The four new labour codes , the Code on Wages, the Industrial Relations Code, the Code on Social Security, and the Occupational Safety, Health and Working Conditions (OSH) Code, consolidate 29labour laws into a single, simplified compliance framework. They became effective on 21 November 2025, replacing decades-old, fragmented labour legislation across India.

All four labour codes took effect on 21 November 2025. Central rules for the Code on Wages, Industrial Relations Code, Code on Social Security and OSH Code were notified on 8 May 2026. State-specific rules are still being notified, so full state-wise implementation is ongoing.

Aparajitha regularly tracks and updates the status of state-wise draft rules and notifications to help businesses stay informed about the latest Labour Code requirements across different States and Union Territories. View the latest state-wise Labour Codes rules and implementation status.

The Code on Wages, 2019 standardises the definition of “wages” across India and has a direct impact on salary structuring and statutory benefits such as (but not limited to) PF, gratuity, bonus etc. Under the new wage definition, the specified exclusion components cannot exceed 50% of total remuneration, where these exclusions exceed 50%, the excess amount is added back and treated as wages for statutory purposes.

This may require employers to review and restructure existing salary components to ensure compliance with the new wage definition and applicable statutory requirements.

The Code also brings greater transparency and uniformity to wage definitions, reduces ambiguity in wage calculations and extends wage and social security protections across categories of employees, supporting more consistent and equitable employment practices.

Under the new labour codes, gratuity is linked to the revised definition of “wages.” The listed exclusion components cannot exceed 50% of total remuneration; where the exclusions exceed 50%, the excess is added back and treated as wages. This can increase the wage base used for gratuity calculations for employees, for example: in cases where the  existing Basic Pay and DA form a lower proportion of their total salary.

The revised definition can therefore increase gratuity liabilities for employers and makes reviewing existing compensation structures important for Labour Code compliance.

The Industrial Relations Code 2020 governs union recognition, retrenchment, layoffs, strikes, and dispute resolution. For employers, it changes thresholds for standing orders and lay-off compensation, making Industrial Relations Code transition support critical for HR and legal teams during the shift from state-specific rules.

The Code on Social Security 2020 consolidates benefits like provident fund, ESI, gratuity, and maternity benefit laws etc, and for the first time extends social security coverage to gig and platform workers. Employers, including aggregators, now have defined social security code compliance obligations toward this previously uncovered workforce category.

The Code also provides specific benefits for Fixed Term Employees (FTEs). An FTE who completes one year of service under the contract is eligible for gratuity, without the usual five-year minimum service requirement applicable to other employees.

The OSH Code consolidates 13 earlier laws governing workplace safety, health standards, working hours, and welfare facilities across factories, establishments, mines & docks. It expands coverage thresholds and mandates appointment letters for all employees, making Occupational Safety Health Working Conditions Code consulting a priority for factory and manufacturing employers.

Some of the key areas for employers to focus under the labour codes are restructuring wages to align with the 50% rule, updating appointment letter formats, revising standing orders under the IR Code, and ensuring the engagement of contract labour align with OSH Code where applicable etc. These are broad areas of consideration and are not an exhaustive list of compliance requirements. The applicability and implementation of the Labour Codes can involve several nuances depending on the nature of the business, industry, workforce structure, employee categories and applicable State-specific rules. 

Given the layered central and state rule rollout, most companies outsource labour code compliance to expert Labour Codes Consultants  tracking state-wise notifications.

A Labour Code compliance consultant helps organisations interpret applicable Labour Code requirements, conduct compliance audits and gap analysis, assess compliance processes in line with the new regulations, review HR policies and employment contracts, and develop an implementation roadmap. Expert labour code consultants help employers manage Labour Code compliance while reducing regulatory and financial risks.