Sections 15 and 16 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.
Section 15 of the Code on Wages, 2019 says how wages may be paid: in current coin or currency notes, by cheque, by crediting the employee's bank account, or by electronic mode. Section 16 says for what period wages are fixed: daily, weekly, fortnightly or monthly, never longer than a month. They open Chapter III on payment of wages.
All wages shall be paid in current coin or currency notes, by cheque, by crediting the bank account of the employee, or by the electronic mode (s.15). The appropriate Government may, by notification, specify establishments whose employer must pay only by cheque or bank credit (s.15 proviso). The employer fixes the wage period as daily, weekly, fortnightly or monthly, and no wage period for any employee may be more than a month; different establishments may have different wage periods (s.16 and proviso).
Section 15: mode of payment
| Mode allowed | Text |
|---|---|
| Cash | Current coin or currency notes |
| Cheque | By cheque |
| Bank credit | By crediting the wages in the bank account of the employee |
| Electronic | By the electronic mode |
The text says "all wages shall be paid" by one of these modes, so any other method, such as payment in kind alone, does not meet s.15. The definition of wages in s.2(y) has an Explanation that deals with remuneration in kind given in lieu of wages (up to fifteen per cent of total wages is deemed part of wages); s.15 itself lists only the four money modes. Read the two together if you give any in-kind component, and take advice on how they interact.
The proviso: notified establishments
The appropriate Government may, by notification, specify the industrial or other establishment whose employer shall pay every person employed there the wages only by cheque or by crediting the wages to his bank account. In such an establishment, cash is not a permitted mode.
| Point | Detail |
|---|---|
| Who decides | The appropriate Government (s.2(d)), by notification (published in the Gazette, s.2(t)) |
| What it can do | Make bank credit or cheque compulsory for a specified establishment |
| Effect on cash | Cash payment stops being a permitted mode for that establishment |
| Where it applies | Only to establishments in the notification |
Because the Central Government is the appropriate Government for some establishments and the State Government for others, check which Government's notification applies to you and whether your establishment is named. The Central Rules apply only where the Central Government is the appropriate Government; where the State Government is, the State's own wage rules apply. We have not found a Central Rule that changes s.15; read the notification.
If your payroll still pays part of the workforce in cash, or you want to move everyone to bank credit, our payroll compliance audit service can help you check which notifications apply and how to document the change.
Section 15 does not say anything about a particular bank, account type or time of crediting. The time within which wages must be paid is in section 17; the date the wage is "paid" for a bank credit is a matter for that section and the facts.
Section 16: fixation of wage period
The employer fixes the wage period for employees as daily, weekly, fortnightly or monthly, subject to the condition that no wage period in respect of any employee shall be more than a month.
| Wage period | Allowed by s.16 |
|---|---|
| Daily | Yes |
| Weekly | Yes |
| Fortnightly | Yes |
| Monthly | Yes |
| Longer than a month (for example, quarterly) | No; no wage period in respect of any employee shall be more than a month |
Proviso. Different wage periods may be fixed for different establishments. So one employer with several establishments may pay one establishment weekly and another monthly. The text refers to "different establishments", not different employees in the same establishment, though the main part of the section speaks of "the wage period for employees" and "in respect of any employee". Where one establishment has staff on different periods, keep each person's period documented in the appointment terms.
Why the wage period matters
The wage period fixed under s.16 drives other duties:
- Time limit for payment under s.17 depends on whether employees are paid daily, weekly, fortnightly or monthly. Daily-wage employees are paid at the end of the shift; weekly, on the last working day of the week before the weekly holiday; fortnightly, before the end of the second day after the fortnight; and monthly, before the expiry of the seventh day of the succeeding month. See section 17.
- Minimum wage computation for a time rate may be by the hour, day or month (s.6(4)), and overtime applies to those whose rate is by the hour, day or a longer wage period, which the Central Rules say is the month (rule 9); see section 14.
- Normal working day under the Central Rules depends on whether the wage period is daily or not (rule 5); see section 13.
For the old-law view of payment rules, see our guides on payment of wages under the new Labour Codes and the Payment of Wages Act, 1936.
Practical points
- Pick and record the wage period. State it in appointment letters; do not exceed one month.
- Check for notifications. Find out whether your appropriate Government has notified your establishment for cheque or bank-only payment.
- Keep bank proof. For bank credit, keep the bank statement or payment file as proof of payment.
- Avoid cash where not allowed. If your establishment is notified, stop cash payments.
- Align with the time limit. Make sure your payroll calendar meets the deadline for your wage period.
Example. A retail company has a head office and three stores. It fixes a monthly wage period for the head office and a weekly wage period for the store helpers, treating them as different establishments. It pays the helpers in cash. Later the State Government notifies retail stores of this kind to pay wages only by cheque or bank credit. From the notification, cash is no longer a permitted mode for the stores, and the company moves the helpers to bank credit. A quarterly wage period would not have been allowed at any time under s.16.
Need help moving payroll to bank credit?
Switching a workforce from cash to bank payment, or aligning wage periods with the time limits, needs both a process and a paper trail. Our payroll compliance audit team can review your payment modes, wage periods and records against sections 15, 16 and 17.
Key takeaways
- Wages may be paid in coin or notes, by cheque, by bank credit or electronically.
- The appropriate Government may notify establishments that must pay only by cheque or bank credit.
- The employer fixes the wage period as daily, weekly, fortnightly or monthly; no wage period may be more than a month.
- Different wage periods may be fixed for different establishments.
- The wage period decides the time limit under s.17.
Read next
- Section 17: time limit for payment of wages
- Section 14: wages for overtime work
- Payment of wages under the new Labour Codes
- Payment of Wages Act, 1936: applicability, deductions and compliance
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.