
under this Code in respect of that accounting year only and the employee shall be entitled to receive the 
balance, if any. 

 39 .Time limit for payment of bonus.—(1) All amounts payable to an employee by way of bonus 
under this Code shall be paid by crediting it in the bank account of the employee by his employer within a 
period of eight months from the close of the accounting year: 

16 

 
Provided  that  the  appropriate  Government  or  such  authority  as  the  appropriate  Government  may 
specify in this behalf may, upon an application made to it by the employer and for sufficient reasons, by 
order, extend the said period of eight months to such further period or periods as it thinks fit; so, however, 
that the total period so extended shall not in any case exceed two years. 

(2)  Notwithstanding  anything  contained  in  sub-section  (1),  where  there  is  a  dispute  regarding 
payment of bonus pending before any authority, such bonus shall be paid, within a period of one month 
from the date on which the award becomes enforceable or the settlement comes into operation, in respect 
of such dispute: 

Provided that if, there is a dispute for payment at the higher rate, the employer shall pay eight and 
one-third per cent. of the wages earned by the employee as per the provisions of this Code within a period 
of eight months from the close of the accounting year. 

40. Application of this Chapter to establishments in public sector in certain cases.—(1) If in any 
accounting  year  an  establishment  in  public  sector  sells  any  goods  produced  or  manufactured  by  it  or 
renders  any  services,  in  competition  with an establishment  in  private  sector,  and  the  income  from  such 
sale or services or both, is not less than twenty per cent. of the gross income of the establishment in public 
sector for that year, then, the provisions of this Chapter shall apply in relation to such establishment in 
public sector as they apply in relation to a like establishment in private sector. 

(2)  Save  as  otherwise  provided  in  sub-section  (1),  nothing  in  this  Chapter  shall  apply  to  the 

employees employed by any establishment in public sector. 

41. Non-applicability of this Chapter.—(1) Nothing in this Chapter shall apply to— 

(a) employees employed by the Life Insurance Corporation of India; 

(b)  seamen  as  defined  in  clause  (42)  of section  3 of  the  Merchant  Shipping  Act,  1958  (44  of 

1958); 

(c) employees registered or listed under any scheme made under the Dock Workers (Regulation 

of Employment) Act, 1948 (9 of 1948), and employed by registered or listed employers; 

(d) employees employed by an establishment under the authority of any department of the Central 

Government or a State Government or a local authority; 

(e) employees employed by— 

(i)  the  Indian  Red  Cross  Society  or  any  other  institution  of  a  like  nature  including  its 

branches; 

(ii) universities and other educational institutions; 

(iii)  institutions  including  hospitals,  chamber  of  commerce  and  social  welfare  institutions 

established not for purposes of profit; 

(f) employees employed by the Reserve Bank of India; 

(g)  employees  employed  by  public  sector  financial  institution  other  than  a  banking  company, 

which the Central Government may, by notification, specify, having regard to— 

(i) its capital structure; 

(ii) its objectives and the nature of its activities; 

(iii)  the  nature  and  extent  of  financial  assistance  or  any  concession  given  to  it  by  the 

Government; and 

(iv) any other relevant factor; 

(h)  employees  employed  by  inland  water  transport  establishments  operating  on  routes  passing 

through any other country; and 

(i) employees of any other establishment which the appropriate Government may, by notification, 
exempt  having  regard  to  the  overall  benefits  under  any  other  scheme  of  profit  sharing  available  in 
such establishments to the employees. 

17 

 
(2) Subject to the provisions of sub-section (1) and notwithstanding anything contained in any other 
provisions  of  this  Chapter,  the  provisions  of  this  Chapter  shall  apply  to  such  establishment  in  which 
twenty or more persons are employed or were employed on any day during an accounting year. 

CHAPTER V 
ADVISORY BOARD 

42.  Central  Advisory  Board  and  State  Advisory  Boards.—(1)  The  Central  Government  shall 
constitute  the  Central  Advisory  Board  which  shall  consist  of  persons  to  be  nominated  by  the  Central 
Government— 

(a) representing employers; 

(b) representing  employees  which shall be  equal  in  number  of  the  members  specified  in clause 

(a); 

(c) independent persons, not exceeding one-third of the total members of the Board; and 

(d)  five  representatives  of  such  State  Governments  as  may  be  nominated  by  the  Central 

Government. 

(2) One-third of the members referred to in sub-section (1) shall be women and a member specified in 
clause (c) of the said sub-section shall be appointed by the Central Government as the Chairperson of the 
Board. 

(3) The Central Advisory Board constituted under sub-section (1) shall from time to time advise the 

Central Government on reference of issues relating to— 

(a) fixation or revision of minimum wages and other connected matters; 

(b) providing increasing employment opportunities for women; 

(c) the extent to which women may be employed in such establishments or employments as the 

Central Government may, by notification, specify in this behalf; and 

(d) any other matter relating to this Code,  

and on such advice, the Central Government may issue directions to the State Government as it deems fit 
in respect of matters relating to issues referred to the Board. 

