The national floor wage and the Code on Wages
The national floor wage is a minimum level, fixed by the central government under section 9 of the Code on Wages, 2019, below which no state may set its minimum wages. It can differ by geographical area. It does not replace your state's minimum wage. As a contractor, you still pay at least the minimum wage your state notifies for the category, skill and zone, and the floor wage only limits how low that state rate can be.
Part of our guide: Minimum wages by state for security, housekeeping and construction
By HaazriPro Team · Last updated
What does the Code on Wages say about the floor wage?
Section 9 of the Code on Wages, 2019 has three parts:
- The central government "shall fix floor wage taking into account minimum living standards of a worker", and may fix different floor wages for different geographical areas.
- The minimum wages fixed by a state "shall not be less than the floor wage". If a state's existing minimum wage is already higher than the floor wage, the state may not reduce it.
- Before fixing the floor wage, the central government may take the advice of the Central Advisory Board and consult the state governments.
The Code came into force with the other three Labour Codes on 21 November 2025. It replaced the Minimum Wages Act, 1948.
How is the floor wage fixed and revised?
Rule 10 of the Code on Wages (Central) Rules, 2026, notified on 8 May 2026, sets out the manner. The central government may consult the Central Advisory Board, taking into account the minimum living standard including food, clothing, housing and other factors it considers appropriate. The proposal may be circulated to the states for their comments. The rules add that the floor wage may be revised ordinarily at an interval not exceeding five years, with periodic adjustment for changes in the cost of living, in consultation with the Board and the states.
Has a floor wage been notified yet?
When we last checked, we had not found a notification fixing a floor wage figure under section 9. The Code and the 2026 central rules set out the power and the method; the figure itself comes by separate notification. Check the latest position on the Ministry of Labour website, the Press Information Bureau or the e-Gazette before relying on any number you see quoted online.
Before the Code, the central government used a National Floor Level Minimum Wage. It was described as a non-statutory measure to push states to revise their minimum wages upwards, so it could not be enforced against an employer. Under the Code, the floor wage is statutory, but it binds the states that fix minimum wages rather than setting your pay directly.
Floor wage, state minimum wage, your wage: what is the difference?
| Who fixes it | Who it binds | What you do with it | |
|---|---|---|---|
| Floor wage | Central government (section 9) | State governments fixing minimum wages | Nothing directly. It is a floor under the state rates. |
| Minimum wage | The appropriate government, usually your state (sections 6 to 8) | You, the employer | Pay at least this, for the category, skill level and zone of each staff member. |
| Your contract wage | You, in the appointment letter and client contract | You and your client | Must be at or above the minimum wage. It drives your rate per post. |
The Code tells states to fix minimum wages primarily by skill (unskilled, semi-skilled, skilled and highly skilled) and/or geographical area, and to review or revise them ordinarily at intervals not exceeding five years. The cost of living part, the VDA, moves more often. See VDA explained.
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Worked example: why the floor wage rarely changes a contractor's pay
Suppose (for illustration only) a floor wage is notified for an area at a level lower than your state's current minimum wage for unskilled security staff. Section 9(2) says the state cannot reduce its higher rate, so nothing changes for you. You keep paying the state rate.
Now suppose a state's lowest rate for some category is below the new floor wage. The state must bring that rate up to at least the floor. When it does, by notification, your obligation changes from the date that notification takes effect, and you recalculate the wage, the cost per post and the client rate, exactly as for a VDA revision. The floor wage reaches you through your state's notification, not directly.
What should a contractor actually do?
- Track your state's notifications, not national headlines. Your legal minimum is the state rate for each category, skill level and zone.
- Watch for a floor wage notification and, when it comes, check whether any rate you pay is below it. If your state raises its rates in response, update your salary sheet from the effective date.
- Keep the rate per post up to date. Use the manpower rate calculator whenever a rate changes.
- Put a revision clause in client contracts, so that a statutory increase can be passed on. Our guide on updating client rates after a revision shows how.
Does the floor wage change PF, ESI or bonus?
Not directly. PF, ESI and bonus are worked out on the wages you actually pay, under the Code on Social Security and the Code on Wages. If your state raises its minimum wage because of a floor wage, your wages rise and the contributions rise with them. See how to calculate a rate per post.
Sources
- Code on Wages, 2019, sections 6 to 9 (India Code)
- Code on Wages (Central) Rules, 2026, rule 10, G.S.R. 343(E), 8 May 2026 (eGazette)
- PIB, 21 Nov 2025: the four Labour Codes made effective
- Indian Economic Service, Arthapedia: National Floor Level Minimum Wage (non-statutory)
This guide explains the rules in plain language. It is not legal or tax advice. Laws and rates change, so check the latest notifications and confirm with your CA or labour consultant before you act on it.
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