Penalties under the Code on Wages, 2019 — What Employers Should Know
Code in force from 21 November 2025 · Code on Wages (Central) Rules, 2026 in force from 8 May 2026
1. What the penalties are
| If you do this | Section | First time | If it happens again within 5 years of conviction |
|---|---|---|---|
| Pay an employee less than what is due — wages, overtime, bonus, or unequal pay between men and women | 54(1)(a) & (b) | Fine up to ₹50,000 No jail | Jail up to 3 months, or fine up to ₹1,00,000, or both |
| Break any other rule under the Code or the 2026 Rules | 54(1)(c) & (d) | Fine up to ₹20,000 No jail | Jail up to 1 month, or fine up to ₹40,000, or both |
| Not keep registers, muster roll or wage slips properly | 54(2) | Fine up to ₹10,000 | |
| Not pay a settlement (composition) amount on time | 56(7) | Extra 20% of the maximum fine, plus prosecution in court | |
| Not pay what an Authority has ordered you to pay | 45 | Compensation up to 10 times the amount, recovered by the Collector like a land revenue arrear | |
These are maximum amounts, not fixed fines. Each is counted per offence — if one inspection finds short payment, a missing register and no wage slips, all three are charged separately.
The biggest risk is not the fine — it is the claim
If an employee files a claim, the Authority can order you to pay the amount due plus compensation up to ten times that amount. Example: ₹2,00,000 short-paid to 25 employees can become an ₹8,00,000 order. And if you want to appeal, you must first deposit the entire ordered amount. There is no waiver.
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8 more sections in Professional & Enterprise
You are reading the free preview. The rest of this sheet is part of the Professional (Rs 360/month) and Enterprise (Rs 1,360/month) plans.
- 2. The warning-first rule — and where it does not apply
- 3. Common mistakes that lead to penalty
- 4. Records you must keep
- 5. Rules for fines and deductions on employees
- 6. If you receive a notice
- 7. Compounding of offences — Section 56
- 8. Who can be prosecuted — Section 55
- 9. Six actions that prevent most of this