(4)  Every  State  Government  shall  constitute  a  State  Advisory  Board  for  advising  the  State 

Government— 

(a) in fixation or revision of minimum wages and other connected matters; 

(b) for the purpose of providing increasing employment opportunities for women; 

(c)  with  regard  to  the  extent  to  which  women  may  be  employed  in  such  establishments  or 

employments as the State Government may, by notification, specify in this behalf; and 

(d) in any other matter relating to this Code, which the State Government may refer from time to 

time to the Board. 

(5) The State Advisory Board may constitute one or more committees or sub-committees to look into 

issues pertaining to matters specified in clauses (a) to (d) of sub-section (4). 

(6) The State Advisory Board and each of the committees and sub-committees thereof shall consist of 

persons.— 

(a) representing employers; 

(b)  representing  employees  which  shall  be  equal  in  number  of  the  members  specified  in 

clause (a); and 

(c)  independent  persons,  not  exceeding  one-third  of  the  total  members  of  the  Board  or 

committee or sub-committee, as the case may be. 

(7)  One-third  of  the  members  referred  to  in  sub-section  (6)  shall  be  women  and  one  among  the 

members specified in clause (c) of the said sub-section shall be— 

18 

 
(a) appointed by the State Government as the Chairperson of the Board; 

(b)  appointed  by  the  State  Advisory  Board  as  the  Chairperson  of  the  committee  or  sub-

committee, as the case may be. 

(8) In tendering its advice in the matters specified in clause (b) or clause (c) of sub-section (4), the 
State  Advisory  Board  shall  have  regard  to  the  number  of  women  employed  in  the  concerned 
establishment, or employment, the nature of work, hours of work, suitability of women for employment, 
as  the  case  may  be,  the  need  for  providing  increasing  employment  opportunities  for  women,  including 
part time employment, and such other relevant factors as the Board may think fit. 

(9)  The  State  Government  may,  after  considering  the  advice  tendered  to  it  by  the  State  Advisory 
Board  and  after  inviting  and  considering  the  representations  from  establishment  or  employees  or  any 
other person which that Government thinks fit, issue such direction as may be deemed necessary. 

(10) The Central Advisory Board referred to in sub-section (1) and the State Advisory Board referred 
to in sub-section (4) shall respectively regulate their own procedure including that of the committees and 
sub-committees constituted by the State Advisory Board, in such manner as may be prescribed. 

(11) The  terms  of  office  of  the  Central  Advisory  Board referred  to in sub-section  (1) and the  State 
Advisory  Board  referred  to  in  sub-section  (4)  including  that  of  the  committees  and  sub-committees 
constituted by the State Advisory Board, shall be such as may be prescribed. 

CHAPTER VI 

PAYMENT OF DUES, CLAIMS AND AUDIT 

43. Responsibility for payment of various dues.—Every employer shall pay all amounts required to 

be paid under this Code to every employee employed by him: 

Provided that where such employer fails to make such payment in accordance with this Code, then, 
the  company  or  firm  or  association  or  any  other  person  who  is  the  proprietor  of  the  establishment,  in 
which the employee is employed, shall be responsible for such payment. 

Explanation.—For the purposes of this section the expression “firm” shall have the same meaning as 

assigned to it in the Indian Partnership Act, 1932 (9 of 1932). 

44. Payment of various undisbursed dues in case of death of employee.—(1) Subject to the other 
provisions of this Code, all amounts payable to an employee under this Code shall, if such amounts could 
not or cannot be paid on account of his death before payment or on account of his whereabouts not being 
known,— 

(a) be paid to the person nominated by him in this behalf in accordance with the rules made under 

this Code; or 

(b) where no such nomination has been made or where for any reasons such amounts cannot be 
paid  to  the  person  so  nominated,  be  deposited  with  the  such  authority,  as  may  be  prescribed,  who 
shall deal with the amounts so deposited in the manner as may be prescribed. 

(2) Where in accordance with the provisions of sub-section (1), all amounts payable to an employee 

under this Code— 

(a) are paid by the employer to the person nominated by the employee; or 

(b) are deposited by the employer with the authority referred to in clause (b) of sub-section (1),  

then, the employer shall be discharged of his liability to pay those amounts. 

45.  Claims  under  Code  and  procedure  thereof.—(1)  The  appropriate  Government  may,  by 
notification,  appoint  one  or  more  authorities,  not  below  the  rank  of  a  Gazetted  Officer,  to  hear  and 
determine the claims which arises under the provisions of this Code. 

(2) The authority  appointed  under  sub-section  (1),  while  deciding  the  claim  under  that sub-section, 
may order, having regard to the circumstances under which the claim arises, the payment of compensation 
in  addition  to  the  claim  determined,  which  may  extend  to  ten  times  of  the  claim  determined  and 
endeavour shall be made by the authority to decide the claim within a period of three months. 

