MN Ltd., a logistics company conducting delivery operations across multiple states, employs nearly 500 delivery personnel in its workforce. The Central Government has notified a floor wage of ₹ 450 per day applicable acr

Section 6(1) of the Code on Wages, 2019 states that the appropriate Government shall fix the minimum rate of wages payable to employees. Further, section 9(1) of the Code on Wages, 2019 provides that the Central Government shall fix floor wage taking into account minimum living standards of a worker in such manner as may be prescribed. Provided that different floor wage may be fixed for different geographical areas. As per section 9(2) of the Code, the minimum rates of wages fixed by the appropriate Government under section 6 shall not be less than the floor wage. Section 45 of the Code on Wages, 2019 stipulates that the appropriate Government may, by notification, appoint one or more authorities, not below the rank of a Gazetted Officer, to hear and determine the claims which arises under the provisions of this Code. The authority while deciding the claim may order, having regard to the circumstances under which the claim arises, the payment of compensation in addition to the claim determined, which may extend to ten times of the claim determined. The Code on Wages, 2019 established a structured mechanism for wage determination in India by creating a hierarchy between the floor wage fixed by the Central Government and the minimum wage fixed by the appropriate Government. Under Section 9 of the Code, the Central Government is empowered to determine a national floor wage after considering the living standards of workers in different geographical regions. The law clearly provides that the minimum wages fixed by State Governments must not be lower than the floor wage determined by the Central Government. Hence, the floor wage functions as a mandatory statutory benchmark designed to prevent States from prescribing unduly low wage rates. In the present case, while the Central Government has notified a floor wage of ₹ 450 per day, the State Government has fixed a minimum wage of ₹ 380 per day. MN Ltd., employing around 500 delivery workers, has been paying wages at the rate of ₹ 380 per day relying on the State notification. However, this action is legally unsustainable because Section 9(2) prohibits payment of wages below the national floor wage. Upon receiving the complaint of the workers' union, the Labour Authority under Section 45 of the Code on Wages, 2019 may conduct an inquiry and direct the company to pay the differential amount of ₹ 70 per day to each affected worker along with compensation, which may extend to ten times of the claim having regard to the circumstances.