Minimum Wages Under the New Labour Codes: Can an Employee Legally Accept a Salary Below the Minimum Wage?
Published: 14 October 2026 | M.S. Sankhla & Co.
An employee signs an appointment letter, agrees to the offered salary and joins the organisation without raising any objection. However, what happens if the agreed salary is lower than the applicable statutory minimum wage? Can the employer rely on the employee’s consent to justify paying less?
This is an important compliance question for employers, HR professionals, payroll teams and business owners.
The answer is no. An employee’s willingness to accept a lower salary does not exempt an employer from complying with the applicable minimum wage requirements. As clarified in the Ministry of Labour and Employment’s FAQs, statutory wage protections cannot be waived merely through mutual agreement.
1. What Does the Code on Wages, 2019 Provide?
The Code on Wages, 2019 establishes legal safeguards to ensure that employees receive at least the applicable minimum wages.
Section 5 – Prohibition on Payment Below Minimum Wages
Section 5 prohibits an employer from paying wages below the minimum rate prescribed by the appropriate government for the employee’s applicable category of employment.
Section 60 – Waiver of Rights Through an Agreement
Section 60 provides that an agreement or contract under which an employee relinquishes or reduces an entitlement to an amount payable under the Code is void to the extent of that relinquishment or reduction.
Therefore, even if an employee signs an undertaking stating, “I voluntarily accept this salary and will not claim minimum wages,” the undertaking cannot legalise a payment that falls below the applicable statutory minimum wage.
Employers must ensure that the agreed salary complies with the law, regardless of whether the employee has raised any objection.
2. Minimum Wage Calculation: An Illustrative Example
Consider an employee whose applicable minimum wage is ₹16,000 per month. The employer offers ₹14,000 per month, and the employee accepts the offer.
Assuming a complete month of employment, full attendance and no unpaid absence, the calculation would be as follows:
| Particulars | Amount |
|---|---|
| Applicable monthly minimum wage | ₹16,000 |
| Monthly wages paid before deductions | ₹14,000 |
| Monthly wage shortfall | ₹2,000 |
| Shortfall over six identical months | ₹12,000 |
Note: The figures are illustrative only and do not represent any officially notified minimum wage rate.
In this example, the employer has a potential wage shortfall of ₹2,000 per month. The employee’s acceptance of the lower salary does not extinguish the statutory obligation to pay the applicable minimum wage.
3. Is Minimum Wage the Same as Take-Home Salary?
No. The minimum wage requirement should not be confused with the net salary credited to an employee’s bank account.
An employee’s take-home salary may be lower than the applicable minimum wage because of lawful statutory or other permitted deductions. Therefore, a bank credit below the minimum wage does not automatically establish non-compliance.
Employers should examine the following separately:
Wages earned before deductions.
Salary components that legally qualify for minimum wage compliance.
Attendance records and any unpaid absence.
The nature and legality of deductions.
Applicable statutory limits on deductions.
Payroll teams should verify whether the wages payable satisfy the applicable legal requirements rather than relying solely on the final amount credited to the employee.
4. Do Minimum Wage Requirements Apply to Temporary and Contractual Employees?
Minimum wage protection is not limited to permanent employees. Temporary, casual, part-time and contractual workers may also be entitled to the applicable minimum wages, depending on the relevant employment circumstances and statutory provisions.
Employers and contractors should verify the applicable wage notification, employment category, geographical zone and effective date before finalising salary structures.
Engaging an employee through a contractor or describing the employment as temporary does not, by itself, eliminate applicable minimum wage obligations.
5. Minimum Wage Compliance Checklist for Employers
To reduce the risk of wage disputes and statutory non-compliance, employers should review the following before processing payroll:
Applicable government notification: Identify whether the Central or State Government is the appropriate government and verify the relevant minimum wage notification.
Employee category and location: Confirm the applicable scheduled employment, skill category, geographical zone and other relevant classifications.
Effective date and VDA: Apply the correct wage rates and Variable Dearness Allowance (VDA), wherever applicable, for the relevant wage period.
Wage components: Verify which salary components can legally be counted towards meeting the minimum wage requirement.
Attendance and deductions: Reconcile attendance, unpaid absence and deductions with the applicable legal provisions.
Wage shortfalls: Identify and address any underpayment for the relevant wage period.
Periodic reviews: Update salary structures and payroll calculations whenever applicable wage rates change.
6. Key Takeaway for Employers
An employee’s consent is not a substitute for statutory compliance. An appointment letter, salary agreement or signed undertaking cannot authorise an employer to pay less than the minimum wage legally applicable to the employee.
For HR and payroll teams, the key question is not whether an employee agreed to the offered salary, but whether that salary meets the applicable statutory requirements.
Best Practice: Verify the applicable minimum wage notification at the time of hiring and review payroll whenever minimum wage rates or VDA are revised.
M.S. Sankhla & Co. supports organisations with labour law compliance, payroll management, statutory wage reviews and labour law advisory services to help businesses strengthen their compliance processes.
Disclaimer: This article is intended for general informational purposes and should not be treated as legal advice. Employers should verify the latest applicable legislation, government notifications and official clarifications before making compliance decisions.