19 

 
(3) If an employer fails to pay the claim determined and compensation ordered to be paid under sub-
section (2), the authority shall issue a certificate of recovery to the Collector or District Magistrate of the 
district where the establishment is located who shall recover the same as arrears of land revenue and remit 
the same to the authority for payment to the concerned employee. 

(4) Any application before the authority for claim referred to in sub-section (1) may be filed by,— 

(a) the employee concerned; or 

(b)  any  Trade  Union  registered  under  the  Trade  Unions  Act,  1926  (16  of  1926)  of  which  the 

employee is a member; or 

(c) the Inspector-cum-Facilitator. 

(5)  Subject  to  such  rules  as  may  be  made,  a  single  application  may  be  filed  under  this  section  on 

behalf or in respect of any number of employees employed in an establishment. 

(6) The application under sub-section (4) may be filed within a period of three years from the date on 

which claims referred to in sub-section (1) arises: 

Provided  that  the  authority  referred  to  in  sub-section  (1)  may,  entertain  the  application  after  three 

years on sufficient cause being shown by the applicant for such delay. 

(7)  The  authority  appointed  under  sub-section  (1)  and  the  appellate  authority  appointed  under  sub-
section  (1)  of section  49,  shall  have  all  the  powers  of  a  civil  court  under  the  Code  of  Civil  Procedure, 
1908  (5  of  1908),  for  the purpose  of taking  evidence  and  of  enforcing  the  attendance  of  witnesses  and 
compelling the production of documents, and every such authority or appellate authority shall be deemed 
to  be  a  civil  court  for  all  the  purposes  of section  195 and  Chapter  XXVI  of  the  Code  of  Criminal 
Procedure, 1973 (2 of 1974). 

46.  Reference  of  disputes  under  this  Code.—Notwithstanding  anything  contained  in  this  Code, 

where any dispute arises between an employer and his employees with respect to— 

(a) fixation of bonus or eligibility for payment of bonus under the provisions of this Code; or 

(b) the application of this Code, in respect of bonus, to an establishment in public sector,  

then,  such  dispute  shall  be  deemed  to  be  an  industrial  dispute  within  the  meaning  of  the  Industrial 
Disputes Act, 1947 (14 of 1947). 

47.  Presumption  about  accuracy  of  balance  sheet  and  profit  and  loss  account  of  corporations 

and companies.—(1) Where, during the course of proceedings before— 

(a) the authority under section 45; or 

(b) the appellate authority under section 49; or 

(c) a Tribunal; or 

(d) an arbitrator referred to in clause (aa) of section 2 of the Industrial Disputes Act, 1947 (14 of 

1947),  

in respect of any dispute of the nature specified in sections 45 and 46 or in respect of an appeal under 
section 49, the balance sheet and the profit and loss account of an employer, being a corporation or a 
company (other than a banking company), duly audited by the Comptroller and Auditor-General of 
India  or  by  auditors  duly  qualified  to  act  as  auditors  of  companies  under section  141 of  the 
Companies  Act,  2013  (18  of  2013),  are  produced  before  it,  then,  the  said  authority,  appellate 
authority,  Tribunal  or  arbitrator,  as  the  case  may  be,  may  presume  the  statements  and  particulars 
contained  in  such  balance  sheet  and  profit  and  loss  account  to  be  accurate  and  it  shall  not  be 
necessary for the corporation or the company to prove the accuracy of such statements and particulars 
by the filing of an affidavit or by any other mode: 

Provided that where the said authority, appellate authority, Tribunal or arbitrator, as the case may be, 
is satisfied that the statements and particulars contained in the balance sheet or the profit and loss account 
of the corporation or the company are not accurate, it may take such steps as it thinks necessary to find 
out the accuracy of such statements and particulars. 

20 

 
(2)  When  an  application  is  made  to  the  authority,  appellate  authority,  Tribunal  or  arbitrator,  as  the 
case may be, referred to in sub-section (1), by any Trade Union being a party to the dispute or as the case 
may be, an appeal, and where there is no Trade Union, by the employees being a party to the dispute, or 
as the case may be, an appeal, requiring any clarification relating to any item in the balance sheet or the 
profit  and  loss  account,  then  such  authority,  appellate  authority,  Tribunal  or  arbitrator,  may,  after 
satisfying itself that such clarification is necessary, by order, direct the corporation or, as the case may be, 
the company, to furnish to the Trade Union or the employees such clarification within such time as may 
be specified in the direction and the corporation or, as the case may be, the company, shall comply with 
such direction. 

48. Audit of account of employers not being corporations or companies.—(1) Where any claim, 
dispute  or  appeal  with  respect  to  bonus  payable  under  this  Code  between  an  employer,  not  being  a 
corporation  or  a  company,  and  his  employees  is  pending  before  any  authority,  appellate  authority, 
Tribunal or arbitrator, as the case may be, as referred to in sub-section (1) of section 47 and the accounts 
of  such  employer  audited  by  any  auditor  duly  qualified  to  act  as  auditor  of  companies  under  the 
provisions of section 141 of the Companies Act, 2013 (18 of 2013), are produced before such authority, 
appellate authority, Tribunal or arbitrator, then the provisions of section 47 shall, so far as may be, apply 
to the accounts so audited. 

