Background
Code on Wages, 2019 is a central labour legislation enacted by Parliament that consolidates and replaces four earlier laws governing payment of wages, minimum wages, bonus, and equal remuneration under Payment of Wages Act, 1936, Minimum Wages Act, 1948, Payment of Bonus Act, 1965, and Equal Remuneration Act, 1976 into a single unified framework. It introduces a common definition of “wages” applicable across these erstwhile enactments, sets out the mechanism for fixing and revising minimum rates of wages, prescribes timelines and permissible deductions for payment of wages, and lays down the framework for computing and paying statutory bonus, along with a consolidated scheme of offences and penalties for non-compliance.
Rules to give effect to the Code have been notified both centrally and by individual states. The Code on Wages (Central) Rules, 2020 primarily operationalise the bonus provisions of the Code, including the manner of computing allocable surplus and available surplus. For establishments in Rajasthan, the State Government has separately notified the Code on Wages (Rajasthan) Rules, 2026, which supplement the Code with state-specific procedures covering matters such as the calculation of minimum wages, imposition and recovery of fines, deductions for damage, loss, or recovery of advances and loans, maintenance of prescribed registers and forms, working hours and rest days, and filing of the annual return.
Applicability
These compliances apply to every establishment in Rajasthan that is covered under the Code on Wages, 2019 and the Code on Wages (Rajasthan) Rules, 2026, and correspondingly to the employers of such establishments, who are responsible for paying wages and bonus in accordance with the Code, maintaining prescribed registers and forms, displaying statutory notices, and ensuring compliance with working-hour and rest-day requirements; to employees, who are entitled to timely payment of wages and bonus, protection against unauthorised deductions and excessive fines, and prescribed rest periods; and to contractors and principal employers engaging contract labour, who must ensure that wages and minimum bonus are paid to contract employees within the prescribed timelines, failing which the principal employer becomes liable to make such payment itself. Certain obligations such as maintenance of the employee register and display of the statutory notice do not apply to employers who engage not more than five persons for agricultural or domestic purposes.
Key Compliance Obligations under Rajasthan Code on Wages Rules, 2026:
No employer may pay any employee wages lower than the applicable minimum rate of wages. The manner of calculating this minimum rate is set out in Rule 3 of the Code on Wages (Rajasthan) Rules, 2026, while the components that make up minimum wages are prescribed under Section 7 of the Code on Wages, 2019.
Where an employee whose minimum wage rate has been fixed on a daily basis works on a day for fewer hours than constitute a normal working day, he is nonetheless entitled to be paid as if he had worked a full normal working day. This entitlement does not apply, however, where the shortfall arises from the employee’s own unwillingness to work rather than the employer’s failure to provide work, in such other circumstances as may be prescribed, or where the employee is not entitled to such wages under any other applicable law.
Where an employee whose minimum rate of wages has been fixed by the hour, day, or such longer wage period as prescribed works beyond the hours constituting a normal working day, the employer must pay overtime for every hour or part-hour worked in excess, at a rate not less than twice the normal rate of wages. For this purpose, the “longer wage period” referred to in Section 14 is to be reckoned by the month.
Employers must pay wages within prescribed timelines depending on the wage period: daily-wage employees must be paid at the end of the shift, weekly-wage employees before the weekly holiday, fortnightly-wage employees before the end of the second day after the fortnight, and monthly-wage employees before the seventh day of the succeeding month. Where the State Government has specified separate due dates under state law, those state-specified due dates apply instead.
Where an employee is removed, dismissed, retrenched, resigns, or becomes unemployed owing to closure of the establishment, all wages payable to him must be paid within two working days of such removal, dismissal, retrenchment, resignation, or closure.
Total deductions made from an employee’s wages in any wage period may not exceed 50% of those wages. Where deductions exceed this limit, the excess must be carried forward and recovered from wages in succeeding wage periods, in instalments structured so that recovery in any month does not itself exceed 50% of that month’s wages.
A notice specifying the acts and omissions for which a fine may be imposed must be displayed at conspicuous places within the workplace so that every employee can easily read it, and a copy of the notice must be sent to the jurisdictional Inspector-cum-Facilitator.
The total fine imposed on an employee in any wage period may not exceed 3% of the wages payable to him for that period. Before any fine is approved, the employer must give written intimation with detailed particulars to the authority designated under Rule 13, who must offer both the employee and the employer an opportunity of being heard before granting or refusing approval.
No fine may be imposed on any employee who is under fifteen years of age.
A fine imposed on an employee may not be recovered in instalments, nor may it be recovered after the expiry of ninety days from the date on which it was imposed.
