NEW DELHI: The Finance Ministry has directed all central government ministries, departments, autonomous bodies and Central Public Sector Enterprises (CPSEs) to ensure timely payment of wages and salaries to contractual and outsourced workers in line with the implementation of the labour codes, including the Code on Wages, 2019.
In an office memorandum issued by the Department of Expenditure’s Procurement Policy Division on May 8, the government said all procuring entities must strictly adhere to instructions related to timely payment of wages, statutory dues and monitoring mechanisms for manpower engaged directly or through contractors.
The directive follows a communication from the Ministry of Labour and Employment and comes after the four labour codes — the Code on Wages, 2019, the Industrial Relations Code, 2020, the Occupational Safety, Health and Working Conditions (OSH&WC) Code, 2020, and the Social Security Code, 2020 — were brought into force from November 21, 2025.
The government said the reforms are aimed at improving worker protections, including stronger wage safeguards, expanded social security coverage and better working conditions under a streamlined compliance framework.
Under the new instructions, ministries and departments have been asked to ensure that contractors disburse salaries on time and that Drawing and Disbursing Officers (DDOs) verify proof of payments every month. The memorandum also reiterated that under Section 55(3) of the OSH&WC Code, the principal employer is responsible for ensuring timely wage payment by contractors.
The circular lays down timelines for wage payments depending on the wage period. Daily wage workers must be paid at the end of the shift, weekly wage earners before the weekly holiday, fortnightly workers within two days of the end of the fortnight, and monthly wage earners within seven days of the following month. Payments must be made through bank transfer or electronic mode.
In a significant move to tighten accountability, the government has mandated that all manpower hiring tenders and contracts include penalty clauses for delays in wage payments by contractors. Ministries and departments have also been directed to earmark or block funds for outsourced manpower contracts either for the full contract duration or until the end of the financial year, whichever is earlier.
For contracts based on reimbursement of wages, contractors will now have to submit bills by the 10th of every month after paying workers by the 7th, while DDOs must clear these bills by the 15th of the same month.
The government also warned of strict action in cases of persistent defaults. If contractors fail to make payments, principal employers may directly pay contract workers as per contractual provisions. Such contractors could face blacklisting by ministries, and repeat offenders may be barred across all central government departments under Rule 151 of the General Financial Rules (GFRs), 2017.
Further, all DDOs have been asked to generate monitoring reports through GeM and the Public Financial Management System (PFMS) to track timely payments to outsourced workers and reimbursements to contractors. Secretaries of ministries and departments have also been asked to review wage payment compliance during their senior management meetings.