(2) When the authority, appellate authority, Tribunal or arbitrator, referred to in sub-section (1), as the 
case may be, finds that the accounts of such employer have not been audited by any such auditor and it is 
of opinion that an audit of the accounts of such employer is necessary for deciding the question referred to 
it, then, such authority, appellate authority, Tribunal or arbitrator, may, by order, direct the employer to 
get his accounts audited within such time as may be specified in the direction or within such further time 
as it may allow by such auditor or auditors as it thinks fit and thereupon the employer shall comply with 
such direction. 

(3) Where an employer fails to get the accounts audited under sub-section (2), the authority, appellate 
authority, Tribunal or arbitrator, referred to in sub-section (1), as the case may be, may, without prejudice 
to the provisions of section 54, get the accounts audited by such auditor or auditors as it thinks fit. 

(4) When the accounts are audited under sub-section (2) or sub-section (3), the provisions of section 

47 shall, so far as may be, apply to the accounts so audited. 

(5) The expenses of, and incidental to, any audit under sub-section (3) including the remuneration of 
the  auditor  or  auditors  shall  be  determined  by  the  authority,  appellate  authority,  Tribunal  or  arbitrator, 
referred  to  in  sub-section  (1),  as  the  case  may  be,  and  paid  by  the  employer  and  in  default  of  such 
payment  shall  be  recoverable  by  the  authority  referred  to  in  sub-section  (3)  of  section  45  from  the 
employer in the manner provided in that sub-section. 

49. Appeal.—(1) Any person aggrieved by an order passed by the authority under sub-section (2) of 
section  45  may  prefer  an  appeal,  to  the  appellate  authority  having  jurisdiction  appointed  by  the 
appropriate  Government,  by  notification,  for  such  purpose,  within  ninety  days  from  the  date  of  such 
order, in such form and manner as may be prescribed: 

Provided that the appellate authority may entertain the appeal after ninety days if it satisfied that the 

delay in filing the appeal has occurred due to sufficient cause. 

(2)  The  appellate  authority  shall  be  appointed  from  the  officers  of  the  appropriate  Government 

holding the post at least one rank higher than the authority referred under sub-section (1) of section 45. 

(3)  The  appellate  authority  shall,  after  hearing  the  parties  in  the  appeal,  dispose  of  the  appeal  and 

endeavour shall be made to dispose of the appeal within a period of three months. 

(4)  The  outstanding  dues  under  the  orders  of  the  appellate  authority  shall  be  recovered  by  the 
authority referred to in section 45, by issuing the certificate of recovery in the manner specified in sub-
section (3) of that section. 

50.  Records,  returns  and  notices.—(1)  Every  employer  of  an  establishment  to  which  this  Code 
applies  shall  maintain  a  register  containing  the  details  with  regard  to  persons  employed,  muster  roll, 
wages and such other details in such manner as may be prescribed. 

21 

 
(2)  Every  employer  shall  display  a  notice  on  the  notice  board  at  a  prominent  place  of  the 
establishment containing the abstract of this Code, category-wise wage rates of employees, wage period, 
day  or  date  and  time  of  payment  of  wages,  and  the  name  and  address  of  the  Inspector-cum-Facilitator 
having jurisdiction. 

(3)  Every  employer  shall  issue  wage  slips  to  the  employees  in  such  form  and  manner  as  may  be 

prescribed. 

(4) The provisions of sub-sections (1) to (3) shall not apply in respect of the employer to the extent he 

employs not more than five persons for agriculture or domestic purpose: 

Provided that such employer, when demanded, shall produce before the Inspector-cum-Facilitator, the 

reasonable proof of the payment of wages to the persons so employed. 

Explanation.—For  the  purposes  of  this  sub-section,  the  expression  “domestic  purpose”  means  the 
purpose exclusively relating to the home or family affairs of the employer and does not include any affair 
relating to any establishment, industry, trade, business, manufacture or occupation. 

CHAPTER VII 

INSPECTORY-CUM-FACILITATOR 

51.  Appointment  of  Inspector-cum-Facilitators  and  their  powers.—(1)  The  appropriate 
Government may, by notification, appoint Inspector-cum-Facilitators for the purposes of this Code who 
shall  exercise  the  powers  conferred  on  them  under  sub-section  (4)  throughout  the  State  or  such 
geographical  limits  assigned  in  relation  to  one  or  more  establishments  situated  in  such  State  or 
geographical limits or in one or more establishments, irrespective of geographical limits, assigned to him 
by the appropriate Government, as the case may be. 

(2) The appropriate Government may, by notification, lay down an inspection scheme which may also 
provide  for  generation  of  a  web-based  inspection  and  calling  of  information  relating  to  the  inspection 
under this Code electronically. 

(3)  Without  prejudice  to  the  provisions  of  sub-section  (2),  the  appropriate  Government  may,  by 
notification, confer such jurisdiction of randomised selection of inspection for the purposes of this Code 
to the Inspector-cum-Facilitator as may be specified in such notification. 

