Rules 4 and 5 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 4 fixes how often the variable dearness allowance (VDA) on minimum wages is revised: the cost-of-living figures are computed once before 1 April and then before 1 October every year. Rule 5 sets the normal working day: eight hours for a daily-basis employee, and a 48-hour weekly ceiling for others. Payroll teams should read both together with section 7 and section 13. A payroll compliance audit can test whether your VDA dates and shift hours follow them.
Rule 4: the cost of living allowance and the cash value of the concession in respect of essential commodities at concession rate are computed before 1 April, and then before 1 October, each year to revise VDA payable on minimum wages, using the Average Consumer Price Index Number for Industrial Workers published by the Labour Bureau. Rule 5(1): eight hours is the normal day for an employee whose wage period is daily. Rule 5(2): for any other wage period, daily hours are fixed so that weekly hours do not exceed forty-eight. These Rules apply where the Central Government is the appropriate Government; otherwise the State's own wage rules apply.
Rule 4: the VDA interval
The section behind this rule
Section 7(1) lets a minimum rate of wages consist of a basic rate plus a cost of living allowance, or a basic rate with or without that allowance and the cash value of concessions on essential commodities, or an all-inclusive rate. Section 7(2) says the allowance and cash value "shall be computed by such authority, as the appropriate Government may by notification, appoint, at such intervals and in accordance with such directions" as it specifies. Rule 4 supplies the interval for Central Government establishments. See section 7 on components of minimum wages.
What rule 4 says
| Item | Text of the rule |
|---|---|
| What is computed | the cost of living allowance and the cash value of the concession in respect of essential commodities at concession rate |
| How often | once before 1st April, then before 1st October, in every year |
| Purpose | to revise the variable dearness allowance payable to employees on the minimum wages |
| Index | Average Consumer Price Index Number for Industrial Workers, published by the Labour Bureau, Ministry of Labour and Employment, Government of India |
Two things to note. First, the rule says "before" 1 April and 1 October; it does not say the revised VDA is paid from those dates, nor give an effective date. Second, it does not give a formula or point-slab for translating the index into rupees. The text is silent on both; the notification or order for the scheduled employment is where the actual VDA figure and its effective date appear. This article gives no VDA rate.
Illustration (hypothetical). If an employer's payroll adds a VDA line to a notified basic minimum, the payroll calendar should have two review points a year: one ahead of 1 April and one ahead of 1 October. A VDA notified for the half-year starting 1 October should already be loaded before payroll for October runs. The rule does not itself say which half-year the change covers.
Rule 5: hours of work for a normal working day
The section behind this rule
Section 13(1)(a) lets the appropriate Government fix the number of hours that make up a normal working day, inclusive of intervals. Rule 5 fixes them for Central Government cases. See section 13.
Rule 5(1): daily wage period
For an employee whose wage period is on a daily basis, the normal working day is eight hours. The interval for rest is "in accordance with notification issued in this regard under Occupational Safety, Health and Working Conditions Code, 2020 (37 of 2020)". Rule 5 does not give the length of the interval; it points to that notification, which is not part of the text we read.
Rule 5(2): other wage periods
For an employee whose wage period is other than daily (weekly, fortnightly or monthly), the normal working day is "so fixed that the total number of weekly working hours shall not exceed forty-eight hours". It leaves the daily number to the employer within that cap. A six-day week of eight hours works out to forty-eight; a five-day week could use longer days and still stay at or under forty-eight, though the Rules do not give an example and other laws or notifications may limit daily hours.
| Wage period | Normal working day under rule 5 |
|---|---|
| Daily | 8 hours, rest interval per the OSH Code notification |
| Weekly, fortnightly, monthly | fixed so that weekly hours do not exceed 48 |
Why it matters for overtime
Section 14 requires overtime at "not less than twice the normal rate of wages" for work beyond the hours of a normal working day. What counts as "normal" is therefore set by rule 5 (and, for certain categories, rule 8, which lets hours exceed the normal limit while keeping section 14 overtime). See section 14 and rules 7 to 9. Rule 6(2) also controls work on the weekly rest day.
Practical points
- Record the wage period of each employee in your register; the rule 5 test depends on it.
- Show hours in Form IX (attendance register-cum-muster roll), so that weekly totals can be checked against forty-eight. See rule 51.
- If State rules apply to you, do not assume the same VDA dates or hours; check the State's own rules.
Need help with VDA dates and working-hour compliance?
Getting VDA revisions loaded on time, and showing weekly hours within the cap, takes a payroll calendar and clean attendance data. Our payroll compliance audit team can build both and check them against the Rules and the notifications that apply to you.
Key takeaways
- VDA inputs (cost of living allowance and cash value of concessions) are computed before 1 April and before 1 October each year.
- The index named is the Average Consumer Price Index Number for Industrial Workers, published by the Labour Bureau.
- A daily-basis employee has a normal working day of eight hours; the rest interval follows the OSH Code notification.
- For other wage periods, weekly hours must not exceed forty-eight.
- The Rules give no VDA rate or effective date; look at the notification.
Read next
- Rule 6: weekly day of rest
- Rules 7 to 9: night shifts, special categories and longer wage period
- Section 14: wages for overtime work
- Overtime under the Minimum Wages Act: double rate
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.