Lakshadweep Wage explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Chapters III, IV and VI to X of the Code on Wages (Lakshadweep) Rules, 2025 tell an island employer how far wages may be deducted, when fines and damage deductions must be reported, where undisbursed dues are deposited, which registers to keep and for how long, and how an offence is compounded. This article takes those chapters in order and gives only what the Lakshadweep text prints.
Deductions above fifty per cent of wages are carried forward (rule 11). A deduction under the proviso to section 20(2) is reported to the Inspector-cum-Facilitator within 10 days (rule 15), and a damage or loss deduction is intimated to the employee within fifteen days (rule 16). Registers go in Form I and Form IV and are preserved for five years after the last entry (rule 43); the wage slip is Form V, issued on or before payment (rule 44). Undisbursed dues go to the Labour Enforcement Officer (rules 37 and 38).
The rule set
The rules are the Code on Wages (Lakshadweep) Rules, 2025, as notified on 15 June 2026 (F. No. 08/01/2024-LE&T, Lakshadweep Gazette Extraordinary of the same date). Later amendments and State notifications under these rules should be checked in the State Gazette. Rule 1(3) reads: "They shall come into force after the date of their final publication in the Official Gazette." The four Codes were brought into force from 21 November 2025. The rules supersede the rules on the subject in force in the Union Territory, except for things done before the supersession, and rule 53 repeals the rules framed under the Minimum Wages Act, 1948 as applicable to Lakshadweep, saving orders issued and actions taken under them as if made under the corresponding new rules.
The first article in this set, on the notification, minimum wages, working hours and weekly rest, covers Chapter II. For a payroll review against these chapters, our payroll compliance audit service checks registers, slips and deduction records together.
How the rules sit with the Central rules
The Central rules on deductions are in rules 13 to 16, on absence and damage in rules 17 and 18, and on advances in rules 19 and 20. The Central registers and wage slip are in rules 51 and 52. The Lakshadweep text has its own numbering, so cite the Lakshadweep rule number for a Lakshadweep establishment.
Chapter III: payment of wages and deductions
| Obligation | Rule | Form or register | Period as printed | Authority |
|---|---|---|---|---|
| Carry forward deductions above half of wages | 11 | Wage record | Recovery in any month not above fifty per cent of that month's wages | Employer |
| Authority for section 19(1) | 12 | None | Officer appointed by notification | Officer notified by the Administration |
| Display notice under section 19(2) | 13 | Notice | Conspicuous places; copy to Inspector-cum-Facilitator | Inspector-cum-Facilitator |
| Approval of fine | 14 | Written intimation | Hearing before approval or refusal | Labour Enforcement Officer |
| Intimation of deduction | 15 | Written intimation | Within 10 days from the date of deduction | Inspector-cum-Facilitator |
| Deduction for damage or loss | 16 | Written explanation | Intimated to employee within fifteen days of deduction | Employer |
| Recovery of advances | 17 | Form I | Instalments not above fifty per cent of wages in a wage period | Employer |
Rule 11 says that where total authorised deductions under section 18(2) exceed fifty per cent of an employee's wages, the excess is carried forward and recovered from succeeding wage periods in instalments so that recovery in any month does not exceed fifty per cent of the employee's wages in that month.
Rule 13 requires the section 19(2) notice to be displayed at conspicuous places in the workplace so that every employee can easily read it, with a copy sent to the Inspector-cum-Facilitator having jurisdiction. Under rule 14, an employer who wants approval to impose a fine gives written intimation with detailed particulars to the Labour Enforcement Officer, who must hear the employee and the employer before granting or refusing approval.
Rule 15 applies where the employer makes a deduction under the proviso to section 20(2). The employer intimates the Inspector-cum-Facilitator within 10 days from the date of the deduction, with the reason, and the Inspector-cum-Facilitator examines the intimation and initiates action under the Code if the explanation contravenes it.
Rule 16 sets a two-step process for damage or loss deductions: first explain to the employee personally and in writing the damage or loss of goods expressly entrusted for custody, or the money the employee is required to account for, and how it is directly attributable to the employee's neglect or default; then give the employee an opportunity to explain. A deduction, if made, is intimated to the employee within fifteen days from the date of deduction.
Under rule 17, recovery of advances of money given after employment begins (section 23(b)) and advances of wages not yet earned (section 23(c)) is made in instalments determined by the employer, but all instalments in a wage period must not exceed fifty percent of the wages in that wage period, and the particulars are recorded in the register in Form I. Rule 18 leaves loans for house building or other approved purposes to the directions or circulars of the Administration on the extent of the loan and the rate of interest; the rules print no figure.
Chapter IV: bonus
Rule 19 is the only bonus rule. It says the calculation of set on or set off, the computation of gross profits under sections 32(a) and (b), the deduction of further sums under section 34(c) and the manner of carrying forward under section 36(1) and (2) are such as may be prescribed by the Central Government. The Lakshadweep rules print no bonus procedure of their own.
Chapter V: the Advisory Board
Chapter V (rules 20 to 36) constitutes the Union Territory Advisory Board under section 42. It has two employer representatives, two employee representatives and independent persons, with the Secretary (Labour, Employment and Training) as Chairperson and the Director (Labour, Employment and Training) as Member Secretary; independent members must not exceed one-third of the Board and one member must be a woman (rule 20). Meetings need fifteen days' notice by registered post and electronically, or seven days for an emergent meeting (rule 22); the term is normally two years (rule 30). These are matters for the Administration rather than for an employer's day-to-day compliance.