(4)  Every  Inspector-cum-Facilitator  appointed  under  sub-section  (1)  shall  be  deemed  to  be  public 

servant within the meaning of section 21 of the Indian Penal Code (45 of 1860). 

(5) The Inspector-cum-Facilitator may— 

(a) advice to employers and workers relating to compliance with the provisions of this Code (45 

of 1860); 

(b) inspect the establishments as assigned to him by the appropriate Government,  

subject to the instructions or guidelines issued by the appropriate Government from time to time. 

(6) Subject to the provisions of sub-section (4), the Inspector-cum-Facilitator may,— 

(a) examine any person who is found in any premises of the establishment, whom the Inspector-

cum-Facilitator has reasonable cause to believe, is a worker of the establishment; 

(b) require any person to give any information, which is in his power to give with respect to the 

names and addresses of the persons; 

(c) search, seize or take copies of such register, record of wages or notices or portions thereof as 
the  Inspector-cum-Facilitator  may  consider  relevant  in  respect  of  an  offence  under  this  Code  and 
which the Inspector-cum-Facilitator has reason to believe has been committed by the employer; 

(d) bring to the notice of the appropriate Government defects or abuses not covered by any law 

for the time being in force; and 

(e) exercise such other powers as may be prescribed. 

22 

 
(7) Any person required to produce any document or to give any information required by a Inspector-
cum-Facilitator under sub-section (5) shall be deemed to be legally bound to do so within the meaning of 
section 175 and section 176 of the Indian Penal Code. 

(8) The provisions of the Code of Criminal Procedure, 1973 (2 of 1974) shall, so far as may be, apply 
to  the  search  or  seizure  under  sub-section  (5)  as  they  apply  to  the  search  or  seizure  made  under  the 
authority of a warrant issued under section 94 of the said Code. 

CHAPTER VIII 

OFFENCES AND PENALTIES 

52.  Cognizance  of  offences.—(1)  No  court  shall  take  cognizance  of  any  offence  punishable  under 
this  Code,  save  on  a  complaint  made  by  or  under  the  authority  of  the  appropriate  Government  or  an 
officer authorised in this behalf, or by an employee or a registered Trade Union registered under the Trade 
Unions Act, 1926 (16 of 1926) or an Inspector-cum-Facilitator. 

(2)  Notwithstanding  anything  contained  in  the  Code  of  Criminal  Procedure,  1973  (2  of  1974),  no 
court  inferior  to  that  of  a  Metropolitan  Magistrate  or  Judicial  Magistrate  of  the  first  class  shall  try  the 
offences under this Code. 

53.  Power  of  officers  of  appropriate  Government  to  impose  penalty  in  certain  cases.—(1) 
Notwithstanding anything contained in section 52, for the purpose of imposing penalty under clauses (a) 
and  (c)  of  sub-section  (1)  and  sub-section  (2)  of  section  54  and  sub-section  (7)  of  section  56,  the 
appropriate  Government  may  appoint  any  officer  not  below  the  rank  of  Under  Secretary  to  the 
Government of  India or an officer of equivalent rank in the State Government, as the case may be, for 
holding enquiry in such manner, as may be prescribed by the Central Government. 

(2)  While  holding  the  enquiry,  the  officer  referred  to  in  sub-section  (1)  shall  have  the  power  to 
summon and enforce attendance of any person acquainted with the facts and circumstances of the case to 
give  evidence  or  to  produce  any  document,  which  in  the  opinion  of  such  officer,  may  be  useful  for  or 
relevant to  the  subject  matter  of the  enquiry  and if,  on  such enquiry,  he  is satisfied  that  the  person has 
committed any offence under the provisions referred to in sub-section (1), he may impose such penalty as 
he thinks fit in accordance with such provisions. 

54. Penalties for offences.—(1) Any employer who— 

(a) pays to any employee less than the amount due to such employee under the provisions of this 

Code shall be punishable with fine which may extend to fifty thousand rupees; 

(b) having been convicted of an offence under clause (a) is again found guilty of similar offence 
under this clause, within five years from the date of the commission of the first or subsequent offence, 
he  shall,  on  the  second  and  the  subsequent  commission  of  the  offence,  be  punishable  with 
imprisonment  for  a  term  which  may  extend  to three  months  or  with fine  which  may  extend  to  one 
lakh rupees, or with both; 

(c) contravenes any other provision of this Code or any rule made or order made or issued there 

under shall be punishable with fine which may extend to twenty thousand rupees; 

(d) having been convicted of an offence under clause (c) is again found guilty of similar offence 
under this clause, within five years from the date of the commission of the first or subsequent offence, 
he shall, on the second and the subsequent commission of the offence under this clause, be punishable 
with imprisonment for a term which may extend to one month or with fine which may extend to forty 
thousand rupees, or with both. 

