Draft labour rules pave way for higher minimum wages
India new labour code (Image for representation)NEW DELHI: A month after notifying the four new labour codes, Centre on Wednesday released draft rules for their implementation, which lay out how minimum wages will be calculated, fix weekly working hours, set procedures to recognise and verify trade union membership, and provide for the composition of a National Social Security Board that will look after the welfare of gig and platform workers among other things. Under the draft rules, seeking public comments within 30-45 days, minimum daily wages will be based on the needs of a standard working-class family comprising the worker, a spouse and two children.
This includes a daily intake of 2,700 calories per person, clothing needs of 66 metres a year for the family, house rent at 10% of food and clothing costs, 20% of wages for fuel, electricity and other essentials, and an additional 25% to cover education, healthcare, recreation and contingencies. An official told TOI that the calculation of minimum wage follows the principles laid down in the Reptakos Brett judgment, which took the socio-economic aspect of the wage structure into consideration, as a worker’s wage is no longer a contract between an employer and an employee.
“Subsequently, the minimum wages are expected to see upward revision once the new codes come into effect.” Besides, the rules cap weekly working hours at 48, while daily working hours, rest intervals, and spread-over time will be notified separately.
The proposed national social security board for gig workers will include lawmakers, representatives from states, worker and employer organisations, along with Centre’s nominees. On gratuity, govt clarified that the provisions will apply prospectively from Nov 21, 2025, the date the labour codes come into force.
Fixed-term employees will be eligible for gratuity after one year of continuous service, compared with five years earlier for permanent workers. The labour ministry also iterated the definition of wages under the labour codes.
If components other than basic pay, dearness allowance and retaining allowance exceed 50% of total pay, the excess will be treated as wages.
Performance-linked incentives, ESOPs, variable or reimbursement-based payments and leave encashment are excluded. In the meantime, old rules will remain in force until final notification of the new rules during the transition period, the ministry clarified separately. States will also need to release draft rules under the new labour codes.
