Abstract
The Code on Wages, 2019 was drafted with a plain ambition: to tidy up India’s scattered wage laws and to carry minimum-wage protection to every kind of worker, not just those in a list of scheduled trades. At the centre of that ambition sits the floor wage under Section 9, a statutory baseline below which no minimum wage can be fixed. The idea matters because the older system was built on separate schedules, occupations and State-level rates, and the result was a patchwork with wide gaps between one State and the next.
This article looks critically at what stands in the way of putting the floor-wage framework into practice. It considers Centre-State coordination, regional differences in the cost of living, skill classifications, informal employment and the capacity to enforce the law. It also weighs the role of the Inspector-cum-Facilitator, digital wage records and remedies that ordinary workers can actually reach. Gujarat is taken as a case study to show how difficult it is to apply one national baseline across industry, construction, services and informal work.
The argument is that fixing the floor wage is only the first step. The harder task lies in revising it regularly, explaining it clearly, monitoring it and enforcing it. The article therefore proposes transparent wage-setting, revision tied to living costs, stronger State-level enforcement, workable digital compliance and simple complaint routes. In the end, the success of the Code should be judged less by the wage the law prescribes and more by the wage the worker takes home.
Keywords: Code on Wages, 2019; floor wage; minimum wages; labour law; implementation; informal workers; Gujarat; wage enforcement; living wage
1. Introduction
Minimum wages are among the oldest and most familiar tools of labour protection. Their basic purpose is easy to state. A worker with little bargaining power should not be pushed into accepting pay below a legally fixed level, and the law should guarantee at least a modest standard of income and a decent life. Where a worker is desperate for a job and an employer is able to wait, the market alone rarely produces a fair result, and minimum-wage law exists to correct that imbalance.
In India, the Minimum Wages Act, 1948 was for decades the principal law on the subject, and it operated in scheduled employments. Over time, wage rates were fixed with reference to the nature of the work, the skill involved, the geographical area and the local cost of living. This gave the system flexibility, but it also produced a structure that was complicated and uneven. A worker doing much the same job could be entitled to a very different wage depending on the State, the district or the trade in which the work happened to fall.
The Code on Wages, 2019 tried to change this picture. It brought four major wage-related laws under a single roof, the Minimum Wages Act, 1948 among them, and it aimed to extend minimum-wage protection to all employees. It also introduced the idea of a floor wage under Section 9. The floor wage is a statutory baseline, and State Governments cannot fix minimum wages below it. They remain free, however, to set higher rates after considering skill, the nature of the work and local conditions.
The four Labour Codes came into force on 21 November 2025. The Code on Wages now offers a common legal framework for minimum wages across the country, while leaving States a real role in fixing higher rates to suit local conditions. Yet a law coming into force is not the same as a law working. Serious practical questions remain about how the national floor wage is to be determined, applied and enforced.
2. Review of Literature
Thakur and Mathew (2026) argue that India’s minimum wage has always been a need-based right rooted in dignity and social justice, not a market-driven figure. They warn that treating the new floor wage as the same as the minimum wage could weaken this tradition. In their view, the floor wage can act as a safety net for workers whom minimum-wage enforcement does not reach, but only if the two concepts stay separate. Their study is mostly doctrinal and says little about enforcement in practice.
Dvara Research (n.d.) looks at how the Code and the Draft Wages Code Rules, 2020 will work in practice. It points out that Section 9 leaves the meaning of “minimum living standards” to the Central Government’s discretion. It also warns that many workers may stay outside minimum-wage protection until the national floor is formally fixed, and suggests that no worker should be paid below it. However, the commentary covers only the draft rules and not how the Code works after it comes into force.
These studies explain the meaning of the floor wage and point out gaps in the rules. However, they say little about enforcement in informal and fragmented workplaces, and neither applies the issue to a State such as Gujarat. This article addresses that gap.
3. Research Methodology
This is a doctrinal and analytical study. Its primary materials are the Constitution of India, the Code on Wages, 2019, relevant Central Government materials, wage-related notifications and reported judicial decisions. Its secondary materials include government reports, research publications, academic discussion and selected contemporary reports on how the labour codes are being put into effect.
