Background
Code on Wages, 2019 (Central Act No. 29 of 2019), assented to on August 8, 2019, is a consolidating central legislation that brought four earlier labour enactments i.e., the Payment of Wages Act, 1936, the Minimum Wages Act, 1948, the Payment of Bonus Act, 1965, and the Equal Remuneration Act, 1976 under a single unified framework governing wages, minimum rates, timely payment, permissible deductions, bonus, and equal remuneration across all sectors of employment. The Code introduces a universal wage floor applicable to every employee, whether in the organised or unorganised sector, and empowers the appropriate Government Central or State to notify minimum rates, fix wage periods, and prescribe forms, registers and returns through subordinate rules made under Section 67 of the Code.
In exercise of this rule-making power, the Government of Andhra Pradesh notified the Code on Wages (Andhra Pradesh) Rules, 2026 vide G.O.Rt.No.124, Labour, Factories, Boilers & Insurance Medical Services (Lab.I) Department, superseding the Andhra Pradesh Payment of Wages Rules, 1937 and the Andhra Pradesh Minimum Wages Rules, 1960, and setting out state-specific procedures for wage-period fixation, fines, deductions, advances, loans, nomination, undisbursed dues, registers, returns and wage slips. Concurrently, the Ministry of Labour and Employment notified the Code on Wages (Central) Rules, 2026 vide G.S.R. 343(E) dated May 8, 2026, superseding seventeen earlier central wage rules and governing, among other matters, the payment of bonus and the liability of a principal employer where a contractor defaults on bonus due to contract labour. Together, the parent Code and these AP and Central Rules made under it form the compliance framework summarised in this blog.
Applicability
Code on Wages applies broadly to every employer and establishment in Andhra Pradesh that engages persons on wages, regardless of industry or sector, and casts the principal compliance burden on the employer, who must pay not less than the notified minimum wages, remunerate men and women equally for the same or similar work, observe prescribed working hours and rest days, pay overtime at double the normal rate, restrict deductions and fines to the heads and limits the Code allows, and maintain prescribed registers, returns and wage slips. It extends to every employee paid on a time, piece or task basis, including those whose minimum wages are fixed on a daily basis, and specifically protects employees under fifteen years of age from any fine. Establishments that engage contract labour must ensure, as principal employer, that contractors’ employees are paid on time and are paid the minimum bonus where the contractor itself defaults, while establishments employing twenty or more persons additionally attract the bonus chapter under Sections 26 and 39. Employers must further obtain nominations from employees for undisbursed dues and deposit such dues with the Deputy Commissioner of Labour where they cannot be paid to a nominee within the prescribed period.
Compliance Requirement Under the act in Accordance with the Rules:
The employer must not discriminate among employees on the ground of gender in matters relating to wages, in respect of the same work or work of a similar nature performed by any employee in the establishment or any unit of it. This requirement cannot be met by reducing the wage rate of any employee — equal pay must be secured by levelling wages upward, never by lowering them.
No employer may discriminate on the ground of sex while recruiting any employee for the same work or work of a similar nature, or in the conditions of employment that follow, except where the employment of women in that particular work is prohibited or restricted under any other law currently in force.
Every employee must be paid wages not less than the minimum rate notified by the Government of Andhra Pradesh under the Code. Where the minimum rate is fixed on a daily basis, the corresponding hourly rate is derived by dividing the daily rate by eight, and the monthly rate by multiplying the daily rate by twenty-six; fractions of half a rupee or more are rounded up, and fractions below half a rupee are ignored. In establishments that work fewer than six days a week, the daily minimum wage is instead derived from the hourly rate.
An employee whose minimum rate of wages is fixed on a daily basis is entitled to be paid for a full normal working day even if he actually worked fewer than the requisite number of hours on that day, provided the shortfall was not caused by his own unwillingness to work for instance, where the employer failed to provide him with work. This entitlement does not extend to such other cases and circumstances as may be prescribed.
Correspondingly, where an employee whose minimum wage is fixed by the day is engaged for less than the normal number of working hours on a given day, he must ordinarily still be paid as if he had completed a full normal working day, except where his own unwillingness to work rather than any omission on the employer’s part to provide work caused the shortfall, or in such other prescribed circumstances.
Where an employee performs two or more classes of work to which different minimum wage rates apply, the employer must pay wages for the time spent on each class of work at not less than the minimum rate applicable to that class.
Where a person is employed on piece work for which the Government has fixed a minimum time rate but not a minimum piece rate, the employer must pay that person wages at not less than the applicable minimum time rate.
The normal working day for an employee paid on a daily basis must not exceed eight hours, with rest intervals fixed in accordance with the notification issued under the Occupational Safety, Health and Working Conditions Code, 2020. For employees whose wage period is not daily, working hours must be so fixed that the total weekly hours do not exceed forty-eight.