Chapter VI: undisbursed dues and claims
- Dues on death or unknown whereabouts (rule 37). If an amount payable under the Code could not be paid to the nominee until three months after it became payable, the employer deposits it with the Labour Enforcement Officer, who disburses it to the nominee after ascertaining identity within two months of the deposit.
- Other undisbursed dues (rule 38). Where an amount remains undisbursed because no nomination was made or for any other reason, and could not be paid until six months after it became payable, the employer deposits it with the Labour Enforcement Officer before the expiry of the fifteenth day after the last day of that six-month period, by bank transfer or crossed demand draft from a scheduled bank in India in favour of the Labour Enforcement Officer.
- Handling of the deposit (rule 39). The notified officer invests the amount in Central or State Government securities or a fixed deposit, displays a notice for at least fifteen days and publishes it in two newspapers, and releases it after hearing. If unclaimed for seven years, it is dealt with as the Administration directs.
- Claims authority (rule 40). The Administration may appoint a Gazetted officer as the authority under section 45(1). Rule 41 allows a single application under section 45(5) in Form II, and rule 42 allows an appeal under section 49(1) in Form III to the appellate authority.
The Central rules on these subjects are in rule 45, rules 48 and 49 and rule 50.
Chapter VII: registers, wage slip and returns
Under rule 43, fines and realisations (section 19(8)) and deductions and realisations (section 21(3)) are recorded in a register in Form I, kept electronically or otherwise, and the authority for section 19(8) is the Labour Enforcement Officer. Every employer of an establishment to which the Code applies maintains the registers under section 50(1) in Form I and Form IV, electronically or otherwise (rule 43(3)), and preserves them for five years after the last entry, producing them to the Inspector-cum-Facilitator on demand (rule 43(4)).
Form I is the Register of Wages, Overtime, Fine, Deduction for Damage and Loss, and Form IV is the Employee Register. The wage slip is issued, electronically or otherwise, in Form V on or before payment of wages (rule 44).
The annual return is filed electronically by every employer in the relevant columns of the Form specified in the rules made under the Code on Wages, with a copy forwarded electronically to the Labour Bureau (rule 45). Rule 46 requires the employer to submit details of minimum wages, payment of wages and bonus, as statistics, electronically to the Administration and to the Director General, Labour Bureau. Our note on the Central registers and forms shows the Central layouts for comparison.
Chapters VIII and IX: inspection and compounding
The Labour Enforcement Officer formulates an inspection scheme with the Administration's approval, and a number is specified in the scheme for each office or Inspector-cum-Facilitator and establishment (rule 47). The Inspector-cum-Facilitator, appointed by notification, may enter premises at reasonable hours, examine registers, records of wages and notices, examine persons, seize or copy records relevant to an offence, and supervise payment of wages (rule 48).
An accused person who wants to compound an offence applies in Form VI to the Gazetted officer notified under section 56(1). If the offence is compoundable and the accused agrees, the compounding officer compromises it for fifty per cent of the maximum fine provided under the Code, payable within the time in the order (rule 50). Rule 51 refers to an application in Form VII under section 56(4). The Code's penalty provisions apply to offences; the rules print no other penalty. See also rule 54 of the Central rules.
Chapter X: wages through a contractor
Rule 52 says that where employees work through a contractor, the contractor must disburse wages before the date of payment under section 17 of the Code and comply with EPF, ESI and Labour Welfare Fund provisions, and then raise a bill supported by proof of compliance. If the contractor fails to pay or short-pays, the principal employer must pay the wages in full as provided in section 55 of the Occupational Safety, Health and Working Conditions Code, 2020.
A worked example
A resort in Agatti deducts the cost of a broken equipment set from an employee's wages. Under rule 16 the manager first explains the loss to the employee in person and in writing and hears the employee. The deduction is recorded in Form I, the employee is told within fifteen days of the deduction, and, where the deduction falls under the section 20(2) proviso, the Inspector-cum-Facilitator is informed within 10 days with the reason.
Common lapses
- Reporting a deduction to the Inspector-cum-Facilitator after the 10 days.
- Recovering advances in instalments above fifty per cent of the wages of the wage period.
- Keeping only an attendance record and no Form IV employee register.
- Discarding registers before five years from the last entry.
- Holding undisbursed dues instead of depositing them with the Labour Enforcement Officer.
Need help with Lakshadweep wage records?
If your registers, slips and deduction notices need to be checked against these chapters, our payroll compliance audit service can review them against the Lakshadweep text and list what is missing.
Key takeaways
- Deductions above fifty per cent of wages are carried forward; advance instalments in a wage period stay within fifty percent.
- A section 20(2) proviso deduction is reported within 10 days; a damage or loss deduction is intimated to the employee within fifteen days.
- Registers are in Form I and Form IV, kept five years after the last entry; wage slip is Form V.
- Undisbursed dues are deposited with the Labour Enforcement Officer, after three or six months as the rule says.
- Compounding is by Form VI, for fifty per cent of the maximum fine under the Code.
Read next
- Code on Wages (Lakshadweep) Rules, 2025: the notification, minimum wages, working hours and weekly rest
- Industrial Relations (Lakshadweep) Rules, 2025: Works Committee, trade unions and standing orders
- Rules 51 and 52 of the Central wage rules: registers and wage slip
- State rules under the four Labour Codes: which States have notified final rules
Disclaimer: Based on the State or Union territory rules named above, as notified under the Labour Codes and consulted on 4 October 2026. Later amendments, State notifications, fees and forms should be checked in the State Gazette and on the State labour department website. This article is general information, not legal advice; check the official text before acting.