The Ministry of Labour and Employment has corrected a significant drafting error in S.O. 2455(E), the notification appointing officers for compounding offences under the Code on Wages, 2019.
Importantly, the corrigendum does not amend the Code on Wages (Central) Rules, 2026. It corrects the separate notification designating officers under Section 56(1).
What has been corrected?
Version | Wording |
|---|---|
Incorrect wording in S.O. 2455(E) | Officers were authorised “to compound the offences punishable with imprisonment only, or with imprisonment and also with fine…” |
Corrected wording under S.O. 4573(E) | Officers are authorised to compound “any offence under the Code on Wages, 2019, other than an offence punishable with imprisonment only or with imprisonment and also with fine…” |
The omission of the words “any offence…other than” had completely reversed the intended meaning.
Read literally, the earlier notification appeared to authorise officers to compound the very offences that Section 56 excludes from compounding. The corrigendum now brings the notification into line with the parent legislation.
Correct legal position
Under Section 56(1) of the Code on Wages, 2019:
An eligible offence may be compounded before or after prosecution begins.
The compounding amount is 50% of the maximum fine prescribed for the offence.
Offences punishable with imprisonment only, or mandatorily with imprisonment and fine, cannot be compounded.
Compounding is unavailable where a similar offence is repeated within five years after an earlier compounding or conviction.
The prescribed procedure appears in Rule 54 of the Code on Wages (Central) Rules, 2026. The accused must apply in Form VI; the amount must ordinarily be deposited within 30 days of the composition order, and the officer must issue the composition certificate within 10 days of receiving the amount. Code on Wages, 2019—Section 56 and Code on Wages (Central) Rules, 2026—Rule 54.
Which offences may be compounded?
The nature of the punishment and the previous compliance history must be checked—not merely whether the violation appears “technical” or “serious”.
Offence | Statutory punishment | General compounding position |
|---|---|---|
First-time payment of less than the amount due under the Code—Section 54(1)(a) | Fine up to ₹50,000 | Potentially compoundable |
First-time contravention of another provision, rule or order—Section 54(1)(c) | Fine up to ₹20,000 | Potentially compoundable |
Non-maintenance or improper maintenance of records—Section 54(2) | Fine up to ₹10,000 | Potentially compoundable |
Similar offence repeated within five years after earlier compounding or conviction | Governed by Sections 54 and 56(2) | Not compoundable under the five-year restriction |
Offence punishable with imprisonment only or mandatorily with imprisonment and fine | Imprisonment-based punishment | Not compoundable |
Important clarification
It would not be correct to say that every wage-payment violation is automatically non-compoundable. A first-time offence involving payment of less than the amount due is punishable with fine under Section 54(1)(a) and may therefore fall within the compounding framework, subject to Section 56.
Practical implications for employers
Inspection and show-cause proceedings
Before applying for compounding, employers should identify:
The exact section cited in the notice.
Whether the punishment is fine only or includes mandatory imprisonment.
Whether a similar offence was compounded or resulted in conviction during the preceding five years.
Whether the establishment falls within the jurisdiction of the officer appointed under S.O. 2455(E).
Whether prosecution has already been instituted.