It is important to be clear about what the study does not do. It makes no claim to offer a statistical estimate of the wages actually received by workers in Gujarat or anywhere else in India. Such an estimate would need large-scale field data, and that is a different kind of project. The Gujarat discussion here is used instead as a focused legal and administrative case study. Its purpose is to bring out implementation issues that can be traced through legislation, rules, notifications and enforcement practice.
The article also draws a careful line between the statutory floor wage under Section 9 and the earlier administrative National Floor Level Minimum Wage (NFLMW). The two should not be treated as the same thing. The NFLMW was a non-statutory benchmark. The Code, by contrast, creates a statutory mechanism under which the Central Government must fix a floor wage and State minimum wages cannot fall below it. Keeping this distinction in view prevents a good deal of confusion later in the analysis.
4. Legal Framework of Minimum Wages under the Code on Wages, 2019
The Code on Wages, 2019 reorganises the legal structure of wage regulation in several ways. Section 3 prohibits discrimination on the ground of gender in matters of wages and recruitment for the same work or work of a similar nature. Section 5 provides that an employer cannot pay an employee less than the minimum rate of wages notified by the appropriate Government. Section 6 deals with the fixation of minimum wages. The appropriate Government may fix minimum rates for time work or piece work, and may structure those rates by the hour, the day or the month.
Section 6 deserves attention because it keeps a degree of differentiated wage-setting alive. The appropriate Government is required to take into account, primarily, the skill of workers and the geographical area. It may also consider how arduous the work is, including factors such as temperature, humidity, hazardous occupations or underground work. The Code therefore does not proceed on the assumption that every worker in India must receive exactly the same minimum wage. It accepts that work and place matter.
Section 7 concerns the components of a minimum wage. A minimum rate may consist of a basic rate together with a cost-of-living allowance linked to the relevant index. It may be a basic rate with or without such an allowance, along with the cash value of concessions. Or it may be an all-inclusive rate. This has a direct bearing on the implementation debate, because a wage cannot be properly understood by looking at the headline basic rate alone. Inflation and changes in the price of essential goods can quietly erode the real value of what a worker receives.
Section 8 lays down the procedure for fixing and revising minimum wages. The Government may appoint committees to hold enquiries and advise on fixation or revision. Alternatively, it may publish its proposals for the information of the people likely to be affected and consider their representations before finalising the rate. This consultative design is valuable, since wage fixation touches workers and employers alike, and a rate reached with both sides heard is more likely to be accepted and obeyed.
Section 9 is where the floor wage is introduced. The Central Government is required to fix a floor wage, taking into account the minimum living standards of a worker, in the manner prescribed. The provision allows different floor wages for different geographical areas. The minimum rates fixed by the appropriate Government under Section 6 cannot be less than the floor wage. And if an existing State minimum wage is already higher than the floor wage, the State cannot cut the existing rate merely to bring it down to the floor.
The Code’s universal approach is another significant change. The older minimum-wage system was tied to scheduled employment, so that protection depended on whether a particular trade appeared in a schedule. Under the Code, the idea of scheduled employment has been removed, and the Ministry has stated that minimum-wage protection is meant to apply across both organised and unorganised employment. The legal importance of this expansion is considerable. Many of the lowest-paid workers are found in fragmented employment arrangements where formal documentation is thin, and these are precisely the people the older, schedule-based system so often left behind.
5. The Floor Wage and the Problem of Terminology
The title of this article uses the expression “National Floor Minimum Wage” because that phrase is common in public discussion. The statutory language of the Code, however, speaks only of a “floor wage“. The difference is more than a matter of words, and a research article should respect it, because the earlier National Floor Level Minimum Wage was a different policy instrument altogether.
That earlier benchmark was introduced as a non-statutory measure and was last revised to Rs. 178 per day in 2017. It did not carry the legal force that the floor wage under Section 9 of the Code carries. The Code, in contrast, makes the Central Government’s floor-wage power a part of the statutory structure of minimum-wage regulation. One was guidance, and the other is law.
6. Major Implementation Bottlenecks
Several obstacles stand between the text of the Code and the wages that workers actually receive. They are taken up one by one below, though in practice they overlap and tend to reinforce each other.
The obstacles are listed below, though in practice they overlap and tend to reinforce each other:
- Lack of a simple method for determining the floor wage: Section 9 requires minimum living standards to be considered, but food, housing, transport, healthcare and education all cost different amounts in different places. Without a transparent and practical formula, the reasoning behind a figure can look arbitrary, and a figure that looks arbitrary is harder to defend and harder to enforce.
