Minimum Wage

Minimum wages are the lowest amount an employer may legally pay a worker. In India, they are fixed separately by the central and state governments, because labour is a concurrent subject under the Constitution.

Who fixes minimum wages

Both the central and state governments set minimum wages for different scheduled employments — categories of work such as security, housekeeping, construction, or factory work. Rates can differ by:

• State and locality
• Skill level (unskilled, semi-skilled, skilled)
• Class of work within the same employment
• Whether the wage is time-based or piece-rate

There is no single national minimum wage. Each state publishes its own rates for each scheduled employment and reviews them at its own interval.

Structure of a minimum wage

A notified minimum wage usually has two parts:

• Basic rate, and
• Variable Dearness Allowance (VDA), which is revised to track the cost of living.

The VDA is adjusted on a fixed schedule (often every six months) so the wage does not lose value as prices rise. Employers must pay the notified total.

Under the Code on Wages

The Code on Wages, 2019, now governs minimum wages. Two points matter:

• Floor wage. The central government will fix a national floor wage; state minimum wages must be equal to or higher than it. The floor wage has not yet been notified.
• Wage structure. Basic wages must be at least 50% of total wages, so a minimum-wage earner’s structure must be built accordingly.

See the Labour Codes overview for how the wage definition works.

Worked example (illustrative)

A state notifies a minimum wage of ₹450 a day for unskilled security work, split as ₹270 basic + ₹180 VDA. For a 26-day month, the worker’s minimum monthly wage is:

₹450 × 26 = ₹11,700

Paying below the notified rate, or structuring the wage so the basic falls under 50%, is underpayment. The rates above are illustrative — always use the current notification for the state and employment that apply to you.

Non-compliance

Underpaying or not paying the minimum wage is an offence. Penalties include fines and, for repeat offences, imprisonment. The exact amounts differ between the Code and state rules, so check the notification that applies to your state.