The Payment of Wages Act, 1936 is no longer the principal wage-payment law in India. Section 69 of the Code on Wages, 2019 expressly repeals the Payment of Wages Act, 1936 along with the Minimum Wages Act, 1948, the Payment of Bonus Act, 1965 and the Equal Remuneration Act, 1976. The Government of India brought the four Labour Codes into effect from 21 November 2025. Wage-payment compliance in 2026 must therefore be analysed primarily under the Code on Wages, 2019, the applicable rules and the statutory savings for earlier actions.
This guide explains the present legal position, payment deadlines, permitted deductions, employee remedies and employer compliance requirements. It also explains why older references to the Payment of Wages Act remain relevant for historical disputes and saved actions even though the 1936 Act has been repealed.
Is the Payment of Wages Act, 1936 Still in Force?
No. Section 69(1) of the Code on Wages, 2019 expressly repeals the Payment of Wages Act, 1936. The same provision also repeals the Minimum Wages Act, 1948, the Payment of Bonus Act, 1965 and the Equal Remuneration Act, 1976.
However, repeal does not mean that every notification, order, appointment, direction or earlier legal consequence under the old enactments automatically disappears. Section 69 contains a savings mechanism. Broadly, actions taken under the repealed laws continue to operate under the corresponding provisions of the Code to the extent that they are not inconsistent with the Code, until replaced or repealed in accordance with law. Section 69 also preserves the application of Section 6 of the General Clauses Act, 1897 to the repeal.
For the official statutory text, see the Code on Wages, 2019 on India Code.
What Replaced the Payment of Wages Act?
The present central statutory framework is the Code on Wages, 2019. The Code consolidates the law relating to wages and bonus. Chapter III specifically deals with payment of wages.
The Government implemented the four Labour Codes with effect from 21 November 2025. The Ministry of Labour and Employment also maintains the current Labour Codes portal containing the Code, implementation notifications, the Code on Wages (Central) Rules, 2026, FAQs and compliance material. Employers should therefore avoid relying on pre-2025 HR manuals that cite only the repealed 1936 Act.
Current official Labour Code material is available from the Ministry of Labour and Employment Labour Codes portal.
Key Wage-Payment Provisions Under the Code on Wages, 2019
Section 15: Mode of Payment of Wages
Section 15 permits wages to be paid in current coin or currency notes, by cheque, by credit to the employee’s bank account, or through electronic mode. The appropriate Government may require specified establishments to pay wages only by cheque or bank credit.
For modern payroll systems, bank transfer and electronic payment provide an important audit trail. Employers should preserve payroll registers, bank transaction records, wage slips and deduction records so that the amount and date of payment can be demonstrated if challenged.
Section 16: Wage Period
Section 16 provides the statutory framework for fixation of wage periods. Wage periods may be daily, weekly, fortnightly or monthly. A wage period cannot exceed one month.
Section 17: Time Limit for Payment of Wages
Section 17 creates specific payment deadlines depending on the wage period.
| Wage Period | Statutory Payment Time |
|---|---|
| Daily | At the end of the shift |
| Weekly | On the last working day of the week, before the weekly holiday |
| Fortnightly | Before the end of the second day after the end of the fortnight |
| Monthly | Before expiry of the seventh day of the succeeding month |
Where an employee is removed or dismissed, retrenched, resigns, or becomes unemployed because of closure of the establishment, Section 17 provides for payment of wages payable within two working days, subject to the statutory provision and any other applicable law. The appropriate Government may prescribe another time limit in circumstances contemplated by the Code, and Section 17 also protects a different time limit provided under another law.
Deductions From Wages: Section 18
The basic rule under Section 18 is that there should be no deduction from wages unless the deduction is authorised by the Code. The provision recognises specified categories such as fines, absence from duty, damage or loss attributable to the employee, authorised accommodation or amenities, recovery of advances or approved loans, statutory levies, court-ordered deductions, social-security contributions and certain deductions made with the employee’s written authorisation.
A particularly important compliance control is the statutory ceiling: the total deductions made under Section 18 in a wage period generally cannot exceed 50% of the employee’s wages. Where authorised deductions exceed that limit, the excess must be dealt with in the manner prescribed.
An employer should therefore never treat a general employment-contract clause as unlimited authority to deduct salary. Each deduction should be traceable to a lawful category, supported by records and reflected transparently in payroll documentation.
Fines, Absence, Damage, Advances and Loans
Sections 19 to 24 contain the detailed framework governing fines and deductions for absence, damage or loss, services rendered, advances and loans. These provisions should be read together with the applicable Central or State rules.
For HR departments, the practical lesson is straightforward: disciplinary recovery and wage deductions are not interchangeable. If an employer alleges damage, absence or an outstanding advance, the payroll deduction must still comply with the statutory conditions applicable to that category.
Who Is Responsible for Wage Payment?
The Code creates responsibility for payment of statutory dues and requires employers to maintain compliant wage-payment systems. The precise responsibility may depend on the nature of the establishment and the applicable provisions and rules.
Businesses should identify a responsible payroll/compliance function, document approval authority, reconcile attendance and wage data, preserve proof of transfer and maintain an exception process for failed or returned payments. Delay caused by internal accounting or approval failures can still create statutory exposure.