- Regional variation: India shows large differences in living costs and labour-market conditions. Although the Code allows different floor wages for different geographical areas, the classification has to be designed with care. If it is too broad, it ignores real differences. If it is too fine-grained, neither employers nor workers can follow it.
- Relationship between the floor wage and State minimum wages: States can continue to fix higher rates based on local conditions. But clear notifications, showing the basic wage, allowances, skill category, area and effective date, are needed to keep confusion to a minimum. This matters most for employers who operate across several States and must track a different set of rates in each.
- Periodic revision: Inflation reduces the real value of wages over time. Minimum wages are ordinarily reviewed or revised within five years under Section 8, but that interval can be long when prices rise fast. More frequent adjustment of the cost-of-living component may be needed so that the wage does not slip behind the price of basic necessities.
- Informal employment: Many workers have no written contract, no attendance record and no wage slip. When a dispute arises, it is very hard for them to prove that they were employed, what they were paid, how many days they worked, and whether overtime or deductions were handled properly.
- Subcontracting and labour intermediaries: In sectors such as construction, manufacturing, logistics and security, one party may recruit the worker, another may supervise the work and a third may actually pay. When responsibility is spread so thinly, each party can point at another. Clear allocation of responsibility for wage compliance, backed by effective monitoring of contractors, is essential.
- Lack of awareness among workers: A right that a person does not know about cannot be claimed. Workers need to know the wage that applies to them and the protections that come with it, and this information should reach them in plain language through labour offices, helplines, worker organisations and other local channels.
- Limited enforcement capacity: This is the point on which everything else depends. The Inspector-cum-Facilitator system can work well only if it is supported by adequate staff, training, mobility and technology. Facilitation should complement enforcement and not take its place, particularly where an employer repeatedly underpays.
6.1 Differences in Cost of Living and Geographical Areas
The cost of living lies at the heart of the floor-wage debate. A national wage policy cannot simply assume that essential goods and services cost the same everywhere in India. Rents in large cities, transport costs along industrial corridors and food prices in different regions can each produce quite different patterns of household spending, and a wage that is comfortable in one place may be barely adequate in another.
At the same time, a national floor serves a legitimate purpose. Without a common baseline, a worker’s statutory protection can depend heavily on the State in which he or she happens to be employed, which is hardly a principled basis for legal entitlement. The floor sets a minimum level of protection everywhere while still leaving States free to go higher.
The Code’s allowance for different geographical areas is important because it acknowledges this reality. Even so, the classification of areas should rest on transparent and regularly updated data. A worker should not be placed in a low-cost category simply because an administrative boundary has failed to keep pace with economic change. A town that has grown into an industrial centre in ten years should not go on being treated as if nothing has happened.
A practical model would use a small number of clearly defined zones built on objective indicators, such as consumer prices, housing expenditure, transport costs and other relevant measures of living costs. The zones should be reviewed at regular intervals, and State Governments should retain the ability to set higher rates wherever local conditions justify it.
An approach of this kind would keep the national character of the floor intact. It would also avoid the unrealistic assumption that a single number can measure minimum living standards equally well in every locality. A national floor and a locally sensitive structure above it are not rivals. Properly designed, they work together.
8. Informal and Unorganised Workers
The Code’s aim of universal minimum-wage coverage matters most for informal and unorganised workers. These workers usually have less bargaining power, and they often work through temporary, casual, seasonal or contractor-based arrangements. Their employment can change from week to week, which makes conventional inspection systems hard to apply.
The real difficulty is therefore not coverage on paper. It is identification and enforcement. Suppose an informal worker is fully covered by the law but has no appointment letter, no wage slip and no reliable attendance record. That worker may still find it very hard to claim what the law promises, because the entitlement is difficult to prove.
One sensible response is to simplify employment records. Employers and contractors should be required to keep basic wage information in a form that can be inspected without difficulty. Where digital records are used, the worker should have easy access to a simple wage statement showing the days worked, the rate, overtime, deductions and the net payment. Even a short statement of this kind can make the difference between a claim that succeeds and one that collapses for want of proof.