All fines and their realisations must be recorded in a register maintained in the prescribed manner and form, and the proceeds may be applied only to purposes beneficial to the establishment’s employees as approved by the prescribed authority.
No deductions may be made from an employee’s wages except those authorised under the Code. Unless the concerned State Government provides otherwise, certain events are also treated as deductions for this purpose including any payment made by an employee to the employer or the employer’s agent, and any loss of wages arising for good and sufficient cause from withholding of an increment or promotion (including stoppage of an increment), reduction to a lower post or time-scale, or suspension.
A deduction for an employee’s absence from duty must not bear a larger proportion to the wages payable for the wage period than the period of absence bears to the total period during which, under the terms of employment, the employee was required to work. Where ten or more employees acting in concert absent themselves without due notice and without reasonable cause, the deduction from any such employee may include an amount not exceeding his wages for eight days, subject to applicable state law. An employee is also deemed absent from his place of work if, although present, he refuses to work in pursuance of a stay-in strike or for any other unreasonable cause.
Where an employer makes a deduction under the proviso to Section 20(2), the employer must intimate the deduction to the jurisdictional Inspector-cum-Facilitator within 10 days of the deduction, explaining the reason for it. Section 20(2) itself provides that such a deduction shall not bear a larger proportion to the wages payable for the wage period than the period of absence bears to the total period the employee was required to work; its proviso further allows, subject to rules made by the appropriate Government, a deduction not exceeding eight days’ wages where ten or more employees acting in concert absent themselves without due notice and without reasonable cause.
Before making a deduction for damage or loss under Section 21(1), the employer must explain to the employee, both personally and in writing, the damage or loss of goods entrusted to the employee’s custody (or of money for which he is required to account) and how it is directly attributable to the employee’s neglect or default. The employee must be given an opportunity to submit an explanation, and any deduction that is ultimately made must be intimated to the employee within fifteen days of the deduction.
A deduction made under clause (c) or clause (n) of Section 18(2) for damage or loss must not exceed the actual amount of the damage or loss caused to the employer by the employee’s negligence or default, and no such deduction may be made until the employee has been given an opportunity to show cause against it, in accordance with the prescribed procedure.
All deductions made for damage or loss, and all realisations thereof, must be recorded in a register maintained in the prescribed form.
Deductions for house-accommodation or other amenities or services supplied by the employer may be made from an employee’s wages only where the employee has accepted the accommodation, amenity, or service as a term of employment or otherwise. Any such deduction must not exceed the value of what was supplied and must be subject to any conditions the appropriate Government may impose.
A deduction for recovery of an advance of money given to an employee before employment began must be made from the first payment of wages for a complete wage period, though no recovery may be made for advances given towards travelling expenses. Advances given after employment begins, or advances of wages not yet earned, may be recovered by the employer in instalments determined by the employer, provided no instalment (or combination of instalments) in a wage period exceeds 50% of that period’s wages. Details of such recovery must be recorded in the register maintained in Form-I.
Deductions for recovery of the principal and interest on loans granted for house-building or other purposes approved by the State Government must be made subject to any direction or circular issued by the State Government from time to time regulating the extent to which such loans may be granted and the applicable rate of interest.
Where an amount payable to an employee remains undisbursed because no nomination was made or for any other reason, and cannot be paid to the nominee within six months of becoming payable, the employer must deposit the amount with the Authority notified by the State Government before the expiry of the fifteenth day after that six-month period, by bank transfer or demand draft of a scheduled bank in favour of the Authority.
All amounts payable to an employee that cannot be paid on account of the employee’s death before payment, or because his whereabouts are unknown, must be paid to the person he nominated in accordance with the Code’s rules. Where no nomination has been made, or the amount cannot for any reason be paid to the nominated person, it must instead be deposited with the prescribed authority, who will deal with it in the prescribed manner.
Every employee must make a declaration in Form-X nominating a person to receive any amount that may stand to his credit in the event of his death, either before the amount becomes payable or, if it has already become payable, before payment is made. Where the employee has a family, the nomination must be in favour of the spouse in preference, or one or more family members; a nomination in favour of a non-family member is invalid if the employee has a family. Where the nomination is wholly or partly in favour of a minor, the employee must appoint a major family member or, failing that, any other person as guardian of the minor nominee, and where more than one nominee is named, the employee must specify each one’s share. A fresh nomination in favour of the spouse must be made on marriage, and any nomination made before that marriage is deemed invalid. This nomination requirement is distinct from, and in addition to, the separate obligation to deposit undisbursed dues after six months.
