Setting Up of Business, Industrial and Labour Laws · The Code on Wages, 2019

Minimum Wages and Floor Wage under the Code on Wages, 2019

Updated 11 October 2026 · Fact-checked

The Central Government fixes a floor wage (section 9) based on the minimum living standards of a worker. The appropriate Government then fixes minimum wages (section 6) by the procedure in section 8. Minimum wages cannot be below the floor wage, and an existing higher rate cannot be reduced. Rates are reviewed at least every five years.

Understand Minimum Wages and Floor Wage

A minimum wage is the lowest rate of wages the appropriate Government fixes for employees. The Code on Wages, 2019 asks the appropriate Government to fix it for time work or piece work. Under section 6, rates for piece work must be set so that such employees secure a minimum rate on a time-work basis.

The floor wage is a new idea in the Code. Under section 9, the Central Government fixes it, taking into account the minimum living standards of a worker. It works as a base below which no minimum wage can fall. Different floor wages may be fixed for different geographical areas.

Think of it as two layers. The Centre sets the base (floor wage). The appropriate Government (Central or State) sets the actual minimum rates on top of it. Section 9(2) says minimum rates must not be less than the floor wage. If an earlier minimum rate is already higher than the floor wage, the Government shall not reduce it.

The Code also builds in consultation. The Central Government may take the advice of the Central Advisory Board and consult State Governments before fixing the floor wage. Each State Government must constitute a State Advisory Board to advise on fixation or revision of minimum wages. Employers, employees and independent persons are represented on these bodies.

For exams, keep the three questions apart: who fixes the floor wage, how minimum wages are fixed and revised (section 8), and what factors the Government considers (section 6).

Key rules to remember

Floor wage (section 9(1)): Central Government fixes floor wage, taking into account minimum living standards of a worker; Different floor wage may be fixed for different geographical areas.
Minimum wage vs floor wage (section 9(2)): Minimum rate of wages ≥ floor wage; If an earlier minimum rate is more than the floor wage, the appropriate Government shall not reduce it.
Consultation before floor wage (section 9(3)): Central Government may obtain advice of Central Advisory Board and consult State Governments; The word is 'may', so it is permissive, not mandatory.
Wage period (section 6(4)): Time-work minimum rate: by the hour, or by the day, or by the month; Rates may also be fixed for piece work, with a time-work equivalent under section 6(3).
Factors for fixation (section 6(6)): Primary: skill (unskilled, semi-skilled, skilled, highly-skilled) or geographical area, or both. Additional: arduousness of work; Arduousness covers difficult temperature or humidity, hazardous occupations or processes, and underground work, as prescribed. The number of minimum rates should be kept as few as possible (section 6(7)).
Procedure (section 8(1)): Either (a) appoint committees to enquire and recommend, or (b) publish proposals by notification with a date not less than two months away; The Government chooses one of the two routes.
Committee composition (section 8(2)): Employer representatives = employee representatives; independent persons ≤ one-third of total; Same pattern applies to the advisory boards under section 42.
Commencement (section 8(3)): Notification comes into force on expiry of three months from issue, unless it provides otherwise; If revising under the proposals route (clause (b)), the Government must also consult the Advisory Board under section 42.
Review period (section 8(4)): Review or revise minimum rates ordinarily at an interval not exceeding five years; The word 'ordinarily' allows some flexibility.

How to solve Minimum Wages and Floor Wage questions

Use this method for any question on minimum wages or floor wage, whether it is theory, a short note or a case-based problem.

1Identify what is asked: floor wage, fixation of minimum wages, revision, advisory boards, or a mix.
2Name the authority. Floor wage: Central Government (section 9). Minimum wage: the appropriate Government (section 6).
3State the rule with its section number, using the Code's words where you can.
4Apply the link between the two: minimum rates must not be below the floor wage, and an earlier higher rate must not be reduced.
5For procedure questions, state the two routes under section 8(1), the committee composition, the three-month commencement and the five-year review.
6For factors, state skill or geographical area as primary, and arduousness as additional.
7Mention the advisory board role where relevant (section 42).
8Close with a clear conclusion that answers the exact question asked.

Quickest way: Who, what, how, when

When to use it: Use it for short notes and 4 to 6 mark questions when time is tight.

Who: Centre fixes the floor wage; the appropriate Government fixes minimum wages.
What: floor wage is the base; minimum wage cannot be below it and cannot be reduced if already higher.
How: committees or published proposals (not less than two months); committees are equal employers and employees plus up to one-third independents.
When: in force after three months unless stated otherwise; reviewed ordinarily within five years.
Add: advisory boards advise on fixation or revision of minimum wages.

