Karnataka Minimum Wage Overhaul: 2026 Rates, Zones & Compliance Mandates

Revised Minimum Wages in Karnataka
Skill category	Zone-1 (INR/month)	Zone-2 (INR/month)	Zone-3 (INR/month)
Highly skilled	34,225.42	31,114.02	28,285.47
Skilled	31,114.02	28,285.47	25,714.07
Semi-skilled	28,285.47	25,714.07	23,376.43
Unskilled	25,714.07	23,376.43	21,251.30

Source: A Guide to Minimum Wage in India in 2026, India Briefing

These wage levels are reflected in the schedules applicable to power generation units, foundries, chemical manufacturing units, and other covered employments and broadly illustrate the state’s revised wage framework.

Expansion of scheduled employments in Karnataka

The notification covers a wide range of industries, including:

1. Manufacturing
2. Construction
3. Hospitality
4. Retail and commercial establishments
5. Healthcare institutions
6. Logistics and transportation
7. Security services
8. Financial services
9. Electronics and engineering industries
10. Municipal and sanitation services

Additionally, the state government has also added several new sectors to the schedule for the first time, including:

1. E-commerce and courier services
2. Computer and cyber centers
3. Mobile tower operations
4. Public amusement and water theme parks
5. Educational institutions
6. Religious and charitable organisations

Variable Dearness Allowance (VDA) mechanism retained

As per the notification, Karnataka has retained the Variable Dearness Allowance (VDA) system to account for inflation.

The VDA will continue to be revised annually based on the average Consumer Price Index (CPI) for the preceding calendar year. The notification specifies that wage adjustments will be calculated using a CPI benchmark and a prescribed allowance rate for each increase in index points.

Legal validity under the Code on Wages, 2019

Although the Code on Wages, 2019, became operational in November 2025, Karnataka issued the notification under the Minimum Wages Act, 1948.

Karnataka has relied on transitional provisions under Section 69 of the Code on Wages, which preserve actions initiated under repealed labour laws. The notification also refers to the General Clauses Act, 1897, to support the continuation and completion of wage revision proceedings that commenced before the labour codes came into force.

Implications for employers in Karnataka

The revised wage framework is expected to have a major impact on employer compliance obligations and labour costs across Karnataka.

1. Review employee wage levels against revised minimum wages

Employers should compare current wages against the newly prescribed minimum wage rates applicable to their industry, zone, and employee skill category.

The notification introduces standardised wage rates based on scheduled employment, zone classification, skill level, and applicable VDA.

Any employee receiving less than the prescribed minimum wage must have their compensation adjusted immediately.

2. Verify correct employee classification

Employers should reassess workforce classifications to ensure employees are correctly categorised according to their skill level and job role.

The notification applies different wage rates to:

1. Unskilled workers
2. Semi-skilled workers
3. Skilled workers
4. Highly skilled workers

Incorrect classification may result in underpayment and potential labour law violations.

3. Confirm applicable zone classification

The revised framework uses a three-zone system for wage determination from a previous four-zone framework.

Organisations operating across multiple districts or locations should verify that each establishment is applying the correct zone-based wage rates. Wage obligations differ notably between Zones 1, 2, and 3.

4. Update payroll systems

Payroll teams should update the following:

1. Minimum wage master data
2. Salary structures
3. Attendance and wage calculation systems
4. Overtime calculations
5. Contractor payment processes

The revised rates took effect immediately upon notification, requiring employers to align payroll systems without delay.

5. Review contract labour and vendor arrangements

Companies engaging contract workers, security personnel, housekeeping staff, facility management personnel, or outsourced manpower should verify that contractors are paying workers in accordance with the revised wage schedules.

Principal employers may face compliance risks if contractors fail to meet statutory wage obligations.

6. Recalculate statutory contributions

Higher minimum wages may increase the wage base used for calculating the following:

1. Employees’ Provident Fund (EPF) contributions
2. Bonus payments (where applicable)
3. Gratuity liabilities
4. Other wage-linked benefits

Employers should assess the resulting increase in labour costs and budgetary impact.

7. Prepare for annual VDA revisions

The notification continues Karnataka’s VDA mechanism.

Employers must monitor annual VDA revisions linked to the Consumer Price Index (CPI) and incorporate updated rates into payroll calculations each year.

8. Update employment documentation

Organisations should revise appointment letters, wage registers, payroll records, HR policies, and internal compensation documentation to reflect the revised wage framework.

Industries with large blue-collar workforces, including manufacturing, construction, logistics, retail, hospitality, and facility management, are likely to experience the most substantial increase in wage costs.

Outlook

Karnataka’s 2026 minimum wage notification represents one of the most extensive wage revisions undertaken by an Indian state in recent years. By introducing a more uniform wage structure, expanding coverage to new sectors, and increasing wage floors, the state aims to strengthen worker protections while modernising its wage administration framework.

For employers, the notification underscores the need for immediate compliance reviews and proactive workforce cost planning as labour regulators increasingly align legacy wage laws with India’s broader labour code regime.