This note is being shared along with the Additional FAQs on Labour Codes (as on 16.03.2026) to provide clear and concise understanding of the key clarifications issued by the Ministry of Labour & Employment (MoLE). The FAQs cover important interpretations under the Code on Wages, 2019, Code on Social Security, 2020, Industrial Relations Code, 2020, and the Occupational Safety, Health and Working Conditions (OSH&WC) Code, 2020.
The document provides authoritative guidance on wage definition, overtime, gratuity, leave, ESI coverage, fixed‑term employment, and other compliance‑critical matters. Below is a structured overview of the major themes addressed.
1. Wage Definition & 50% Rule (Code on Wages, 2019)
The FAQs reaffirm that several components—including overtime allowance—form part of the 50% wage calculation. As stated, “Overtime allowance payment forms a part of the 50 percent wage calculation” .
Statutory components such as employer PF contribution and statutory bonus are included for determining total remuneration, while gratuity and ESI are excluded. The definition of “wages” under the Labour Codes is effective from 21.11.2025.
2. Minimum Wages vs. Wages
The FAQs clarify that minimum wages and wages are distinct. Minimum wages are statutory, whereas wages are defined contractually under Section 2(y). The document states: “Minimum wages are the statutory wages fixed by the appropriate government” .
3. Overtime Eligibility & Computation
Overtime entitlement applies to all employees whose minimum rate of wages is fixed under the Code. The OSH&WC Code specifies that overtime becomes payable for work beyond 8 hours per day or 48 hours per week, whichever is applicable. As noted, “If a worker works for more than eight hours in any day… he shall… be entitled to wages at twice the normal rate” .
4. Gratuity Clarifications (Code on Social Security, 2020)
Key points include:
- Gratuity based on the revised wage definition applies from 21.11.2025.
- For Fixed Term Employees, gratuity is payable upon completing one year of service under the contract.
- For contract labour, gratuity liability rests with the contractor, as stated: “the employer (i.e. Contractor) will pay gratuity…” .
- Benefits not listed under Section 2(88) are excluded from gratuity calculation.
5. ESI Coverage
Until new rules are notified, the existing wage threshold of ₹21,000 per month continues to apply. The FAQ states: “At present, Rs 21,000 per month wages notified for ESI coverage will be applicable.” .
6. Leave, Encashment & Carry‑Forward (OSH&WC Code, 2020)
Important clarifications include:
- Leave provisions apply to workers and supervisors earning up to ₹18,000 per month.
- A worker may carry forward up to 30 days of leave; refused leave can be carried forward without limit.
- There is no maximum limit for leave encashment under the Code. The FAQ notes: “There is no prescribed maximum limit for leave encashment…” .
- At separation, all accumulated leave is encashable.
7. Applicability of Central vs. State Rules
Where Central and State rules differ (e.g., health check‑up age thresholds), the applicable rule depends on whether the establishment falls under Central or State jurisdiction.
8. Other Key Clarifications
- Crèche facilities apply irrespective of gender.
- Sales promotion employees are included in the definition of “worker”.
Benefits such as food coupons, ration items, and mobile recharge qualify as remuneration in kind, as stated: “Benefits… such as food coupons, ration items, mobile recharge etc. would constitute remuneration in kind.” .
For more details download the FAQ from below link.