On 21 November 2025 the Government of India brought the four Labour Codes into effect: the Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020 and the Occupational Safety, Health and Working Conditions Code, 2020. Together they replace 29 central labour laws. This is a summary of what changed for employers, from the Ministry of Labour and Employment’s compliance handbook and FAQs. It is not legal advice.
The transition
The Codes are in force, but the rules under them are still being made. The government said that during the transition the relevant provisions of the existing Acts and their rules, notifications and schemes continue to remain in force. The Ministry’s FAQ puts it as: old rules remain until new rules are notified, to the extent they are in line with the Codes. Central rules apply where the Central Government is the appropriate government, and state rules where the state government is, so a Maharashtra establishment should watch for the Maharashtra rules.
One definition of wages
Wages now means basic pay, dearness allowance and retaining allowance, across all four Codes. If allowances and the other excluded items exceed half of total pay, the excess is added back to wages. This took effect on 21 November 2025 and affects PF, gratuity and other statutory calculations. Performance incentives, ESOPs and reimbursements are not wages.
Paying people
- Every worker has a right to the minimum wage, not only those in scheduled employments
- Monthly wages must be paid before the end of the seventh day of the following month
- When someone leaves, all due wages must be paid within two working days
- Overtime is paid at least twice the normal rate, for work beyond 8 hours a day or 48 hours a week
- Deductions may not exceed half of wages in a wage period
- Statutory bonus is due to anyone who worked at least 30 days in the year, at 8.33 to 20 per cent of wages
- Equal pay for the same or similar work, with no gender discrimination in wages or recruitment
Hiring and documents
- An appointment letter for every employee
- Wage slips for every employee on or before payment
- Registers cut from 84 to 8, kept electronically if you wish, for five years
- A single registration, a single licence and a single electronic return in place of many
Fixed term employment and gratuity
A fixed term employee gets the same wages and benefits as a permanent worker doing the same work, and gratuity after one year of service under the contract instead of five. Gratuity is 15 days’ wages per completed year, subject to the ceiling, and must be paid within 30 days. For contract workers, the contractor pays gratuity after five years.
Safety, health and women at work
- A free annual health check-up for workers; the government’s announcement specifies workers above 40
- Women may work in all establishments and all types of work; before 6 am or after 7 pm only with their consent and the prescribed safety measures
- A canteen where 100 or more workers are employed and a crèche where more than 50 are employed
- Safety committees as the government orders, and mandatory safety committees in establishments with 500 or more workers
Contract labour
The contract labour provisions now sit in the OSH Code and apply where 50 or more contract workers are employed. Contractors with 50 or more need a five year licence. The principal employer provides welfare facilities and pays wages if the contractor does not. Contract labour in core activities is limited. See Contract labour in Maharashtra.
Social security
- Provident fund applies to establishments with 20 or more employees, without the old scheduled employments limit
- ESI applies to establishments with 10 or more persons, voluntary below 10, and to hazardous occupations even with one employee
- Gig and platform workers are covered for the first time, funded partly by aggregators
- Separately, the EPFO wage ceiling for compulsory coverage rose from Rs 15,000 to Rs 25,000 a month on 17 September 2026
Industrial relations
- A grievance redressal committee in every industrial establishment with 20 or more workers
- Standing orders apply to establishments with 300 or more workers, with model standing orders available
- Factories, mines and plantations with 300 or more workers need prior permission for lay-off, retrenchment or closure
- On retrenchment, besides compensation, the employer contributes 15 days’ wages per worker to the Workers’ Re-Skilling Fund
- At least 21 days’ notice before changing service conditions listed in the Third Schedule
What to do now
Re-check salary structures against the 50 per cent wage rule, issue appointment letters to everyone, review fixed term and contract arrangements, and recalculate PF coverage under the new Rs 25,000 ceiling. Our payroll management service and our compliance work cover these for clients.
This is a plain summary for general information, not legal advice. Laws, rates and limits change; check the official source before acting on a figure.
Sources
- PIB, 21 November 2025: Government makes the four Labour Codes effective
- Ministry of Labour and Employment: Compliance Handbook for Employers under the Four Labour Codes (February 2026)
- Ministry of Labour and Employment: FAQs on Labour Codes (30 December 2025)
- Ministry of Labour and Employment: Additional FAQs on Labour Codes (16 March 2026)
- Ministry of Labour and Employment (PIB, 16 September 2026): EPFO wage ceiling raised to Rs 25,000