(2)  Notwithstanding  anything  contained  in  sub-section  (1),  for  the  offences  of  non-maintenance  or 
improper maintenance of records in the establishment, the employer shall be punishable with fine which 
may extend to ten thousand rupees. 

(3)  Notwithstanding  anything  contained  in  clause  (c)  of  sub-section  (1)  or  sub-section  (2),  the 
Inspector-cum-Facilitator shall, before initiation of prosecution proceeding for the offences under the said 
clause or sub-section, give an opportunity to the employer to comply with the provisions of this Code by 
way of a written direction, which shall lay down a time period for such compliance, and, if the employer 
complies  with the  direction  within  such  period,  the  Inspector-cum-Facilitator  shall  not  initiate  such 

23 

 
prosecution proceeding and, no such opportunity shall be accorded to an employer, if the violation of the 
same nature of the provisions under this Code is repeated within a period of five years from the date on 
which such first violation was committed and in such case the prosecution shall be initiated in accordance 
with the provisions of this Code. 

55. Offences by companies.—(1) If the person committing an offence under this Code is a company, 
every person who, at the time the offence was committed was in charge of, and was responsible to the 
company  for  the  conduct  of  business  of  the  company,  as  well  as  the  company,  shall  be  deemed  to  be 
guilty of the offence and shall be liable to be proceeded against and punished accordingly: 

Provided  that  nothing  contained  in  this  sub-section  shall  render  any  such  person  liable  to  any 
punishment if he proves that the offence was committed without his knowledge or  that he exercised all 
due diligence to prevent the commission of such offence. 

(2) Notwithstanding anything contained in sub-section (1), where an offence under this Code has been 
committed  by  a  company  and  it  is  proved  that  the  offence  has  been  committed  with  the  consent  or 
connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other 
officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty 
of that offence and shall be liable to be proceeded against and punished accordingly. 

Explanation.—For the purposes of this section,— 

(a) “company” means anybody corporate and includes— 

(i) a firm; or 

(ii) a limited liability partnership registered under the Limited Liability Partnership Act, 2008 

(6 of 2009); or 

(iii) other association of individuals; and 

(b) “director” in relation to a firm means a partner in the firm. 

56.  Composition  of  offences.—(1)  Notwithstanding  anything  contained  in  the  Code  of  Criminal 
Procedure,  1973  (2 of  1974),  any  offence  punishable  under  this  Code,  not being  an  offence  punishable 
with imprisonment only, or with imprisonment and also with fine, may, on an application of the accused 
person, either before or after the institution of any prosecution, be compounded by a Gazetted Officer, as 
the  appropriate  Government  may,  by  notification,  specify,  for  a  sum  of  fifty  per  cent.  of the  maximum 
fine provided for such offence, in the manner as may be prescribed. 

(2)  Nothing  contained  in  sub-section  (1)  shall  apply  to  an  offence  committed  by  a  person  for  the 

second time or thereafter within a period of five years from the date— 

(i) of commission of a similar offence which was earlier compounded; 

(ii) of commission of similar offence for which such person was earlier convicted. 

(3)  Every  officer  referred  to  in  sub-section  (1)  shall  exercise  the  powers  to  compound  an  offence, 

subject to the direction, control and supervision of the appropriate Government. 

(4)  Every  application  for  the  compounding  of  an  offence  shall  be  made  in  such  manner  as  may  be 

prescribed. 

(5) Where any offence is compounded before the institution of any prosecution, no prosecution shall 
be  instituted  in  relation  to  such  offence,  against  the  offender  in  relation  to  whom  the  offence  is  so 
compounded. 

(6)  Where  the  composition  of  any  offence  is  made  after  the  institution  of  any  prosecution,  such 
composition shall be brought by the officer referred to in sub-section (1) in writing, to the notice of the 
court  in  which  the  prosecution  is  pending  and  on  such  notice  of  the  composition  of  the  offence  being 
given, the person against whom the offence is so compounded shall be discharged. 

(7) Any person who fails to comply with an order made by the officer referred to in sub-section (1), 
shall  be  punishable  with  a  sum  equivalent  to  twenty  per  cent.  of  the  maximum  fine  provided  for  the 
offence, in addition to such fine. 

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(8) No offence punishable under the provisions of this Code shall be compounded except under and in 

accordance with the provisions of this section. 

CHAPTER X 

MISCELLANEOUS 

57.  Bar  of  suits.—No  court  shall  entertain  any  suit  for  the  recovery  of  minimum  wages,  any 

deduction from wages, discrimination in wages and payment of bonus, in so far as the sum so claimed— 

(a) forms the subject of claims under section 45; 

(b) has formed the subject of a direction under this Code; 

(c) has been adjudged in any proceeding under this Code; 

(d) could have been recovered under this Code. 

58. Protection of action taken in good faith.—No suit, prosecution or any other legal proceeding 
shall lie against the appropriate Government or any officer of that Government for anything which is in 
good faith done or intended to be done under this Code. 

