What are Wages?

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Wages refer to all monetary payments in the form of salaries, allowances, etc. that an employer pays to a person for their work or employment, including:

Basic Pay
Dearness Allowance
Retaining Allowance (if any)

There are some monetary payments that are not included in wages:

Any legally required bonus not included under the employment agreement. For example, the annual bonus an employer is required to give employees in addition to wages.
Amenities like house accommodation, electricity, water, medical attendance, etc. which the Government has excluded from wages
Employer’s contributions paid to pension or provident fund, and the resulting interest
Conveyance allowance or travelling concession
House rent allowance
Overtime allowance
Commission
Payment for special expenses depending upon the nature of the employment. For example, if a glassworker requires a specific tool to carry out their work, this could be a special expense paid for by the employer.
Gratuity, retrenchment compensation, or other retirement benefits.

Payment of a legal award or settlement made between parties by the order of the court^¹.

Section 2(y), Code on Wages, 2019.[↩]

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