The Centre has released draft rules to implement four new labour codes, setting out a revised framework for calculating minimum wages and new protections for workers across sectors. The draft, open for public feedback for 30–45 days, explains how minimum wages will be determined, caps weekly working hours and proposes a National Social Security Board for gig and platform workers.
India minimum wages
The proposed wage formula is based on the needs of a standard working-class family and assumes a household of a worker, a spouse and two children. It factors in a daily intake of 2,700 calories per person and annual clothing requirements of 66 metres for the family. House rent is pegged at 10% of food and clothing costs, while 20% of wages are allocated for fuel, electricity and other essentials. An additional 25% is added to cover education, healthcare, recreation and contingencies.
Officials say the calculation follows principles laid down in the Reptakos Brett judgment, which recognised the socio-economic dimensions of wages. Once the labour codes come into force, minimum wages are expected to see an upward revision that could benefit millions of workers, particularly in low-paid sectors.
The draft rules also propose to cap weekly working hours at 48. Provisions on daily working hours, rest intervals and spread-over time will be finalised separately. The government has indicated that the measure aims to standardise working time norms and improve workplace wellbeing.
For gig and platform workers, the draft sets out a proposed National Social Security Board. The board would include lawmakers, state government representatives, worker and employer organisations, and nominees of the Centre. Its remit would be to oversee welfare measures for gig workers who have historically lacked formal social protections.
On gratuity, the government clarified that the provisions will apply prospectively from 21 November 2025, the date the labour codes are expected to be implemented. A notable change is that fixed-term employees will become eligible for gratuity after one year of continuous service, down from the earlier requirement of five years for permanent workers. This could extend retirement-type benefits to a larger cohort of contract and temporary staff.
The ministry also reiterated the new definition of wages under the codes. If components other than basic pay, dearness allowance and retaining allowance exceed 50% of total remuneration, the excess will be treated as wages. Performance-linked incentives, ESOPs, variable or reimbursement-based payments and leave encashment will remain excluded from the wage definition.
Until the final rules are notified, existing regulations will remain in force. States are required to prepare their own draft rules under the new codes, creating a period of transition as central and state authorities align on implementation. The government has invited comments from employers, trade unions and civil society before finalising the rules.
Analysts say the draft rules aim to balance worker protection and business flexibility. If enacted as drafted, the measures could lift pay for low-wage workers, extend social security to gig workers and reshape employment costs for firms. The feedback window will be closely watched for responses from states and industry bodies ahead of the final notification.
Key Takeaways:
- Draft rules propose a new method for calculating India minimum wages based on a standard working-class household.
- Weekly working hours capped at 48 and a National Social Security Board proposed for gig and platform workers.
- Gratuity and wage-definition changes aim to broaden social protection and could lift pay for millions.
