Sections 43 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 43 makes the employer responsible for paying every amount due under the Code, and names who steps in if the employer fails. Section 44 deals with money that cannot be paid because the employee has died or cannot be traced: it goes to a nominee or is deposited with a prescribed authority, and the employer is then discharged.
Every employer must pay all amounts required under the Code to every employee (s.43). If the employer fails, the company, firm, association or other person who is the proprietor of the establishment is responsible for the payment. Where an amount could not or cannot be paid because of the employee's death or because whereabouts are not known, it is paid to the nominee, or, if there is no nominee or the nominee cannot be paid, deposited with the prescribed authority (s.44(1)). Payment to the nominee or deposit discharges the employer (s.44(2)).
Section 43: who is responsible
The main rule is plain: "Every employer shall pay all amounts required to be paid under this Code to every employee employed by him." This covers wages, bonus and any other amount payable under the Code. The proviso adds a fall-back. Where the employer fails to pay in accordance with the Code, "the company or firm or association or any other person who is the proprietor of the establishment, in which the employee is employed, shall be responsible for such payment."
The Explanation says "firm" has the meaning in the Indian Partnership Act, 1932.
The practical effect: the proprietor of the establishment cannot say that a manager, a payroll vendor or a contractor was supposed to pay. Where the employer is a separate person from the proprietor, the dues can be pursued from the proprietor. The text does not describe how the proprietor can recover from the actual employer; that is a matter for the contract between them. For contractors, see the definitions in our article on contractor and contract labour. If you want an independent check that dues are being paid as the Code requires, our payroll compliance audit service reviews the pay cycle against the Code.
Section 44(1): death or whereabouts unknown
Section 44(1) is "subject to the other provisions of this Code". It applies to "all amounts payable to an employee under this Code" where they "could not or cannot be paid" for two reasons: death before payment, or whereabouts not being known. Such amounts shall:
- (a) be paid to the person nominated by the employee, in accordance with the rules made under the Code; or
- (b) where no nomination has been made, or the amount cannot be paid to the nominee for any reason, be deposited with the authority prescribed, who deals with the deposit in the prescribed manner.
| Situation | What happens |
|---|---|
| Employee dies, valid nominee exists | Pay the nominee as the rules provide (s.44(1)(a)) |
| Employee dies, no nomination | Deposit with the prescribed authority (s.44(1)(b)) |
| Nominee exists but cannot be paid | Deposit with the prescribed authority (s.44(1)(b)) |
| Employee's whereabouts unknown | Same two routes: nominee, else deposit |
Hypothetical example. An employee leaves without notice and cannot be traced. A final amount of Rs 18,000 is due. The employee had made a nomination, but the nominee does not respond. Under s.44(1)(b), the sum cannot be "paid to the person so nominated", so the employer deposits it with the prescribed authority. The amount is invented to show the route only.
Section 44(2): the employer is discharged
Where all amounts payable to an employee under the Code are (a) paid by the employer to the nominee or (b) deposited with the authority under s.44(1)(b), "the employer shall be discharged of his liability to pay those amounts." The discharge follows only once the payment or deposit is actually made. Keep the receipt or challan.
The text does not state a time limit for the deposit; that comes from the rules.
What the Central Rules add
The Code on Wages (Central) Rules, 2026 (G.S.R. 343(E), 8 May 2026) apply only where the Central Government is the appropriate Government. Where the State Government is the appropriate Government, the State's own wage rules apply.
- Rule 45 deals with nomination. An employee makes a declaration in Form VII, in physical form or electronically, before the amount becomes payable or, if it has become payable, before payment. If the employee has a family, the nomination must favour the spouse (in preference) and then one or more family members; a nomination of an outsider by an employee with a family is invalid. A fresh nomination for the spouse is needed on marriage, and an earlier one is deemed invalid. For a minor nominee, the employee may appoint a guardian. Where there are several nominees, the shares must be specified to cover the whole amount.
- Rule 45(2) says that if the amount could not be paid to the nominee until three months from the date it became payable, the employer deposits it with the Deputy Chief Labour Commissioner (Central) having jurisdiction, who disburses it to the nominee after ascertaining identity within two months of the deposit.
- Rule 46 covers deposit where there is no nomination or the nominee cannot be paid: the employer deposits after the expiry of six months from the date the amount became payable, and before the expiry of the fifteenth day after the last day of that six months. Payment is by bank transfer or a crossed demand draft from a scheduled bank in India in favour of that officer.
- Rule 47 deals with the officer's handling: the money is invested in Central or State Government securities or held in a fixed deposit in a scheduled bank; a notice is shown on the notice board for at least fifteen days and published in local vernacular newspapers; the officer releases the amount after hearing the claimant. If the amount remains unclaimed for seven years, it is dealt with as the Central Government directs.
Read the rule articles on nomination under rule 45 and deposit under rules 46 and 47.
A drafting note: rule 45(2) speaks of a three-month period for paying a nominee, while rule 46 speaks of six months from the date the amount became payable for the no-nomination case. Read both together and follow the time that fits the facts. Whether a nominee-case deposit can also be made later under rule 46 is not stated.
Need help with unpaid and unclaimed dues?
Final settlements of employees who have died or vanished are easy to leave in the books for years. Our payroll compliance audit team can list such balances, check whether nominations are on file and prepare the deposit.
Key takeaways
- The employer must pay all amounts under the Code; if it fails, the proprietor of the establishment is responsible (s.43).
- Amounts that cannot be paid on death or because whereabouts are unknown go to the nominee, or are deposited with the prescribed authority (s.44(1)).
- Payment to the nominee or deposit discharges the employer (s.44(2)).
- Central Rules 45 to 47 prescribe Form VII, the deposit timelines and the handling by the Deputy Chief Labour Commissioner (Central).
- Keep nominations current and keep proof of every deposit.
Read next
- Rule 45: nomination and payment of undisbursed dues on death
- Rules 46 and 47: deposit of undisbursed dues
- Section 45: claims and procedure
- Payment of wages under the new labour codes
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.