The code on wages was enacted by parliament to consolidate and reform the law regulating wages and bonus in India. It repealed the following four legislations regulating wages and bonus payments:

• The Payment of Wages Act, 1936,
• The Minimum Wages Act, 1948,
• The Payment of Bonus Act, 1965,
• The Equal Remuneration Act, 1976.

The code covers all employees employed in any establishment on wages including the contract labour, where any industry, trade, business, or manufacture is carried out. The word wages covers all the monetary remuneration paid by employees for work done by employees other than the bonus, house rent allowance, pension benefits, gratuity and overtime allowance etc.

The Act prescribes that the central government shall fix floor wage, taking into account, minimum living standards of a worker. The government may fix different floor wages for different geographical areas. The minimum rate of wages shall not be less than the floor wages prescribed by the central government.  In case the existing minimum wages fixed by the central or state governments are higher than the floor wage, minimum wages cannot be reduced.

The Act also provides for the rate of overtime wages. If an employee works on any day in excess of the number of hours constituting a normal working day, the employer shall pay him for every hour or for part of an hour so worked in excess, at the overtime rate which shall not be less than twice the normal rate of wages.

All employees who are drawing wages less than a specific monthly amount, notified by the central or state government, will be entitled to an annual bonus.  The bonus will be at least 8.33% of his wages or ) Rs 100, whichever is higher.  In addition, the employer will distribute a part of the gross profits amongst the employees.

The Code strictly prohibits gender discrimination. It provides there shall be no discrimination in an establishment or any unit thereof among employees on the ground of gender in matters relating to wages by the same employer, in respect of the same work or work of a similar nature done by any employee.

The Act provides for the constitution of the central and state Advisory Board. The Boards will advise the respective governments on various issues including fixation of minimum wages, increasing employment opportunities for women and any matter relating to the code.

A Metropolitan Magistrate or Judicial Magistrate of the first-class can take cognizance of the offence on a complaint made under the authority of the appropriate Government or an officer authorized in this behalf, or by an employee or a registered Trade Union registered under the Trade Unions Act, 1926 or an Inspector-cum-Facilitator. The Code imposed penalties and punishments for offences committed by an employer, such as (i) paying less than the due wages, or (ii) for contravening any provision of the Code.  Penalties vary depending on the nature of the offence, with the maximum penalty being imprisonment for three months.