Every employee must be allowed one rest day in each week ordinarily a Sunday where the establishment works six days a week, and both Saturday and Sunday where it works fewer than six days though the employer may fix any other day, provided the employee is informed of the day fixed, and of any subsequent change, in advance by a displayed notice. An employee must not be required to work on the rest day unless granted a substituted rest day in the week immediately before or after, and no employee may be made to work more than ten consecutive days without a rest day. Wages for the rest day are paid at the rate applicable to the previous working day; where the rest day itself is worked and a substituted day is later given, the day actually worked is paid at not less than twice the normal rate, while the substituted rest day is paid at the previous working day’s rate.
Where an employee whose minimum rate of wages is fixed by the hour, the day, or a longer prescribed wage period works in excess of the hours constituting a normal working day, the employer must pay for every hour, or part of an hour, worked in excess at an overtime rate of not less than twice the normal rate of wages.
Wages must be paid in current coin or currency notes, by cheque, by crediting the employee’s bank account, or by electronic mode. Where the appropriate Government notifies a particular industrial or other establishment for this purpose, that employer must pay wages only by cheque or by crediting the employee’s bank account.
The employer must fix the wage period for employees as daily, weekly, fortnightly or monthly, provided that no employee’s wage period exceeds one month; different wage periods may be fixed for different establishments.
Wages must be paid to employees engaged on a daily basis by the end of the shift; to those on a weekly basis, on the last working day of the week, before the weekly holiday; to those on a fortnightly basis, before the end of the second day after the fortnight ends; and to those on a monthly basis, before the expiry of the seventh day of the following month.
Where an employee has been removed or dismissed from service, has been retrenched, has resigned, or has become unemployed because the establishment closed down, all wages payable to him must be paid within two working days of his removal, dismissal, retrenchment or resignation, as the case may be.
Notwithstanding anything in any other law in force, no deduction may be made from an employee’s wages except as authorised under the Code. Permitted deductions are limited to fines; absence from duty; damage to or loss of goods entrusted to the employee; house-accommodation supplied by the employer; amenities and services supplied by the employer; recovery of advances; recovery of loans; income-tax and other statutory levies; contributions to social security funds; payments to co-operative societies; trade union membership fees; deductions arising from railway losses; and contributions to the Prime Minister’s National Relief Fund.
Total deductions from an employee’s wages in any wage period must not exceed fifty per cent of those wages. Where the amount properly deductible exceeds this ceiling, the excess is carried forward and recovered in subsequent wage periods, in instalments that similarly do not exceed fifty per cent of the wages payable in the month in which the recovery is made.
No fine of any kind may be imposed on an employee who is under fifteen years of age.
A fine imposed on an employee must not be recovered from him in instalments, nor after the expiry of ninety days from the date on which it was imposed.
No fine may be imposed on an employee except in respect of acts and omissions that the employer has specified by notice, with the prior approval of the appropriate Government or the prescribed authority under the Andhra Pradesh Rules, the Deputy Commissioner of Labour having jurisdiction.
The notice specifying the approved acts and omissions liable to a fine must be displayed in Hindi, English and the local language at a conspicuous place in the establishment, and a copy must be sent electronically or by speed post to the Inspector-cum-Facilitator having jurisdiction.
Before imposing a fine, the employer must give the employee written or electronic intimation specifying the alleged act or omission and allow seven days within which to show cause. The fine may be imposed only once the charge is established; if the employee does not respond within seven days, the employer may impose the fine and must intimate the employee of it within fifteen days.
The total fine imposed on an employee in any wage period must not exceed three per cent of the wages payable to him for that period. As with all fines under the Code, no such fine may be recovered by instalments or after ninety days from the date of imposition, and no fine may be imposed on an employee under fifteen years of age.
Consistent with the general position under Section 19(6), a fine imposed on any employee in Andhra Pradesh must not be recovered from him in instalments or after the expiry of ninety days from the date it was imposed.
Wages may be deducted for unauthorised absence from duty only after the employer gives the employee written or electronic intimation of the proposed deduction and allows seven days to reply; the deduction itself may be made only once the charge is established, and must be proportionate to the period of absence, calculated in accordance with Section 18(3). Where no reply is received within seven days, the employer may proceed with the deduction but must intimate the employee within fifteen days. For this purpose, an employee is treated as absent from his place of work if he is physically present there but refuses to carry out his work — whether in the course of a stay-in strike or for any other cause that is not reasonable in the circumstances.
Wages may be deducted for damage to or loss of goods entrusted to an employee only after he is given seven days to explain the alleged damage or loss and the charge has been established in accordance with Section 18(3); where he does not reply within seven days, the employer may proceed with the deduction but must intimate him of it within fifteen days.
Deductions for house-accommodation, amenities or services supplied by the employer may be made only where the employee has accepted them as a term of his employment, and the amount deducted must not exceed the value of what is supplied, subject to any conditions the appropriate Government may impose.
