Equal pay and pay transparency in India
Reviewed by Mellow Editorial Team, HR & payroll content team
Equal pay and pay transparency are not yet mandated in India in the same comprehensive way they are in parts of Europe or the US, but employers still carry real legal obligations — and employee expectations are shifting fast.
What the law actually says
India does not have a single, consolidated equal pay statute in 2026. The principle exists, but it is spread across several instruments.
The Equal Remuneration Act, 1976 required employers to pay men and women equal remuneration for the same work or work of a similar nature, and prohibited discrimination in recruitment on pay grounds. That Act has now been subsumed into the Code on Wages, 2019 — one of India's four consolidated Labour Codes that came into force in 2025. The Code on Wages carries forward the equal remuneration principle and extends it to wages, recruitment, conditions of service and terms of employment. Discrimination on grounds of gender is prohibited. The Code does not currently extend explicit protections to other characteristics such as religion, caste or age in the same pay-equity framing, though other legislation addresses discrimination more broadly.
In practice, enforcement has historically been uneven. The law is clear on paper; audits and prosecutions remain relatively rare. That is not a reason for complacency — it is a reason to build clean internal records.
What pay transparency means in practice
Pay transparency means giving employees and candidates enough information to understand how pay is determined and whether it is applied fairly. It sits on a spectrum.
At one end: publishing a salary band in a job posting. At the other: disclosing every employee's compensation across the organisation. Most employers in India operate somewhere near the conservative end — many job advertisements still omit salary ranges, and internal pay structures are frequently treated as confidential.
There is currently no law in India that compels employers to publish salary ranges in job postings or to share pay data with employees on request. Some multinational companies operating in India apply their global pay transparency standards locally, which is driving gradual market movement. Listed companies face increasing shareholder and ESG scrutiny on pay equity disclosures, particularly around gender pay gaps.
The practical question for most employers is not "are we required to be transparent?" but "what level of transparency lets us attract talent, retain staff and manage risk?"
Where employers commonly run into trouble
Even where policy is well-intentioned, pay gaps appear for predictable reasons.
Unstructured negotiation at hiring. When starting salaries are set through unconstrained individual negotiation rather than bands, people who negotiate more assertively — a trait that correlates with gender and prior privilege — earn more from day one. Subsequent increments compound the gap.
Inconsistent increment logic. Annual raises decided manager by manager, without documented criteria, produce drift. Two employees in identical roles performing comparably can end up on materially different salaries within three years.
Role title inflation. Different managers use different titles for equivalent work, which makes pay comparisons harder and can obscure inequity during audits.
Statutory deductions applied inconsistently. EPF contributions — 12% from the employee, 12% from the employer — must be applied consistently across eligible employees. Similarly, ESI coverage kicks in for employees below the applicable wage threshold. Errors here create both compliance exposure and perception of unfairness.
Building a defensible pay structure
You do not need an elaborate system. You need a documented one.
Define job levels and bands. Map roles to levels, and attach a salary range to each level. The range should reflect genuine market data and internal equity, not just what you can get away with. Bands give managers a framework and give employees a reference point.
Document how people are placed within a band. Is it experience, skill assessment, performance history? Write it down. Consistency is not about paying everyone the same — it is about applying the same logic to everyone.
Conduct a pay audit periodically. Pull your payroll data, segment it by gender (and by any other dimension you track), and look for gaps that are not explained by documented criteria. A gap that exists for no written reason is a liability — legal, reputational and for retention.
Be clear with employees about how pay decisions are made. You do not have to publish individual salaries. Explaining to an employee how their pay band works, what drives movement within it and how performance is assessed costs nothing and reduces the corrosive speculation that happens when pay feels opaque and arbitrary.
Preparing for where this is heading
India's regulatory direction, ESG reporting requirements and hiring market norms are all moving toward greater accountability on pay equity. Companies that do the structural work now — clean job architecture, documented pay logic, periodic audits — will find compliance straightforward when requirements tighten. Companies that treat pay as an informal, individual negotiation will face retrofitting costs and potential back-pay exposure later.
Form 24Q filings and Form 16 issuance already require employers to maintain accurate, employee-level compensation records. The infrastructure for a pay audit largely exists in most payroll systems already. Using it proactively is significantly easier than responding to a complaint or regulator inquiry after the fact.
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