Migrant workers face an additional problem. They may move between States and may not know what the local minimum wage is. Portability of employment information and accessible multilingual material can ease this difficulty. The Code on Wages should therefore be implemented together with the wider labour-code infrastructure on worker identification, social security and digital records, and not in isolation from it.
The informal sector also needs a proportionate enforcement strategy. A very small establishment may honestly struggle with complicated compliance forms, but simplicity must never become an excuse for underpayment. The aim should be simple rules with strong basic obligations: know the applicable wage, display or communicate it, record every payment, and provide a route for complaint.
9. Example: Gujarat
Gujarat is a useful case study for this research because its labour market is so diverse. It includes manufacturing, textiles, construction, ports, logistics, services, small enterprises and a large body of informal employment. The State also sees substantial movement of workers between districts and from other States. These features make wage administration there both important and complex.
Gujarat has historically used differentiated minimum-wage notifications built on categories such as skill and geographical area, together with cost-of-living or special allowance mechanisms. Publicly available State wage material also shows the use of zone-based distinctions. Such differentiation reflects the practical reality that labour markets and living costs are not the same across the State.
This experience shows why a national floor should not be treated as a substitute for State wage administration. A national floor can set the minimum legal baseline, while Gujarat continues to determine higher rates in light of local conditions, industries and skill categories. The real challenge is to make sure the two work together clearly once the statutory floor has been notified.
A Gujarat-focused study should therefore examine at least five questions:
- Are the State’s minimum-wage notifications clearly understood by employers and workers?
- Are special or cost-of-living allowances updated on time?
- Are contractors and subcontractors paying the full applicable rate?
- Does inspection actually reach small and informal establishments?
- Can workers recover wage differences quickly when underpayment occurs?
The State’s industrial diversity also creates a classification problem. A worker in a large organised factory may have formal payroll records and bank payments. Another worker doing similar low-skilled work through a small contractor may be paid in cash and have almost no paperwork to show for it. The legal right is the same for both, yet their experience of enforcement can be very different.
The Gujarat example also shows why wage policy should not concentrate only on the published rate. A sound academic assessment would compare the notified minimum with the amount actually paid, and it would look at how regularly payment is made, how overtime and deductions are treated, and whether the worker is able to seek a remedy when something goes wrong.
10. Judicial Perspective on Minimum Wages
The courts have shaped the way minimum-wage legislation is understood in India, and two decisions in particular continue to be relevant to any discussion of the floor wage.
10.1 Bijay Cotton Mills Ltd. v. State of Ajmer
In Bijay Cotton Mills Ltd. v. State of Ajmer, the Supreme Court upheld the constitutional validity of minimum-wage legislation. The Court recognised that such laws can place reasonable restrictions on the freedom of contract in the public interest. This is especially important in labour relationships, where employers and workers do not stand on equal footing.
The Court made it clear that a worker’s willingness to accept a lower wage does not by itself make that wage legally valid. Once the law prescribes a minimum, an agreement between employer and worker cannot ordinarily be used to defeat the statutory protection. The decision therefore establishes that minimum-wage legislation is meant to protect workers from exploitation and to secure for them a basic level of economic security.
The case bears directly on the present study, because the floor wage under the Code on Wages, 2019 rests on the same principle: workers should not be paid below a legally prescribed minimum. It supports the view that freedom of contract in employment is subject to statutory labour protections.
10.2 Express Newspapers (Private) Ltd. v. Union of India
In Express Newspapers (Private) Ltd. v. Union of India, the Supreme Court considered the wider principles of wage fixation and the distinction between a minimum wage, a fair wage and a living wage.
The Court discussed the constitutional objective in Article 43 of the Constitution, which directs the State to endeavour to secure a living wage and decent conditions of work for workers. A minimum wage represents the basic statutory protection. A fair wage sits at a higher level, and a living wage stands for a broader social and economic objective.
The case also shows that wage fixation involves a number of economic and industrial considerations. The proper wage level cannot always be worked out by looking at a single factor. The nature of the industry, economic circumstances, working conditions and the needs of workers may all be relevant, depending on the legal framework in question.
The judgment is therefore useful for understanding that minimum wages and living wages are not the same concept. A statutory minimum may give a basic legal safeguard, but the constitutional goal of a living wage calls for a wider improvement in the economic and social conditions of workers.