Every employer of a covered establishment must maintain registers under Section 50(1) in Form-I and Form-IV, electronically or otherwise, along with the muster roll and details of overtime work in Form-V. Every employer must also display a notice on the notice board at a prominent place in the establishment containing an abstract of the Code, category-wise wage rates, the wage period, the day/date and time of payment of wages, and the name and address of the jurisdictional Inspector-cum-Facilitator; this requirement does not apply to employers who employ not more than five persons for agriculture or domestic purposes.
No employee may be required or allowed to work in an establishment for more than forty-eight hours in a week. Where an employee works on a daily basis, his working period, inclusive of rest intervals, must not spread over more than ten-and-a-half hours in a day. Rule 9 permits the working hours of certain categories of employees under Section 13(2) to exceed these normal limits, subject to payment of overtime under Section 14, and Rule 6’s provisions may be modified by the State Government from time to time in the case of agricultural employment.
Where an employee works six days in a week, his working period, inclusive of rest intervals must not spread over more than ten-and-a-half hours per day, and the seventh day of that week must be a paid holiday for him.
No employee may be required to work for more than five continuous hours before being given a rest interval of at least half an hour. These provisions of Rule 6 may, in the case of agricultural employment, be modified by the State Government from time to time.
Every employee must be allowed one or more rest days each week, ordinarily Sunday in a six-day working week, and both Saturday and Sunday where the working week is shorter than six days, though the employer may fix any other day(s) as rest days for any employee or class of employees, with the remaining days of the week being paid rest days. An employee is entitled to rest days only where he has worked the requisite continuous period under the same employer, though certain days such as paid attendance without work, lay-off with compensation under the Industrial Relations Code, 2020, and leave or holidays immediately preceding the rest days are deemed days worked for this purpose. Employees must be informed of the fixed rest days, and of any change to them, by notice displayed at a conspicuous place before the change takes effect; and this rule does not prejudice more favourable terms available under any other law, award, agreement, or contract of service.
An employee may not be required or allowed to work on a rest day unless he has, or will have, a substituted rest day for a whole working day in the week immediately before or after the rest day, provided that no substitution may result in the employee working more than ten consecutive days without a rest day. Where a substituted rest day is given, the original rest day is counted, for the purpose of calculating weekly working hours, in the week in which the substituted rest day falls.
An employee must be paid, for a rest day, wages at the rate applicable to the next preceding day; where he works on the rest day and is given a substituted rest day instead, he must be paid at the overtime rate for the day worked and at the rate applicable to the next preceding day for the substituted rest day. However, in a six-day working week, where the employee’s notified minimum or actual daily rate (derived by dividing the monthly rate by 26, with the actual rate never below the notified minimum) already factors in the rest day, no separate rest-day wages are payable, and if such an employee works on the rest day and is given a substituted day, only the overtime rate is payable for the day worked. For a piece-rate employee, wages for a rest day worked are payable at the overtime rate, and for the substituted rest day at the rate applicable to the next preceding day. “Next preceding day” means the last day the employee actually worked immediately before the rest day or substituted rest day, and any dispute on how the daily rate has been computed may be decided by the Labour Commissioner, Rajasthan, or an officer appointed by the State Government, after hearing the parties.
Where an employee’s shift extends beyond midnight, a rest day under Rule 7 means a period of twenty-four consecutive hours beginning from the time the shift ends, and the following day is likewise deemed to be the twenty-four-hour period beginning from that time, with hours worked after midnight counted towards the previous day. For specified categories of employees under Section 13(2), actual hours of work, excluding rest intervals and periods where the employee is on duty but not required to display physical activity or sustained attendance must not exceed nine hours in a day, and the total spread-over of working hours must not exceed sixteen hours in a day.
All fines and realisations referred to in Section 19(8) must be recorded in a register kept by the employer in Form-I, electronically or otherwise, with the Authority referred to in that sub-section being the Authority notified by the State Government as having jurisdiction. All deductions and realisations referred to in Section 21(3) must likewise be recorded in Form-I. Every employer of a covered establishment must additionally maintain the registers required under Section 50(1) in Form-I and Form-IV, along with the muster roll and overtime details in Form-V. Section 50(1) itself requires every employer to maintain a register containing details of persons employed, the muster roll, wages, and such other particulars as may be prescribed, though this obligation does not apply to employers who employ not more than five persons for agriculture or domestic purposes.
