How minimum wage revisions change your client rate

Why does a small wage rise cost so much per post?

A rate per post is built on the wage. Every statutory line and your margin are percentages of it, so they all move when it moves. On a typical 7-day post with PF at 13%, ESI at 3.25%, bonus at 8.33%, a 1/6 reliever and a 10% service charge, each ₹1 added to the monthly wage adds roughly ₹1.60 to the monthly rate per post before GST. See how a rate per post is built for the full breakdown.

Worked example: a ₹400 VDA rise on a 10-post contract

Basic ₹15,000 + VDA ₹3,000 a month, rising to VDA ₹3,400. Reliever on, PF 13%, ESI 3.25%, bonus 8.33%, uniform ₹500, service charge 10%, GST 18%, 10 posts:

If the client keeps paying the old rate, you lose about ₹6,395 a month before GST on this one contract, and you still have to pay the staff the new wage. Over a six-month revision cycle that is more than ₹38,000. Get the new figure for your own contract from the manpower rate calculator, or update the costing sheet, which recalculates every line.

From when do you have to pay the new wage?

From the effective date in the notification. Under section 8 of the Code on Wages, 2019, a fixing or revision of minimum rates comes into force on the date the notification provides, or, if it says nothing, three months after it is issued. Cost of living (VDA) revisions follow the intervals the government sets. In the central sphere that is before 1 April and before 1 October each year (rule 4 of the 2026 central rules); states set their own. See VDA explained.

Your obligation to the staff does not wait for the client. If a notification is issued after its effective date, pay the arrears in the next salary run.

What should the revision clause in a contract say?

Ask for a clause like this in every new contract and renewal. Have your lawyer adapt it to your contracts:

"The rates in this agreement are based on the minimum wages notified by the appropriate Government as on the date of this agreement. On any revision of minimum wages or variable dearness allowance, and of statutory contributions linked to wages, the rates shall be revised in the same proportion with effect from the date the revision takes effect, on submission of the notification and a revised rate calculation."

Government and PSU tenders may include their own price-variation or statutory-revision clause. Read it before you bid; some reimburse only the wage increase and the statutory contributions on it, not your service charge on the increase.

HaazriPro works this out every month from your attendance, for every staff member and site. Start 30-day free trial  →

How do you ask the client for the revision?

1. Recalculate the rate per post and per staff-day for every category on the contract.
2. Write a one-page letter: the notification number and effective date, the old and new rate for each category, and the clause in your contract that allows the revision.
3. Attach the notification and your rate calculation, line by line.
4. Send it before you raise the next bill, so the bill is not the first time the client hears of it.
5. Bill the new rate from the effective date. If the revision is approved late, raise a separate supplementary bill for the arrears period.

What if the client refuses?

• With a revision clause: point to the clause and the notification, and agree the date from which the new rate applies.
• Without a clause: you still have to pay the higher wage. Negotiate a revision from the next month, and make the clause a condition of renewal.
• If the margin turns negative: work out the real cost per post with the new wage before you decide whether to continue the contract.

What should the revised bill look like?

Show the change openly rather than folding it into a new total. For each category, the bill should carry the staff-days worked before and after the effective date at the old and new rates. Add a line that names the notification. If the revision was approved after you had already billed the months it covers, raise one supplementary bill for the difference, with the same staff-days, so the client can match it to the bills already paid.

How do you avoid missing a revision?

• Keep a list of every state, category, skill level and zone you pay, and check each one at every revision period.
• Update the salary sheet first (what you owe staff), then the costing (what it costs you), then the bill (what you charge).
• Bill from attendance, not from a fixed monthly figure, so a rate change is applied to the actual staff-days worked. See how to bill a client for manpower.

Sources

• Code on Wages, 2019, sections 7 and 8 (India Code)
• Code on Wages (Central) Rules, 2026, rule 4, G.S.R. 343(E), 8 May 2026 (eGazette)
• PIB, 21 Nov 2025: the four Labour Codes made effective

This guide explains the rules in plain language. It is not legal or tax advice. Laws and rates change, so check the notification that applies to you and confirm contract wording with your lawyer before you act on it.