10.3 Relevance to the Present Study
The principles developed in these decisions remain relevant to the Code on Wages, 2019. The Code attempts to build a broader system of wage protection by giving employees a minimum-wage entitlement and by introducing the concept of a national floor wage.
The floor wage can be seen as a statutory baseline meant to ensure that minimum wages do not fall below a prescribed level. State Governments may continue to prescribe higher minimum wages based on local conditions, skill levels, the characteristics of employment and other relevant factors.
The judicial decisions also suggest that implementation should not be treated as a purely mechanical process. Effective wage regulation requires attention to the needs of workers, regional economic conditions, the characteristics of each industry and the practical ability of the authorities to enforce the law.
11. Positive Features of the Floor-Wage Framework
The floor-wage framework has several positive features, and it is only fair to set them out before turning to the difficulties:
- Creates a national baseline: A worker’s legal protection should not depend entirely on the State in which the employment happens to be located, and the floor goes some way towards ensuring that it does not.
- Preserves State flexibility: Section 9 does not prevent States from fixing higher minimum wages, which is important because regional conditions really do differ.
- Supports universal minimum-wage coverage: The removal of the scheduled-employment concept widens the reach of statutory protection to many workers who were previously outside it.
- Recognises living standards: The framework treats living standards as a relevant consideration. This gives the floor a social purpose and stops it from being regarded as merely an administrative number.
- Provides for consultation: The Code provides for consultation through the Central Advisory Board and for State consultation. Wage policy is more credible when the groups it affects have a chance to contribute to it.
- Supports better compliance: The Code’s changes to enforcement and record-keeping can help. Inspector-cum-Facilitators, digital systems and simplified compliance may make wage administration more transparent if they are properly carried out.
These advantages, however, depend on execution. A statutory framework can remain ineffective if the rate is not notified, updated, communicated or enforced. The strengths listed above are potential strengths, and they become real only when the administrative machinery works.
12. Negative Aspects and Practical Concerns
The main practical concerns about the framework are set out below:
- Gap between the legal promise and the wage paid: Universal coverage is valuable, but in fragmented labour markets enforcement becomes very difficult, and a promise that cannot be enforced is worth little to the person it was made to.
- Risk of an inadequate floor: If the national baseline is set at a level that does not meaningfully reflect minimum living standards, its practical impact may be small. The legal floor should not become a symbolic figure that looks impressive in a notification and changes nothing in a pay packet.
- Administrative complexity: Although the Code aims to simplify wage law, the coexistence of the Central floor, State minimum wages, skill categories, geographical areas and allowances can still be hard for small employers and workers to follow.
- Speed of revision: Inflation can reduce the real value of a fixed wage well before a formal revision takes place, and the worker bears that loss in the meantime.
- Digital divide in compliance: Digital compliance may favour larger employers over small establishments. Digital tools should be designed for easy use and should not become a new barrier for small employers or for workers.
- Access to remedies: A worker may have a clear legal right and still be unwilling to complain for fear of losing the job. Effective wage enforcement therefore needs accessible claims procedures and real protection against retaliation.
None of these concerns means that the floor-wage concept is unworkable. What they show is that the legal rule needs institutional support if it is to do the work expected of it.
13. Recommendations
The following measures can improve implementation of the floor-wage framework.
- Transparent floor-wage methodology: The Central Government should publish the indicators and reasoning used to calculate the floor wage. Workers and employers should be able to understand why the amount has been fixed.
- Regular revision: The floor should be reviewed on a predictable schedule, with changes in the cost of living monitored between major revisions.
- Regional classification: Where different geographical floor wages are used, the criteria should be objective, data-based and periodically reviewed.
- Clear State notifications: State wage notifications should follow standard formats showing the basic rate, allowance, total rate, skill category, area and effective date.
- Worker-friendly wage information: Minimum wage rates should be available in simple language through websites, mobile services, labour offices, and helplines and community channels.
- Digital wage records: Employers should maintain accessible wage records showing days worked, wage rate, overtime, deductions and payment, and workers should be able to obtain a copy.
- Stronger contractor monitoring: Principal employers and contractors should keep clear records of wage compliance so that responsibility is not lost through subcontracting.
- Risk-based inspection: Labour departments should use available data to identify sectors and establishments where the risk of underpayment is higher.
