New Labour Codes 2025: What Does the Draft Code on Wage Rules Say About Minimum Wage Calculation?

The New Labour Codes 2025 propose to simplify wage determination, reduce disputes, and provide clarity for employers. It suggests that minimum pay be fixed using a needs-based formula, ensuring that wages reflect the real cost of living for a standard working-class family. This family includes an earning worker, a spouse, and two children, and is treated as three adult consumption units for wage calculation. 

What are the Key Assumptions Behind Minimum Wage Calculation?

The assumptions taken for minimum salary calculation aim to link wages directly to realistic living costs, rather than arbitrary figures. Some of them include: 

• Daily calorie intake: 2,700 calories per consumption unit.
• Annual clothing needs: 66 metres per family.
• Housing rent: 10% of combined food and clothing expenditure.
• Fuel, electricity, and other expenses: 20% of minimum wage.
• Children’s education, healthcare, recreation, and contingencies: 25% of minimum wage.

New Labour Codes 2025: How Are Minimum Wages Calculated?

Once the daily wage is determined, the hourly wage is calculated by dividing it by 8 working hours. The monthly wage is derived by multiplying the daily wage by 26 working days. Rounding rules ensure simplicity: fractions of one-half or more are rounded up, while smaller fractions are ignored.

For example, if the daily wage is ₹800:

• Hourly wage = ₹100
• Monthly wage = ₹20,800

For workers on a five-day workweek, the same hourly rate is applied to compute daily wages.

What Are the Other Factors Considered for Minimum Wage Calculation?

The central government will also consider geographical location, skill level, and work experience when fixing wages. Workers are classified as unskilled, semi-skilled, skilled, or highly skilled. However, minimum wages for central government employees will not be determined under the Code on Wages.

Read more: AICPI-IW Rises for 5th Straight Month: What It Means for DA Hike and Salaries?

Conclusion

The New Labour Codes 2025 introduce a structured and transparent system for minimum wage calculation, tying pay directly to living costs and work conditions. Once implemented, these rules will ensure fair compensation, provide uniformity across sectors, and reduce wage-related disputes. 

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