The Government of the National Capital Territory of Delhi notified the rules under the Code on Wages 2019 (the Code) in February 2026, with an effective date of 1 June 2026. The notification is a significant development for the estimated 14 lakh registered establishments in Delhi that employ workers across sectors. The Code on Wages consolidates four pre-existing statutes — the Minimum Wages Act 1948, the Payment of Wages Act 1936, the Payment of Bonus Act 1965, and the Equal Remuneration Act 1976 — into a single legislation. Delhi's rule notification activates the Code's obligations and supersedes the state-level rules under the predecessor statutes.
Revised Definition of Wages
The most consequential change for Delhi NCR employers is the revised definition of "wages" under Section 2(y) of the Code. Unlike the fragmented definitions in the predecessor statutes, the Code's wage definition includes basic pay, dearness allowance, and retaining allowance, but explicitly excludes a specified list of allowances — including house rent allowance, conveyance allowance, children education allowance, overtime allowance, and commissions. However, the Code creates a floor: excluded allowances, in aggregate, must not exceed 50% of total wages. Where excluded allowances exceed 50% of the total cost to company, the excess is deemed part of wages for the purposes of PF contributions, gratuity calculations, and statutory deductions.
This 50% floor has significant implications for Delhi NCR employers — particularly in the IT, financial services, and media sectors — that have historically structured compensation packages with high allowance components to reduce PF employer contributions and gratuity accruals. Those structures must be reviewed and, in many cases, rebalanced. The cost impact of reclassifying allowances as wages for PF and gratuity purposes can be material for mid-to-large employers.
Payment Timelines
Section 17 of the Code prescribes wage payment timelines. For employees other than daily-wage workers: wages must be paid by the 7th of the following month for establishments employing more than 1,000 workers, and by the 10th for all other establishments. These timelines are stricter than the prior Payment of Wages Act standard in some categories. Daily-wage workers must be paid daily or weekly, depending on the terms of engagement. Advance deductions — where employers make deductions for loans or advances given to workers — must comply with the Code's deduction limits and require written authorisation from the worker.
The Code also mandates wage payment through bank transfer, prepaid payment instruments, or electronic wallets for all establishments covered by its provisions. Cash wage payment is permitted only where banking facilities are not available in the locality — a standard that eliminates cash payment for virtually all Delhi NCR establishments. Employers that maintain informal cash payroll for certain categories of workers must transition to digital payment systems before 1 June 2026.
Minimum Wage Compliance
The Code mandates payment of a floor wage — to be notified by the Central Government — across all states. Where a state's minimum wage is higher than the Central floor wage, the higher rate applies. Delhi's minimum wages have historically been among the highest in the country. Under the Code, the State Government must review minimum wages not less than once every five years. Employers must ensure that all workers — including gig workers and platform economy workers engaged through third-party contracts — are paid at least the applicable minimum wage for their category of work and skill level.
Delhi's rules are expected to maintain the existing industry-wise minimum wage schedule as the baseline but introduce a simplified skill categorisation (unskilled, semi-skilled, skilled, highly skilled) aligned with the Code's national framework. Employers must re-map their workforce to this categorisation and confirm that minimum wage compliance is maintained for all mapped categories.
Bonus Provisions
The Code's bonus provisions, effective from 1 June 2026, cover all employees drawing wages up to Rs 21,000 per month. Minimum bonus of 8.33% of annual wages (subject to a deemed wage calculation) remains applicable. The Code introduces a statutory cap on the wage calculation for bonus purposes at Rs 7,000 per month or the minimum wage for the employee's scheduled employment, whichever is higher. Employers must recalculate bonus liability for FY2026–27 using this revised formula.
Action Items for Delhi Employers
- Audit your compensation structure against the 50% allowance cap and model the PF and gratuity cost impact of any reclassification required before 1 June 2026.
- Transition all cash payroll to digital payment modes — bank transfer, prepaid instruments, or electronic wallets — before the effective date.
- Review wage payment timelines and update payroll processing cycles to comply with the 7th/10th of month deadlines.
- Remap your workforce to the Code's four-tier skill classification and verify minimum wage compliance for each category.
- Recalculate bonus provisioning for FY2026–27 using the revised deemed wage cap.
- Ensure gig worker and platform worker contracts clearly address minimum wage obligations under the Code.