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India: Four Labour Codes Implementation Update and Employer Action Plan

By - - Employment Law, Employment Status, Industrial & Workplace Relations, Remuneration

On 21 November 2025, key provisions of four consolidated labour codes – Wage, Industrial Relations, Occupational Safety and Health, and Social Security – came into effect, replacing 29 central laws with a unified framework.

The reform aims to simplify compliance, strengthen worker protections, and modernise employment regulation. It introduces major changes to wages, industrial relations, workplace safety, and social security. Full implementation is pending, with several provisions and state-level rules still awaited, creating a complex compliance landscape for employers.

Current Status of Implementation

The Industrial Relations Code 2020 (IR Code), and the Occupational Safety, Health and Working Conditions Code, 2020 (OSHW Code) have largely come into effect.

Certain provisions under the Code on Wages, 2019 (Wage Code) and the Code on Social Security, 2020 (SS Code) are still not yet in effect.

The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 (EPF Act) continues to apply until replacement schemes are fully operational.

During the transition, existing rules will continue to apply where not inconsistent with the new Codes. This creates a hybrid compliance environment requiring careful interpretation

Key Changes Under Each Code

Wage Code

  • There will be a universal minimum wage which applies to all employees and replaces the earlier scheduled employment model.
  • States cannot set wages below the national floor wage established by the central government.
  • The standardised definition of wages affects calculations for gratuity, bonus, and other benefits.
  • Employers must clear any unpaid wages within two days of an employee’s exit.
  • Written appointment letters are mandatory for all employees.

IR Code

  • The threshold for standing orders has been increased to 300 workers, up from the previous limit of 100.
  • Government permission is required for lay-off, retrenchment, or closure in establishments employing 300 or more workers.
  • A union with 51% membership will be recognised as the sole negotiating union.
  • A grievance redressal committee is mandatory for establishments with 20 or more workers and must include equal representation from workers.

OSHW Code

  • A single licensing system streamlines compliance for factories, mines, and other sectors.
  • Working hours remain capped at eight per day, and overtime requires worker consent.
  • Welfare facilities include crèches (employer-provided childcare facilities for employees’ young children) for establishments with 50 or more women and annual health check-ups.
  • Safety committees are required in larger units, and a National Safety and Health Advisory Board has been established.
  • Inter-state migrant workers receive enhanced protections, including travel allowances and benefit portability.

SS Code

  • Universal social security now extends coverage to gig and platform workers.
  • Gratuity for fixed-term employees is payable after one year on a pro-rata basis.
  • Portability of benefits includes broader family definitions and recognition of commute-related accidents.
  • Digital registration will create a national database for unorganised and gig workers.
Practical Challenges for Implementation

Labour falls under the Concurrent List, meaning it is a shared responsibility of the Centre and the States, and state-level rules are essential for full implementation. Progress has been uneven, as many States have only published draft rules, so older State laws may still apply.

Employers face compliance complexity because they must reconcile the new Codes with legacy rules until full clarity emerges.

What should Employers do?
  • Review compensation structures to assess the impact of the new wage definition on gratuity, bonus, and other benefits.
  • Update employment documentation by issuing appointment letters to all employees.
  • Reassess contract labour engagement to ensure compliance with restrictions on core activities.
  • Prepare for new thresholds, including standing orders and lay-off permissions for establishments with 300 or more workers.
  • Constitute grievance redressal committees with equal worker representation.
  • Plan for social security compliance by registering gig and platform workers and updating HR systems for portability.
  • Monitor state notifications to track state-specific rules and adapt policies accordingly.

This is a high-level general update only. Legal advice should be obtained on specific circumstances.
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