- Accessible grievance mechanisms: Wage claims should be simple, low-cost and available through both online and offline channels. Workers should not need to understand complicated legal procedures before making a complaint.
- Protection from retaliation: Workers who raise wage complaints should receive meaningful protection against unlawful retaliation.
- Training of Inspector-cum-Facilitators: Officers should receive regular training in wage calculation, digital records, contractor arrangements and communication with workers.
- Better Central-State coordination: The Central Government and the States should maintain interoperable wage databases so that the applicable wage can be identified quickly.
- Periodic evaluation: The Ministry and State labour departments should publish data on inspections, violations, recovery of unpaid wages and the disposal of wage claims.
- Gujarat-focused implementation: Gujarat should keep strengthening the communication of wage rates across industrial and informal sectors, particularly where workers are recruited through contractors or migrate between districts.
- Academic and field research: Universities should undertake district-level studies comparing notified wages with actual wages. This would help policymakers see where the legal framework is failing in practice.
16. Conclusion
The Code on Wages, 2019 marks an important change in India’s wage-regulation framework. By creating a statutory floor wage and extending minimum-wage protection across employment, it attempts to reduce the fragmentation that marked the earlier system. Its approach recognises that States need flexibility while also insisting on a common baseline.
The major challenge is implementation. A floor wage has little practical value if its calculation is not transparent, if it is not revised when living costs change, if workers do not know the rate, or if employers can avoid compliance through informal and fragmented employment arrangements. Enforcement must therefore be treated as seriously as wage fixation.
The distinction between a minimum wage, a floor wage and a living wage should also stay clear. The floor is a statutory baseline, and it is not automatically the same thing as a living wage. Article 43 of the Constitution points towards a broader goal of a living wage and decent conditions of work. The Code can contribute to that objective, but it cannot reach it through a single number alone.
Gujarat shows why national and State mechanisms have to work together. Local wage notifications, geographical differences, skill categories, contractors and informal employment all affect what a minimum wage means in practice. A national floor can provide common protection, while State Governments continue to set higher rates according to local circumstances.
The central conclusion of this study is that the success of the floor-wage system should be measured by the distance between law and lived experience. If a worker receives the notified wage, understands the entitlement and can obtain a remedy when it is violated, the reform is working. If the wage exists only in a notification and is not received in practice, the implementation problem remains.
A workable system should combine a transparent floor-wage methodology, regular cost-of-living review, meaningful Central-State consultation, simple wage notifications, effective inspection, digital and physical complaint mechanisms, and contractor accountability and worker awareness. Together, these measures would make the Code far more capable of delivering the wage security that minimum-wage law is meant to provide.
References
- The Code on Wages, 2019, No. 29 of 2019, especially Sections 3, 5-9, 42 and related enforcement provisions, Ministry of Labour & Employment, Government of India.
- Ministry of Labour & Employment, Government of India, “New Wage Code”, Press Information Bureau, 25 July 2022.
- Ministry of Labour & Employment, Government of India, “FAQs – Code on Wages, 2019”, 2025.
- Ministry of Labour & Employment, Government of India, “Government Makes the Four Labour Codes effective to Simplify and Streamline Labour Laws”, 21 November 2025.
- Indian Express, “Govt notifies rules for all labour codes, drops minimum wage calculation criteria”, 10 May 2026.
- Bijay Cotton Mills Ltd. v. State of Ajmer, AIR 1955 SC 33; 1955 SCR (1) 752, Supreme Court of India, judgment dated 14 October 1954.
- Express Newspapers (Private) Ltd. v. Union of India, AIR 1958 SC 578; 1959 SCR 12, Supreme Court of India, judgment dated 8 January 1958.
- Government of Gujarat, Labour and Employment Department, State minimum-wage notifications and special/cost-of-living allowance notifications applicable to scheduled employments and related categories.
- Dvara Research. (n.d.). Comments on the Code on Wages, 2019 and Draft Wages Code Rules, 2020. https://dvararesearch.com/comments-on-the-code-on-wages-2019-and-draft-wages-code-rules-2020/
- Thakur, A., & Mathew, B. (2026). Minimum wage, floor wage, and the politics of conflation in Indian labour law jurisprudence. National Law School of India University Repository. https://repository.nls.ac.in/nls_articles/188
Written By: Tisha Patel – MAHRD
