The four codes
- Code on Wages, 2019 — wages, minimum wages, bonus and timely payment.
- Industrial Relations Code, 2020 — trade unions, standing orders, layoffs, retrenchment and closures.
- Code on Social Security, 2020 — provident fund, ESIC, gratuity, maternity benefit and gig-worker coverage.
- Occupational Safety, Health and Working Conditions Code, 2020 — factories, contract labour, working hours and welfare.
The Government of India notified the Codes to come into force from 21 November 2025, with rules being finalised at central and state level. Check the current notifications for your state before acting on any specific provision.
Where employers feel it first
- Wage definition: allowances above a threshold are added back, so basic pay and related components generally need to make up at least 50% of total remuneration. This affects PF, gratuity and bonus calculations.
- Fixed-term employment: fixed-term employees are recognised, with benefits such as gratuity after one year of service.
- Final settlement: wages have to be settled within two working days of removal, dismissal, retrenchment or resignation.
- Appointment letters: written appointment letters with prescribed particulars are expected for all employees.
- Contract labour: the CLRA threshold moves from 20 to 50 workers under the OSH Code.
A practical checklist
- Re-map your salary structure to the new wage definition and model the payroll and PF impact.
- Update appointment letters, policies and the employee handbook.
- Review contractor arrangements and vendor compliance.
- Re-check registrations and licences that may be merged or renamed in your state.
- Train HR and finance teams on the new settlement and record-keeping rules.
Frequently asked questions
How many labour laws do the Labour Codes replace?
They consolidate 29 central labour laws into four codes.
Will my salary structure change under the Labour Codes?
Possibly. Because the wage definition adds back certain allowances, many employers restructure pay so that basic wages form a larger share of total pay.
Do the Codes apply to small businesses?
Yes, although several thresholds and exemptions depend on the size of the establishment. An audit shows which provisions apply to you.
Last updated 2026-09-29. General information only, not legal advice.