Section 54 of the Code on Wages, 2019: Penalties for Offences
Section 54 of the Code on Wages, 2019 (Act No. 29 of 2019) specifies penalties for employers who pay an employee less than the amount due under the Code, contravene other provisions, fail to maintain records properly, or repeat specified offences. It also provides a compliance opportunity before prosecution for certain contraventions.
What Section 54 covers
Section 54 appears in Chapter VIII, titled "Offences and Penalties". It creates different consequences depending on the nature of the employer's default and whether a similar offence is repeated within five years.
| Contravention | Provision | Maximum consequence |
|---|---|---|
| Paying an employee less than the amount due under the Code | Section 54(1)(a) | Fine up to Rs. 50,000 |
| Repeat of a similar underpayment offence within five years after conviction | Section 54(1)(b) | Imprisonment up to 3 months, or fine up to Rs. 1,00,000, or both |
| Contravention of another provision of the Code, rule, order made or issued under it | Section 54(1)(c) | Fine up to Rs. 20,000 |
| Repeat of a similar offence under Section 54(1)(c) within five years after conviction | Section 54(1)(d) | Imprisonment up to 1 month, or fine up to Rs. 40,000, or both |
| Non-maintenance or improper maintenance of establishment records | Section 54(2) | Fine up to Rs. 10,000 |
Section 54 - statutory text
54. (1) Any employer who-
(a) pays to any employee less than the amount due to such employee under the provisions of this Code shall be punishable with fine which may extend to fifty thousand rupees;
(b) having been convicted of an offence under clause (a) is again found guilty of similar offence under this clause, within five years from the date of the commission of the first or subsequent offence, he shall, on the second and the subsequent commission of the offence, be punishable with imprisonment for a term which may extend to three months or with fine which may extend to one lakh rupees, or with both;
(c) contravenes any other provision of this Code or any rule made or order made or issued thereunder shall be punishable with fine which may extend to twenty thousand rupees;
(d) having been convicted of an offence under clause (c) is again found guilty of similar offence under this clause, within five years from the date of the commission of the first or subsequent offence, he shall, on the second and the subsequent commission of the offence under this clause, be punishable with imprisonment for a term which may extend to one month or with fine which may extend to forty thousand rupees, or with both.
(2) Notwithstanding anything contained in sub-section (1), for the offences of non-maintenance or improper maintenance of records in the establishment, the employer shall be punishable with fine which may extend to ten thousand rupees.
(3) Notwithstanding anything contained in clause (c) of sub-section (1) or sub-section (2), the Inspector-cum-Facilitator shall, before initiation of prosecution proceeding for the offences under the said clause or sub-section, give an opportunity to the employer to comply with the provisions of this Code by way of a written direction, which shall lay down a time period for such compliance, and, if the employer complies with the direction within such period, the Inspector-cum-Facilitator shall not initiate such prosecution proceeding and, no such opportunity shall be accorded to an employer, if the violation of the same nature of the provisions under this Code is repeated within a period of five years from the date on which such first violation was committed and in such case the prosecution shall be initiated in accordance with the provisions of this Code.
Meaning of the important provisions
1. Underpayment under Section 54(1)(a)
This clause applies where an employer pays an employee less than the amount due under the Code. The expression is broad enough to connect the penalty provision with wage entitlements created by the Code, including applicable minimum wage and other amounts legally due under its provisions.
2. Repeat underpayment offence under Section 54(1)(b)
A more serious consequence applies where an employer has already been convicted under clause (a) and is again found guilty of a similar offence within the five-year period specified in the section. The provision permits imprisonment, a higher fine, or both.
3. Other contraventions under Section 54(1)(c)
Clause (c) is the general penalty provision for contravention of another provision of the Code or of a rule or order made or issued under it, where the case falls within this clause.
4. Record-keeping default under Section 54(2)
Sub-section (2) specifically deals with non-maintenance or improper maintenance of records in an establishment and provides a fine that may extend to Rs. 10,000.
5. Compliance opportunity under Section 54(3)
Before prosecution for an offence under Section 54(1)(c) or Section 54(2), the Inspector-cum-Facilitator must give the employer a written direction and a period within which to comply. If the employer complies within that period, prosecution is not to be initiated for that contravention. This opportunity is not available where a violation of the same nature is repeated within five years from the first violation.
Practical compliance points
Employers should ensure that wage calculations and payments match the requirements of the Code, maintain prescribed records accurately, preserve evidence of payment and compliance, and respond within the stated period to any written compliance direction issued by an Inspector-cum-Facilitator. Repeated violations can attract materially higher consequences.
Official legal resources
For authoritative text and commencement details, refer to the official Ministry of Labour and Employment copy of the Code on Wages, 2019 and the commencement notification S.O. 5322(E), dated 21 November 2025.
Disclaimer: This page is a general legal-information resource. For a particular proceeding, compliance issue or prosecution, the current statutory text, applicable rules, notifications and case-specific facts should be examined.