Rule 3 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.
Rule 3 says how a notified minimum rate of wages is turned into hourly, daily and monthly figures. The rate is fixed by the day; the hour is one-eighth of the day; the month is twenty-six days; and there are rules for rounding. If your payroll converts between these units, this is the rule that governs the conversion. A payroll compliance audit will test your sheets against it.
Under rule 3(1), the minimum rate of wages is fixed on a day basis, keeping in view criteria the Central Government specifies separately by special or general order. Rule 3(2): the day rate is divided by eight for the hour and multiplied by twenty-six for the month; a fraction of one-half or more is rounded up and a fraction below one-half is ignored. Rule 3(3): in a week of fewer than six working days, the hourly rate so calculated is used to derive the day's minimum wage. The Central Government does not fix minimum wages of Central Government employees under this Code (proviso to rule 3(1)).
The section behind this rule
Section 6(4) lets the appropriate Government fix the time-work minimum rate by the hour, by the day or by the month. Section 6(5) then says that where rates are fixed by the hour, day or month, "the manner of calculating the wages shall be such, as may be prescribed". Rule 3 is that prescription. Section 6(6) sets what the Government takes into account (skill grades, geographical area, arduousness); see section 6. Rates themselves are notified by the appropriate Government and must be checked at source; this article gives no figure.
Rule 3(1): fixing by the day
For the purposes of section 6(5), "the minimum rate of wages shall be fixed by the day basis keeping in view the criteria which shall be separately specified by the Central Government by special or general order".
Two points follow from the text:
- The criteria are not printed in rule 3. The rule only says they will be specified by order. Rule 3 itself lists no calorie, consumption-unit, clothing or rent percentages. Do not quote those from older rules or from memory; read the order. (Rule 10, the floor wage rule, lists its own, shorter factors; see rule 10.)
- The proviso: "the Central Government shall not fix the minimum wages of the Central Government employees under this Code."
Rule 3 applies where the Central Government is the appropriate Government. Where the State Government is the appropriate Government, the State's own wage rules apply.
Rule 3(2): from day to hour to month
| Step | What the rule says | Illustration (hypothetical figure only) |
|---|---|---|
| Day rate | the fixed rate | Rs 800 |
| Hourly rate | day rate divided by eight | Rs 800 / 8 = Rs 100 |
| Monthly rate | day rate multiplied by twenty-six | Rs 800 x 26 = Rs 20,800 |
The Rs 800 is an arithmetic example, not a notified rate.
Rounding. "In such division and multiplication the factors of one-half and more than one-half shall be rounded as next figure and the factors less than one-half shall be ignored." The text does not say to what unit (rupee or paisa) the rounding is done. The usual reading is the whole rupee. If your day rate were Rs 750, one-eighth is 93.75, which on a whole-rupee reading is rounded to Rs 94; a day rate of Rs 804 gives 100.5, which also rounds up to Rs 101. Confirm the unit with the notifying Government's order if the amount is in dispute.
Note that the monthly figure is not "30 days" or "actual days in the month". It is twenty-six times the day rate, whether the month has 28 or 31 days. For how this ties to the rest-day rule, see rule 6, whose proviso also uses division of the monthly rate by twenty-six.
Rule 3(3): a week of fewer than six days
"In case there is less than six days working week, the hourly rate of minimum wages so calculated shall be used to derive the minimum wages for the day." The text stops there. It does not give a formula. The natural reading is that the hourly rate (day rate divided by eight) is multiplied by the hours that make up the normal working day in that establishment, but the rule does not say so in words. Where the hours differ from eight, check the order or notification.
The hour figure is the anchor; the Rules give no worked example for a shorter week, and the number of hours in the normal day is a matter for rule 5 and the notification.
Practical checks for payroll
- Take the notified daily rate as the starting point; do not start from a monthly figure and divide by 30.
- Round only at the steps the rule names (the hour and the month), and apply the half-rupee rule consistently.
- For a part of an hour, rule 3 is silent; the overtime provision, section 14, speaks of "every hour or for part of an hour". See section 14 on overtime.
- Keep the order or notification that sets the rate with your file.
Need help checking your wage conversions?
Many wage disputes start with a conversion done the wrong way: monthly divided by 30, or an hour rounded the wrong way. Our payroll compliance audit team can reconcile your payroll to the day, hour and month rules and flag the differences before an inspector does.
Key takeaways
- Minimum wages are fixed by the day (rule 3(1)); the criteria come from a separate Central Government order.
- Hour = day / 8; month = day x 26; one-half or more rounds up, less than one-half is ignored.
- A week of fewer than six working days uses the hourly rate to derive the day's wage.
- The Central Government does not fix minimum wages of its own employees under the Code.
- Rule 3 states no wage figure; rates are notified by the appropriate Government.
Read next
- Rules 4 and 5: variable dearness allowance revision and hours of work
- Section 6: fixation of minimum wages
- Rule 10: manner of fixing floor wage
- Components of minimum wages: basic, DA and HRA
Disclaimer: Based on the Code on Wages, 2019 (as enacted) and, where noted, the Code on Wages (Central) Rules, 2026 (G.S.R. 343(E), 8 May 2026), as on 1 October 2026. The Code is in force from 21 November 2025; State Governments make their own rules for establishments where the State is the appropriate Government, and wage rates are notified separately. Verify the current position before acting.