All fines and realisations referred to in Section 19(8) must be recorded in a register kept by the employer in Form-I, electronically or otherwise, with the Authority referred to in that sub-section being the Authority notified by the State Government as having jurisdiction. All deductions and realisations referred to in Section 21(3) must likewise be recorded in Form-I. Every employer of a covered establishment must additionally maintain the registers required under Section 50(1) in Form-I and Form-IV, along with the muster roll and overtime details in Form-V. Section 50(1) itself requires every employer to maintain a register containing details of persons employed, the muster roll, wages, and such other particulars as may be prescribed, though this obligation does not apply to employers who employ not more than five persons for agriculture or domestic purposes.
Every employer must display a notice in Form-VI on the notice board at a prominent place in the establishment, containing an abstract of the Code, category-wise wage rates of employees, the wage period, the day/date and time of payment of wages, and the name and address of the jurisdictional Inspector-cum-Facilitator.
Every employer must issue wage slips to employees in Form-VII, electronically or otherwise, on or before the payment of wages.
Where employees are employed in an establishment through a contractor, the principal employer – whether a company, firm, association, or other person who is proprietor of the establishment, must pay the contractor the amount due to him before the date on which wages are payable, so that wages reach the contract employees in accordance with the timelines prescribed under Section 17.
Where employees engaged through a contractor are not paid the minimum bonus due to them under Section 26 because the contractor has failed to do so, the principal employer must, on receiving written information of such failure from the employees or a registered trade union of which they are members, and on confirming the failure, pay the minimum bonus to those employees itself.
Every employee drawing wages not exceeding the amount notified from time to time by the appropriate Government, and who has worked at least thirty days in an accounting year, must be paid an annual minimum bonus by his employer, calculated at 8⅓% of the wages earned in that year, or one hundred rupees, whichever is higher, whether or not the employer has any allocable surplus for the year. The wage ceiling for bonus eligibility is fixed by notification of the appropriate Government from time to time, and employers should track the currently notified ceiling.
Where an employee’s wages exceed the amount notified by the appropriate Government for bonus purposes, the bonus payable under Section 26(1) and (3) must be calculated as if his wages were equal to that notified amount, or the minimum wage fixed by the appropriate Government, whichever is higher. This applies specifically to employees whose actual wages exceed the notified bonus-calculation ceiling.
Where, for any accounting year, the allocable surplus exceeds the minimum bonus payable under Section 26(1), the employer must, instead of the minimum bonus, pay every employee a bonus proportionate to the wages earned during that accounting year, subject to a maximum of 20% of such wages.
Any bonus linked to production or productivity for an accounting year must be determined by agreement or settlement between the employer and employees, on the condition that the total bonus including the annual minimum bonus does not exceed 20% of the wages earned by the employee in that year. Employers should ensure any such settlement is properly recorded and does not breach this overall ceiling.
In the first five accounting years following the year in which an employer first sells goods produced or manufactured, or first renders services, from the establishment, bonus is payable only for a year in which the employer derives profit computed without applying the set-on/set-off provisions of Section 36. For the sixth and seventh accounting years, set-on/set-off applies but is computed with reference only to the fifth (and, for the seventh year, the fifth and sixth) accounting years’ allocable surplus; from the eighth accounting year onward, Section 36 applies in the ordinary manner. An employer is not deemed to have derived profit in a given year unless depreciation has been provided for and prior years’ arrears of depreciation or losses have been fully set off against profits, and sales made during a factory’s trial run or a mine or oil-field’s prospecting stage are excluded from this computation. These provisions apply equally to new departments, undertakings, or branches set up by existing establishments, and before concluding that “profit” has been derived in a given year, employers should check both the depreciation/loss set-off requirement and the exclusion of trial-run or prospecting-stage sales.
Penalty & Consequences
The following penalty provisions apply across the compliance obligations covered in this blog:
Section 54(1)(a) & (b) of the Code on Wages, 2019 — Underpayment of Wages
An employer who pays any employee less than the amount due under the Code is punishable with a fine which may extend to Rs. 50,000. If the employer is again found guilty of a similar offence within five years of the first or a subsequent offence, the second and every subsequent offence is punishable with imprisonment for a term which may extend to three months, or with a fine which may extend to Rs. 1,00,000, or with both.
Section 54(1)(c) & (d) of the Code on Wages, 2019 — General Contravention of the Code
An employer who contravenes any other provision of the Code, or any rule or order made or issued under it, is punishable with a fine which may extend to Rs. 20,000. If the employer is again found guilty of a similar offence within five years of the first or a subsequent offence, the second and every subsequent offence is punishable with imprisonment for a term which may extend to one month, or with a fine which may extend to Rs. 40,000, or with both.
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