59. Burden of proof.—Where a claim has been filed on account of non-payment of remuneration or 
bonus or less payment of wages or bonus or on account of making deductions not authorised by this Code 
from  the  wages  of an  employee,  the  burden to  prove  that  the  said  dues  have  been  paid  shall  be  on the 
employer. 

60. Contracting out.—Any contract or agreement whereby an employee relinquishes the right to any 
amount or the right to bonus due to him under this Code shall be null and void in so far as it purports to 
remove or reduce the liability of any person to pay such amount under this Code. 

61. Effect of laws agreements, etc., inconsistent with this Code.—The provisions of this Code shall 
have effect notwithstanding anything inconsistent therewith contained in any other law for the time being 
in force or in the terms of any award, agreement, settlement or contract of service. 

62. Delegation of powers.—The appropriate Government may, by notification, direct that any power 
exercisable by it under this Code shall, in relation to such matters and subject to such conditions, if any, 
as may be specified in the notification, be also exercisable— 

(a)  where  the  appropriate  Government  is  the  Central  Government,  by  such  officer  or  authority 
subordinate  to  the  Central  Government  or  by  the  State  Government  or  by  such  officer  or  authority 
subordinate to the State Government, as may be specified in the notification; 

(b)  where  the  appropriate  Government  is  a  State  Government,  by  such  officer  or  authority 

subordinate to the State Government as may be specified in the notification. 

63. Exemption of employer from liability in certain cases.—Where an employer is charged with an 
offence under this Code, he shall be entitled upon complaint duly made by him, to have any other person 
whom he charges as the actual offender, brought before the court at the time appointed for hearing the 
charge;  and  if,  after  the  commission  of  the  offence  has  been  proved,  the  employer  proves  to  the 
satisfaction of the court— 

(a) that he has used due diligence to enforce the execution of this Code; and 

(b) that the said other person committed the offence in question without his knowledge, consent 
or  connivance, that  other  person  shall  be  convicted  of  the  offence  and  shall  be  liable  to  the  like 
punishment as if he were the employer and the employer shall be discharged from any liability under 
this Code in respect of such offence: 

Provided that in seeking to prove, as aforesaid, the employer may be examined on oath, and the 
evidence of the employer or his witness, if any, shall be subject to cross-examination by or on behalf 
of the person whom the employer charges as the actual offender and by the prosecution. 

64.  Protection  against  attachments  of  assets  of  employer  with  Government.—Any  amount 
deposited with the appropriate Government by an employer to secure the due performance of a contract 
with that Government and any other amount due to such employer from that Government in respect of 

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such contract shall not be liable to attachment under any decree or order of  any court in respect of any 
debt  or  liability  incurred  by  the  employer  other  than  any  debt  or  liability  incurred  by  the  employer 
towards any employee employed in connection with the contract aforesaid. 

65. Power of Central Government to give directions.—The Central Government may, for carrying 
into execution of the provisions of this Code in the State give directions to the State Government, and the 
State Government shall abide by such directions. 

66. Saving.—Nothing contained in this Code shall be deemed to affect the provisions of the Mahatma 
Gandhi  National  Rural  Employment  Guarantee  Act,  2005  (42  of  2005)  and  the  Coal  Mines  Provident 
Fund and Miscellaneous Provisions Act, 1948 (46 of 1948), or of any scheme made there under. 

67.  Power  of  appropriate  Government  to  make  rules.—(1)  The  appropriate  Government  may, 

subject to the condition of previous publication, make rules for carrying out the provisions of this Code. 

(2)  In  particular  and  without  prejudice  to  the  generality  of  the  foregoing  power,  such  rules  may 

provide for all or any of the following matters, namely:— 

(a) the manner of calculating the wages under sub-section (4) of section 6; 

(b) the arduousness of work to be taken into account in addition to minimum rate of wages for 

certain category of workers under clause (b) of sub-section (6) of section 6; 

(c) the norms under clause (c) of sub-section (6) of section 6; 

(d)  the  cases  and  circumstances  in  which  an  employee  employed  for  a  period  of  less  than  the 
requisite number of hours shall not be entitled to receive wages for a full normal working day, under 
section 10; 

(e) the extent and conditions, which shall apply in relation to certain classes of employees under 

sub-section (2) of section 13; 

(f) the longer wage period for fixation of minimum rate of wages as referred to in section 14; 

(g) the manner of deducting loans made from any fund constituted for the welfare of labour under 

sub-clause (ii) of clause (f) of sub-section (2) of section 18; 

(h) the manner of recovery of excess of amount under sub-section (4) of section 18; 

(i) the authority to provide approval for imposition of fine under sub-section (1) of section 19; 

(j)  the  manner  of  exhibition  of  the  acts  and  omissions  to  be  specified  in  the  notice  under  sub-

section (2) of section 19; 

(k) the procedure for the imposition of fines under sub-section (3) of section 19; 

(l) the form of the register to record all fines and all realisations thereof under sub-section (8) of 

section 19; 

(m) the procedure for making deductions for absence from duty under sub-section (2) of section 

20; 

(n) the procedure for making deductions for damage or loss under sub-section (2) of section 21; 