Advances of money given to an employee after his employment begins, and advances of wages not yet earned, may be recovered only in instalments determined by the employer, such that no instalment, taken together with other deductions in a wage period, exceeds fifty per cent of the employee’s wages for that period, subject to the ceiling in Rule 12. Every such recovery must be recorded in the register maintained in Form IV.
Deductions for the recovery of loans granted to an employee, and the interest payable on them, must be made in accordance with the State Government’s prevailing instructions or guidelines governing the extent to which such loans may be granted and the rate of interest chargeable on them.
Every employee who has worked for at least thirty days in an accounting year is entitled to an annual bonus. The employer must pay a minimum bonus of 8.33 per cent of the employee’s wages, or one hundred rupees, whichever is higher, and where the allocable surplus permits a bonus of up to twenty per cent of wages, computed in accordance with the Code. The bonus must be credited directly to the employee’s bank account within eight months from the close of the accounting year, and this obligation applies to establishments employing twenty or more persons.
Where employees are engaged through a contractor, the principal employer the company, firm or association that owns the establishment must pay the contractor the amount payable as wages to the contractor’s employees, in accordance with the Code, in time for the contractor to discharge its own wage obligations.
Where a contractor defaults on the payment of bonus due under Section 26, the principal employer must pay the minimum bonus to the contractor’s employees once it receives written information of the default from the employees or their trade union and confirms that the default has in fact occurred.
Every employee must, before any dues become payable to him or are paid, make a declaration in Form VII nominating a person to receive amounts due in the event of his death. The nomination must be in favour of the employee’s spouse or other family members, and is invalid if made in favour of someone outside the family where family members exist; a fresh nomination automatically supersedes an earlier one on the employee’s marriage; and where the nominee is a minor, the employee must appoint a guardian to receive the amount on the minor’s behalf.
Where an amount becomes payable to an employee under the Code following his death, or because his whereabouts are unknown, and it cannot be paid to his nominee within three months from the date it fell due, the employer must deposit that amount with the Deputy Commissioner of Labour having jurisdiction, who will then disburse it to the nominated person within two months of the deposit, after verifying identity.
Where there is no valid nominee, or the nominee cannot be paid, and dues remain undisbursed for six months, the employer must deposit the amount with the Deputy Commissioner of Labour, by bank transfer or crossed demand draft in the Commissioner’s favour, after the six-month period has expired but before the fifteenth day following its expiry.
Every employer of an establishment to which the Code applies must file annual returns electronically, in the forms prescribed under the Occupational Safety, Health and Working Conditions Code, 2020.
Every employer must maintain an Employee Register in Form I, either electronically or physically, recording each employee’s code, name, designation, category (highly skilled, skilled, semi-skilled or unskilled), type of employment (permanent, temporary, fixed-term, trainee or badli), date of joining and exit, PAN, Aadhaar, UAN, bank details, nominee details, and other prescribed particulars. The register must be preserved for five years after the last entry.
Every employer must maintain a Form IV register recording, for each employee, basic wages, dearness allowance, other allowances, overtime hours and wages, gross wages, all deductions including provident fund, ESI, income tax, fines, and recoveries for advances and damage net payment, the date of payment, and the bank transaction reference. This register, too, must be preserved for five years after the last entry.
Every employer must maintain a Form IX Attendance Register cum Muster Roll, either electronically or physically, recording each employee’s daily in-time and out-time and signature for every day of the month, and must preserve it for five years after the last entry.
Every employer must display a notice on the notice board at a prominent place in the establishment, containing an abstract of the Code, the category-wise wage rates of employees, the wage period, the day or date and time fixed for payment of wages, and the name and address of the Inspector-cum-Facilitator having jurisdiction.
Every employer must issue wage slips to employees, electronically or in physical form, in Form V, on or before the payment of wages, as required under Section 50(3).
Penalty & Consequences
The following penalty provisions apply across the compliance obligations covered in this blog. These have been consolidated and de-duplicated for ease of reference:
Section 54(1)(a)–(b) of the Code on Wages, 2019: Underpayment of Wages
Any employer who pays an employee less than the amount due to him under the Code is punishable with a fine which may extend to fifty thousand rupees. Where the employer, having already been convicted of such an offence, is found guilty of a similar offence a second time within five years of the first or a subsequent offence, the punishment on that second or subsequent occasion may extend to imprisonment for a term of up to three months, or a fine of up to one lakh rupees, or both.
Section 54(1)(c)–(d) of the Code on Wages, 2019: General Contravention
Any employer who contravenes any other provision of the Code, or any rule or order made under it, is punishable with a fine which may extend to twenty thousand rupees. A repeat offence of the same kind within five years of the first or a subsequent offence attracts imprisonment for a term of up to one month, or a fine of up to forty thousand rupees, or both, on the second and every subsequent occasion.
Section 54(2) of the Code on Wages, 2019: Non-Maintenance of Records
Notwithstanding the penalties above, an employer who fails to maintain, or improperly maintains, records required to be kept in the establishment is punishable with a fine which may extend to ten thousand rupees.
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