Employee Claims and Appeals
Section 45 of the Code provides the mechanism for claims under the Code and the procedure for such claims. Section 49 provides for an appeal. The correct authority, territorial jurisdiction, procedural requirements and limitation should be checked under the Code and applicable rules for the particular dispute.
An employee alleging non-payment, delayed payment or unlawful deduction should preserve employment records, wage slips, attendance material, bank statements, termination or resignation documents, communications with the employer and any written explanation for the deduction or withholding.
Inspector-cum-Facilitator and Enforcement
Section 51 provides for appointment of Inspector-cum-Facilitators and their powers. This reflects the Labour Code model of combining inspection with compliance facilitation. The Ministry of Labour and Employment has also emphasised web-based inspections, digital compliance and simplified administration under the Labour Codes.
Employers should not interpret the word “facilitator” as reducing enforcement risk. Payroll records, wage registers, authorised deduction documentation and statutory filings must remain capable of regulatory scrutiny.
Penalties for Wage-Related Non-Compliance
Section 54 sets out penalties for offences under the Code, while related provisions deal with adjudication, offences by companies and compounding. The actual consequence depends on the nature of the contravention and the statutory requirements applicable to it.
For companies and their officers, wage compliance should therefore be treated as a governance issue rather than only a payroll function. Repeated salary delays, unauthorised deductions, incomplete records or inconsistent employment documentation can create labour-law, contractual, audit and management risk simultaneously.
Payment of Wages Act 1936 vs Code on Wages 2019
| Issue | Earlier Position | Current 2026 Position |
|---|---|---|
| Principal statute | Payment of Wages Act, 1936 | Code on Wages, 2019 |
| Status of 1936 Act | Standalone wage-payment law | Repealed under Section 69, subject to savings |
| Payment of wages chapter | 1936 Act provisions | Chapter III, Code on Wages |
| Mode of payment | Governed by old Act/amendments | Section 15: cash/currency, cheque, bank credit or electronic mode, subject to notification |
| Wage period | Old statutory framework | Section 16: daily, weekly, fortnightly or monthly; not exceeding one month |
| Payment deadlines | Old Act framework | Section 17 statutory deadlines |
| Deductions | Old Act categories | Sections 18–24; authorised deductions only and statutory controls |
| Claims | Old Act claim mechanism | Section 45 Code claim procedure |
| Inspection | Inspector model | Inspector-cum-Facilitator under Section 51 |
What Should Employers Change in 2026?
Employers should review legacy policies that still cite only the Payment of Wages Act, 1936. A practical compliance review should include:
- Update employment contracts, HR manuals and payroll policies to the current Labour Code framework.
- Verify whether the establishment falls under Central or State rule-making jurisdiction and identify the applicable rules.
- Fix wage periods and payment calendars that comply with Section 16 and Section 17.
- Document authorised modes of payment and maintain bank/electronic payment evidence.
- Review every payroll deduction against Section 18 and the relevant detailed provisions.
- Ensure aggregate deductions do not breach the statutory limit.
- Maintain wage, attendance and deduction records in the prescribed manner.
- Create a documented process for final wage settlement on resignation, retrenchment, dismissal or closure.
- Review contractor and outsourced-payroll arrangements so responsibility is not lost between entities.
- Train HR, finance and payroll personnel on the Code on Wages and the applicable 2026 rules.
What Should Employees Do if Wages Are Delayed or Wrongfully Deducted?
An employee should first preserve evidence and identify the precise default. Useful records include the appointment letter, wage slips, attendance records, bank statement, resignation or termination communication, deduction statement, email or message correspondence and proof of any internal grievance.
The legal remedy should then be assessed under the Code on Wages and the applicable rules. The relevant question is not merely whether the employer acted unfairly; it is whether wages were due, whether the payment deadline was breached, whether a deduction was statutorily authorised, and what claim or appellate remedy is available.
Relationship With Broader Labour Compliance
Wage payment is only one component of employment compliance. Employers should integrate wage controls with appointment letters, working hours, overtime, statutory benefits, social security, leave, POSH compliance, contractor management, separation documentation and labour inspection readiness.
For the wider compliance framework, see Labour Laws in India and HR Compliance and our Labour Law Compliance and Risk Mitigation Guide.
Key Takeaways
- The Payment of Wages Act, 1936 has been expressly repealed by Section 69 of the Code on Wages, 2019.
- The repeal is subject to statutory savings for prior actions and the General Clauses Act.
- The four Labour Codes became effective from 21 November 2025.
- Chapter III of the Code on Wages now contains the principal wage-payment framework.
- Section 17 prescribes specific payment deadlines for daily, weekly, fortnightly and monthly wage periods.
- Section 18 permits only authorised deductions and ordinarily caps total deductions in a wage period at 50%.
- Claims, appeals, inspections and penalties are now governed by the Code and applicable rules.
- HR and payroll policies drafted solely around the 1936 Act should be updated for the current regime.
Disclaimer
This article is intended for general legal awareness and educational purposes only. It does not constitute legal advice, solicitation or advertisement. Wage disputes and employer compliance obligations depend on the nature of the establishment, the appropriate Government, applicable Central or State rules, employment documents, wage structure, dates, deductions and facts of the individual case. Current notifications and rules should be checked before acting on a specific matter.