The 26‑Day Formula for Wage Computation is not valid, adopt fair practices: Rajasthan High Court
The High Court partially allowed the appeal, enhancing the compensation amount by approximately ₹33,000, with interest at 6% per annum. While leaving the rest of the MACT’s decision unchanged, the Court categorically rejected the 26‑day formula and ordered that minimum wages be calculated on a 30‑day basis.
Jaipur, February 2026 – In a significant development for labour law and wage calculation practices, the Rajasthan High Court has ruled that the long‑standing 26‑day monthly wage formula used for daily‑wage workers is unrealistic and unfair. The Court has directed both Union and State labour departments to amend wage notifications and adopt a 30‑day month basis, ensuring fairer compensation for workers in the unorganised sector.
Key Highlights of the Judgment
- Case Background: The ruling arose from an appeal against a Motor Accident Claims Tribunal (MACT) award. The claimant, a daily‑wage worker who suffered a 13% permanent disability in a motorcycle accident, challenged the tribunal’s use of the 26‑day formula to compute wages, arguing that it undervalued his earnings.
- Court’s Observations: Justice Anoop Kumar Dhand noted that while labour laws mandate at least one weekly rest day, daily‑wage workers rarely receive paid leave. Many are compelled to work all 30 days in a month to meet subsistence needs. The assumption of unpaid weekly rest days, therefore, unfairly reduces their monthly income.
- Judgment: The Court enhanced the compensation amount by approximately ₹33,000, with 6% annual interest, and directed that wage calculations be based on a 30‑day month. Copies of the judgment are to be forwarded to the Union Ministry of Labour and Employment and the Rajasthan Labour Department for necessary amendments.
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Implications for HR and Compliance
- Minimum Wage Notifications: States will need to revise minimum wage circulars to reflect a 30‑day calculation basis. This could raise monthly wage floors across sectors.
- Compensation Awards: Accident claims, retrenchment compensation, and other wage‑linked benefits will now require recalculation on a 30‑day basis, leading to higher payouts for affected workers.
- Employer Practices: Organisations employing daily‑wage labour must review payroll systems to ensure compliance with the revised standard.
- Judicial Recognition: The ruling underscores the judiciary’s growing sensitivity to the vulnerabilities of unorganised workers, aligning wage law with ground realities.
Broader Impact
The judgment is expected to influence wage calculation practices beyond Rajasthan. If adopted nationally, the shift from 26 to 30 days will strengthen financial protection for millions of daily‑wage workers. Labour unions have welcomed the ruling as a long‑overdue correction, while employer associations are assessing the potential impact on labour costs. Legal experts anticipate similar challenges in other states, making this a precedent‑setting case in wage jurisprudence.
Conclusion
The Rajasthan High Court’s rejection of the 26‑day wage formula marks a pivotal moment in labour law. By directing government departments to amend rules, the Court has ensured that wage calculations reflect the realities of daily‑wage employment. For HR professionals, compliance leaders, and policymakers, this judgment signals the need for immediate review of wage structures, compensation practices, and statutory notifications to align with the new 30‑day standard.
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