(o) the form of the register to record all deductions and all realisations thereof under sub-section 

(3) of section 21; 

(p)  conditions  for  recovery  of  advance  of  money  given  to  an  employee  after  the  employment 

began under clause (b) of section 23; 

(q) conditions for recovery of advances of wages to an employee not already earned under clause 

(c) of section 23; 

(r) deductions for recovery of loans and the rate of interest payable thereon under section 24; 

(s) the manner of regulating the procedure by the Central Advisory Board and the State Advisory 
Board, including that of the committees and sub-committees constituted by the State Advisory Board, 
under sub-section (10) of section 42; 

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(t)  the  terms  of  office  of  members  of  the  Central  Advisory  Board,  the  State  Advisory  Board, 
including that of the committees and sub-committees constituted by the State Advisory Board, under 
sub-section (11) of section 42; 

(u) the authority and manner of depositing with such authority, various undisbursed dues under 

clause (b) of sub-section (1) of section 44; 

(v) the form of single application in respect of a number of employees under sub-section (5) of 

section 45; 

(w) the form for making an appeal to the appellate authority under sub-section (1) of section 49; 

(x) the manner of maintenance of a register by the employer under sub-section (1) of section 50; 

(y) the form and manner of issuing wage slips under sub-section (3) of section 50; 

(z)  the  other  powers  to  be  exercised  by  the  Inspector-cum-Facilitator  under  sub-section  (5)  of 

section 51; 

(za) the manner of imposing fine under sub-section (1) of section 56; 

(zb) the manner of composition of offence by a Gazetted Officer specified under sub-section (4) 

of section 56; 

(zc) any other matter which is required to be, or may be, prescribed under the provisions of this 

Code. 

(3) The Central Government may, subject to the condition of previous publication, make rules for,— 

(a) the manner of fixing floor wage under sub-section (1) of section 9; 

(b) the manner of consultation with State Government under sub-section (3) of section 9; 

(c) the manner of making set on or set off for the sixth accounting year under clause  (i) of sub-

section (7) of section 26; 

(d) the  manner  of  making  set  on  or  set  off for the seventh  accounting  year  under  clause  (ii)  of 

sub-section (7) of section 26; 

(e) the manner of calculating gross profit under clauses (a) and (b) of section 32; 

(f) such further sums in respect of employer under clause (c) of section 34; 

(g) the manner of utilising the excess of allocable surplus to be carried forward for being set on in 
the succeeding accounting year and so on up to and inclusive of the fourth accounting year under sub-
section (1) of section 36; 

(h) the manner of utilising the minimum amount or the deficiency to be carried forward for being 
set off in the succeeding accounting year and so on up to and inclusive of the fourth accounting year 
under sub-section (2) of section 36; and 

(i) the manner of holding an enquiry under sub-section (1) of section 53. 

(4) Every rule made by the Central Government under this section shall be laid, as soon as may be 
after it is made, before each House of Parliament, while it is in session, for a total period of thirty days 
which may be comprised in one session or in two or more successive sessions, and if, before the expiry of 
the session immediately following the session or the successive sessions as aforesaid, both Houses agree 
in making any modification in the rule or both Houses agree that rule should not be made, the rule shall 
thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that 
any  such  modification  or  amendment  shall  be  without  prejudice  to  the  validity  of  anything  previously 
done under that rule. 

(5) Every rule made by the State Government under this section shall, as soon as possible after it is 

made, be laid before the State Legislature. 

68. Power to remove  difficulties.—(1)  If  any  difficulty  arises  in  giving  effect to  the  provisions  of 
this Code, the Central Government may, by order published in the Official Gazette, make such provisions 

27 

 
not  inconsistent  with  the  provisions  of  this  Code,  as  may  appear  to  be  necessary  for  removing  the 
difficulty: 

Provided that no such order shall be made under this section after the expiry of a period of three years 

from the commencement of this Code. 

(2) Every order made under this section shall be laid, as soon as may be after it is made, before each 

House of Parliament. 

69. Repeal and savings.—(1) The Payment of Wages Act, 1936 (4 of 1936), the Minimum Wages 
Act, 1948 (11 of 1948), the Payment of Bonus Act, 1965 (21 of 1965) and the Equal Remuneration Act, 
1976 (25 of 1976) are hereby repealed. 

(2) Notwithstanding such repeal, anything done or any action taken under the enactments so repealed 
including any notification, nomination, appointment, order or direction made there under or any amount 
of  wages  provided  in  any  provision  of  such  enactments  for  any  purpose  shall  be  deemed  to  have  been 
done or taken or provided for such purpose under the corresponding provisions of this Code and shall be 
in force to the extent they are not contrary to the provisions of this Code till they are repealed under the 
corresponding provisions of this Code or by the notification to that effect by the Central Government. 

(3) Without prejudice to the provisions of sub-section (2), the provisions of section 6 of the General 

Clauses Act, 1897 (10 of 1897) shall apply to the repeal of such enactments. 

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