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.
The Code on Wages, 2019 uses two people-words, employee (s.2(k)) and worker (s.2(z)), and they are not the same. This article explains those, the definitions of employer (s.2(l)), establishment (s.2(m)), factory (s.2(n)) and Government establishment (s.2(o)), and the exclusions that decide who falls outside each term.
An employee is any person, other than an apprentice under the Apprentices Act, 1961, employed on wages to do skilled, semi-skilled, unskilled, manual, operational, supervisory, managerial, administrative, technical or clerical work, and it excludes members of the Armed Forces of the Union (s.2(k)). A worker is narrower: it excludes mainly managerial or administrative staff and supervisors drawing more than fifteen thousand rupees a month or a figure notified by the Central Government (s.2(z)). Most minimum wage and payment rules speak of "employee".
Section 2(k): employee
| Element | Text |
|---|---|
| Who | Any person employed on wages by an establishment, for hire or reward |
| Kinds of work | Skilled, semi-skilled or unskilled; manual, operational, supervisory, managerial, administrative, technical or clerical |
| Terms | Whether the terms of employment are express or implied |
| Included | A person declared to be an employee by the appropriate Government |
| Excluded | An apprentice engaged under the Apprentices Act, 1961; any member of the Armed Forces of the Union |
The definition is wide because it names managerial and administrative work: a manager on a salary is an "employee" even if not a "worker". Implied terms count, so a person without a written letter can still be an employee. The appropriate Government can also bring in a class of persons by declaration; the text lists none, so check for one.
Sections of the Code that protect "employees" include section 3 on gender discrimination, section 5 on minimum wages and the deductions chapter. Employers who have senior managers, trainees and consultants on payroll, and want a clean classification of each, can get help from our employment and labour law advisory service.
Section 2(z): worker
| Element | Text |
|---|---|
| Who | Any person employed in any industry for hire or reward, whether terms are express or implied |
| Kinds of work | Manual, unskilled, skilled, technical, operational, clerical or supervisory |
| Included | Working journalists (as defined in the Working Journalists and other Newspaper Employees (Conditions of Service) and Miscellaneous Provisions Act, 1955); sales promotion employees (as defined in the Sales Promotion Employees (Conditions of Service) Act, 1976); and, for a proceeding in relation to an industrial dispute, a person dismissed, discharged or retrenched in connection with that dispute, or whose dismissal, discharge or retrenchment led to it |
| Excluded: apprentices | An apprentice as defined in clause (aa) of section 2 of the Apprentices Act, 1961 |
| Excluded: (a) | Persons subject to the Air Force Act, 1950, the Army Act, 1950 or the Navy Act, 1957 |
| Excluded: (b) | Persons employed in the police service, or as an officer or other employee of a prison |
| Excluded: (c) | Persons employed mainly in a managerial or administrative capacity |
| Excluded: (d) | Persons employed in a supervisory capacity drawing wage exceeding fifteen thousand rupees per month, or an amount notified by the Central Government from time to time |
Employee versus worker
| Test | Employee (s.2(k)) | Worker (s.2(z)) |
|---|---|---|
| Managerial or administrative work | Included | Excluded if employed mainly in that capacity |
| Supervisory pay | No pay limit in the definition | Excluded if wage exceeds Rs 15,000 per month or the notified amount |
| Industry | Employed by an "establishment" | Employed "in any industry" |
| Armed forces | Members of the Armed Forces of the Union excluded | Persons under the Air Force, Army or Navy Acts excluded |
| Police and prison staff | Not mentioned as excluded | Excluded |
The Rs 15,000 figure in s.2(z)(d) is the text of the Code as enacted and is stated to be changeable by Central notification, so check for a notified amount before applying it. The limit applies only to a person in a supervisory role, not to clerical or technical staff.
Because provisions use "employee" or "worker" depending on their purpose, always read the section you are applying. For instance the minimum wage obligation in s.5 is expressed as a duty not to pay "any employee" less than the notified rate. Read each provision to see which word it uses.
Section 2(l): employer
An employer is a person who employs, whether directly or through any person, or on his behalf or on behalf of any person, one or more employees in his establishment. The definition then adds who counts in particular cases:
- where the establishment is carried on by a department of the Central or State Government, the authority specified by the head of the department or, if none is specified, the head of the department;
- in an establishment carried on by a local authority, the chief executive of that authority;
- (i) for a factory, the occupier as defined in clause (n) of section 2 of the Factories Act, 1948 and, where a person is named as manager under clause (f) of sub-section (1) of section 7 of that Act, the person so named;
- (ii) for any other establishment, the person or authority with ultimate control over its affairs, and where affairs are entrusted to a manager or managing director, that manager or managing director;
- (iii) a contractor; and
- (iv) the legal representative of a deceased employer.
"One or more employees" means even a single-employee business is an employer. For the contractor, see our article on contractor and contract labour.
Section 2(m), (n) and (o): establishment, factory, Government establishment
| Clause | Meaning |
|---|---|
| s.2(m) establishment | Any place where any industry, trade, business, manufacture or occupation is carried on, and includes a Government establishment |
| s.2(n) factory | A factory as defined in clause (m) of section 2 of the Factories Act, 1948 |
| s.2(o) Government establishment | Any office or department of the Government or a local authority |
The test for "establishment" is the place and the activity. It is not limited by size, so the Code's duties can arise even for a small shop or office. Government offices and local authority offices are covered too. For the effect on the appropriate Government, see our article on s.2(d).
Read the Factories Act, 1948 for the factory definition; see also Factory under the new Labour Codes.
Practical points. Flag each person on payroll as employee or not and worker or not; confirm whether the Central Government has notified a different supervisory amount; and remember a trainee is not automatically an apprentice.
Example. A warehouse supervisor draws Rs 18,000 a month and is employed in a supervisory capacity. Under s.2(z)(d) he is not a "worker" unless the notified amount is higher, but he remains an "employee" under s.2(k) and so is covered by provisions that speak of employees, such as the minimum wage duty and the gender non-discrimination rule.
Need help classifying your staff?
Whether a person is an employee, a worker, a contractor's worker or an apprentice decides which duties apply to you. Our employment and labour law advisory team can review your appointment letters and payroll heads and flag classification risks under the Code.
Key takeaways
- "Employee" (s.2(k)) is wide: it covers managerial and administrative work and excludes only apprentices under the 1961 Act and members of the Armed Forces of the Union.
- "Worker" (s.2(z)) excludes mainly managerial or administrative staff and supervisors above Rs 15,000 a month or the notified amount.
- Working journalists and sales promotion employees are included as workers.
- "Employer" includes the occupier and named manager of a factory, the person with ultimate control, a contractor and the legal representative of a deceased employer.
- "Establishment" is any place where an industry, trade, business, manufacture or occupation is carried on, including Government establishments.
Read next
- Section 2: contractor and contract labour
- Section 2(y): definition of wages and the fifty per cent rule
- Sections 3 and 4: gender discrimination in wages
- Payment of wages to contract labour
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.