Common mistakes in Minimum Wages and Floor Wage

Saying the State Government fixes the floor wage.
Students assume all wage fixation is done by the appropriate Government, as under the old law.
Fix: Remember section 9(1): the Central Government fixes the floor wage. The appropriate Government fixes minimum wages.
Treating floor wage and minimum wage as the same thing.
Both sound like a lowest wage.
Fix: Floor wage is the base set by the Centre. Minimum wage is the actual rate fixed under section 6 and cannot fall below the floor wage.
Saying a minimum wage higher than the floor wage must be brought down to it.
Students read the floor wage as a fixed uniform rate.
Fix: Section 9(2) says an earlier higher rate shall not be reduced.
Writing that the minimum wage must be reviewed exactly every five years.
Students drop the word 'ordinarily'.
Fix: Write: ordinarily at an interval not exceeding five years (section 8(4)).
Treating advisory board consultation before the floor wage as compulsory.
Students assume consultation is always mandatory.
Fix: Section 9(3) says the Central Government 'may' obtain advice and consult States. Only the clause (b) revision route in section 8(3) proviso makes consulting the Advisory Board a must.
Giving the wrong notice period for proposals.
Students mix the two-month date for proposals with the three-month commencement.
Fix: Two months: minimum gap before proposals are considered. Three months: when the notification comes into force, unless it says otherwise.

Worked examples

Example 1

The Central Government fixes a floor wage for a geographical area. A State had earlier fixed a minimum rate of wages for that area that is higher than the floor wage. Can the State reduce its rate to the floor wage? Explain.

Show the solution

Provision: under section 9(1) the Central Government fixes the floor wage taking into account the minimum living standards of a worker. Section 9(2) says minimum rates fixed under section 6 shall not be less than the floor wage.
Section 9(2) also provides that if the minimum rates fixed earlier are more than the floor wage, the appropriate Government shall not reduce them.
Analysis: the State's existing rate is higher than the floor wage, so the protection in the second limb of section 9(2) applies.

Answer: No. The State cannot reduce its earlier, higher minimum rate to the floor wage. The floor wage is only the lower limit; a higher existing rate stays.

Example 2

Explain the procedure by which the appropriate Government fixes or revises minimum rates of wages under the Code on Wages, 2019.

Show the solution

Provision: section 8 governs fixing for the first time and revising minimum rates of wages.
Two routes under section 8(1): (a) appoint committees to hold enquiries and recommend; or (b) publish proposals by notification and specify a date not less than two months from the notification on which the proposals will be considered.
Committee composition under section 8(2): employer representatives, an equal number of employee representatives, and independent persons not exceeding one-third of the total members.
Decision under section 8(3): after considering the committee's recommendation or the representations received, the Government fixes or revises the rates by notification. Unless it provides otherwise, it comes into force on expiry of three months from issue. If revising under route (b), it must also consult the Advisory Board constituted under section 42.
Review under section 8(4): rates are reviewed or revised ordinarily at an interval not exceeding five years.
Constraint: the rates must follow section 9, so they cannot be below the floor wage.

Answer: The appropriate Government either appoints committees or publishes proposals with at least two months for comment, then fixes or revises rates by notification that ordinarily takes effect after three months, with review ordinarily within five years.

Exam tips

Write the section number beside each rule: 9 for floor wage, 6 for fixation, 8 for procedure, 42 for advisory boards.
In a differentiate question, use the points: who fixes, purpose, relationship (minimum cannot be below floor) and whether it can be reduced.
Always include the word 'ordinarily' for the five-year review and 'unless otherwise provided' for the three-month commencement.
For case-based questions, follow provision, analysis, conclusion, and end with a one-line answer.
Learn the equal-representation pattern once; it applies to committees and advisory boards.

Practice questions from The Code on Wages, 2019

Minimum Wages and Floor Wage in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Minimum Wages and Floor Wage: frequently asked questions

What is the floor wage under the Code on Wages, 2019?

It is a base wage fixed by the Central Government under section 9, taking into account the minimum living standards of a worker. Different floor wages may be fixed for different geographical areas. Minimum wages fixed by the appropriate Government cannot be less than it.

What is the difference between floor wage and minimum wage?

The Central Government fixes the floor wage, while the appropriate Government fixes minimum wages under section 6. The floor wage is the lower limit for minimum wages. A minimum wage already higher than the floor wage cannot be reduced.

How is minimum wage fixed under the Code on Wages?

The appropriate Government follows section 8. It either appoints committees to recommend or publishes proposals with at least two months for representations. It then fixes the rates by notification, which ordinarily comes into force after three months.

Which factors does the Government consider while fixing minimum wages?

Under section 6(6), it primarily considers the skill of workers (unskilled, semi-skilled, skilled, highly-skilled) or geographical area, or both. It may also consider arduousness of work, such as difficult temperature or humidity, hazardous work or underground work.

What do the advisory boards do under the Code on Wages?

The Central Advisory Board advises the Central Government on matters such as fixation or revision of minimum wages. Each State Government must constitute a State Advisory Board for similar advice. Both include equal numbers of employer and employee representatives, plus independent persons.