Section 2 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 2 of the Code on Wages, 2019 is the definitions section, and it begins "In this Code, unless the context otherwise requires". This article covers the clauses that decide who makes the rules and notifications and who hears disputes: clauses (b), (d), (q), (r), (t), (u), (w) and (x). The most important is clause (d), the appropriate Government.
Under s.2(d), the Central Government is the appropriate Government for establishments carried on by or under its authority and for listed Central-sphere sectors; for any other establishment it is the State Government. "State" includes a Union territory (s.2(w)). "Prescribed" means prescribed by rules made by the appropriate Government (s.2(u)). The Central Rules, 2026 apply only where the Central Government is the appropriate Government; otherwise the State's rules apply.
Section 2(d): the appropriate Government
| Limb | Appropriate Government |
|---|---|
| s.2(d)(i) | Central Government, for an establishment carried on by or under the authority of the Central Government, or an establishment of railways, mines, oil field, major ports, air transport service, telecommunication, banking and insurance company; a corporation or other authority established by a Central Act; a central public sector undertaking; subsidiary companies set up by central public sector undertakings; or autonomous bodies owned or controlled by the Central Government. It includes establishments of contractors for the purposes of such establishment, corporation, undertaking, subsidiary or body |
| s.2(d)(ii) | State Government, in relation to any other establishment |
Three points follow from the text.
- The contractor follows the principal. A contractor's establishment working for a railway, bank or central public sector undertaking falls under the Central Government as well. The text says this expressly for contractors "for the purposes of such establishment".
- The State is the residual. If an establishment is not in the Central list, the State Government is the appropriate Government. For most private employers, such as shops, offices, factories and service firms, that means the State Government of the place where the establishment is situated.
- Everything else turns on this clause. Minimum wages under s.6, notifications under s.15, authorities under s.45 and many other powers are given to "the appropriate Government". Rates, forms and procedures differ depending on which Government that is.
The Code on Wages (Central) Rules, 2026 (G.S.R. 343(E), 8 May 2026) apply where the Central Government is the appropriate Government. Where the State Government is the appropriate Government, the State's own wage rules apply. Rules 1 and 2 of the Central Rules also set out their own definitions; see Rules 1 and 2.
A multi-State employer may have some units under the Central Government and others under State Governments, and should map each unit separately. Our legal consultation team can help you decide which Government is the appropriate Government for each of your units, before you start work on rates, forms or notices.
For the old-law view on Central versus State rates, see our guide on Central minimum wages versus State minimum wages.
Section 2(w): "State" includes a Union territory
Clause (w) is a single line: "State" includes a Union territory. So the "State Government" in s.2(d)(ii) and elsewhere covers the administration of a Union territory as well. An establishment in a Union territory that is not in the Central list is therefore governed by the Union territory's own wage notifications.
Section 2(u): "prescribed"
Clause (u) defines "prescribed" as prescribed by rules made by the appropriate Government. This has a practical effect. When the Code says a thing is "as may be prescribed" (for example the manner of calculating hourly, daily and monthly wages in s.6(5)), it is the Central Rules, 2026 for Central-sphere employers and the relevant State's rules for the rest. Until a State has made its rules, check what the State has notified and do not assume the Central Rules apply to a State-sphere unit.
Section 2(t): "notification"
Clause (t) says "notification" means a notification published in the Gazette of India or in the Official Gazette of a State, as the case may be. The expression "notify" and its variations are construed in the same way. So a minimum wage revision or a direction that a payment be made only by bank credit (s.15 proviso) takes effect through a Gazette notification, not through a circular or a website notice alone.
Section 2(b): "Advisory Board"
Clause (b) says "Advisory Board" means the Central Advisory Board or, as the case may be, the State Advisory Board, constituted under section 42. The Boards advise on matters such as the fixing of the floor wage and the revision of minimum wages (see s.8(3) proviso and s.9(3)). The constitution and function of the Boards are covered in section 42.
Section 2(q): "industrial dispute"
Clause (q) has two limbs:
| Limb | Meaning |
|---|---|
| (i) | Any dispute or difference between employers and employers, between employers and workers, or between workers and workers, connected with the employment or non-employment, the terms of employment or the conditions of labour of any person |
| (ii) | Any dispute or difference between an individual worker and an employer connected with, or arising out of, discharge, dismissal, retrenchment or termination of that worker |
The definition matters in the Code because the definition of "worker" in s.2(z) extends, for proceedings relating to an industrial dispute, to a person dismissed, discharged or retrenched in connection with that dispute. Separately, s.46 deems certain bonus disputes to be industrial disputes within the meaning of the Industrial Disputes Act, 1947. See the definition of employee and worker for that extension.
Section 2(r): "Inspector-cum-Facilitator"
Clause (r) defines the term as a person appointed by the appropriate Government under sub-section (1) of section 51. The powers of the Inspector-cum-Facilitator are in s.51 and in our article on section 51. Under rule 2(1)(n) of the Central Rules, the term means a person appointed by the Central Government under s.51(1).
Section 2(x): "Tribunal"
Clause (x) says "Tribunal" has the same meaning as assigned to it in clause (r) of section 2 of the Industrial Disputes Act, 1947 (14 of 1947). The Code borrows the meaning from that Act as the text stands. Where an employer or worker needs to know which body acts as the Tribunal today, check the current position, since this article reads the Code as enacted.
Practical points
- Write the appropriate Government for each unit on your compliance sheet before downloading any rule or form.
- Check whether the State has notified rules; "prescribed" means prescribed by the appropriate Government's rules.
- Do not rely on a circular alone for a change that the Code says must be "notified".
- Keep a copy of the Gazette notification for any rate or direction you act on.
Example. A bank branch and a private tuition centre in the same city both employ clerks. The bank branch falls under s.2(d)(i) (banking), so the Central Government is its appropriate Government and the Central Rules apply. The tuition centre is an "other establishment", so the State Government is its appropriate Government and the State's wage rules apply.
Need help deciding which Government's rules apply?
If your group has banking, telecom, port or contractor units next to ordinary State-sphere units, the rule set differs for each. Our legal consultation service can review your unit list and confirm the position before you issue rates, notices or forms.
Key takeaways
- The Central Government is the appropriate Government for the sectors and bodies listed in s.2(d)(i), including contractors' establishments for those bodies; the State Government is for all others.
- "State" includes a Union territory (s.2(w)).
- "Prescribed" means prescribed by rules of the appropriate Government (s.2(u)).
- "Notification" means a Gazette notification, Central or State (s.2(t)).
- The Advisory Board is the Central or State Board under s.42 (s.2(b)).
- Industrial dispute, Inspector-cum-Facilitator and Tribunal have the meanings in s.2(q), (r) and (x).
Read next
- Section 2: employee, employer, worker and establishment
- Sections 1 and 69: commencement and repeal
- Section 42: Central and State Advisory Boards
- Central minimum wages versus State minimum wages
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.