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Labour Law in India (2025–2026): Guide for Employer & Employee

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On the 21st of November 2025, the government implemented four new labour codes through a number of the Ministry of labour and Employment notifications. For employees, the new labour codes in India provide social security and a number of other benefits. For employers, it helps simplify the compliance structure and avoid legal conflicts.

The new 4 labour codes, the code on wages, the OSH code, the social security code, and the IR code, consolidate 29 labour laws and significantly reform India’s labour laws in 2026. You will know about all the updates on labour laws, the four new labour codes, and the changes in effect from November 2025. We also provide a checklist outlining what to do in April 2026 to comply with these changes.

What’s Changed in Indian Labour Laws in November 2025

In November 2025, over 29 labour laws were amended and consolidated into four labour codes. Earlier, labour laws in India comprised different state and central acts covering areas of wage and hour rules, employee relations, and safety regulations. Now, these different labour laws are subsumed under four codes, which are:

1. The Code on Wages 2019,
2. Industrial Relations Code, 2020,
3. Social Security Code 2020, and
4. Occupational Safety, Health, and Working Conditions Code 2020.

In December 2025, the government published the draft central rules for all four new labour codes. As of April 2026, the central rules are implemented, but most states are still in the implementation phase.

The New Labour Codes in India 2026

Each of these new labour codes addresses a particular area of regulation.

1. Code on Wages, 2019 (Right to Minimum Wages for Everyone)

Passed in 2019, the Code on Wages regulates areas related to payment of wages, minimum wages, equal remuneration, and payment of bonuses. It provides for a national floor wage in light of the cost of living. Section 2(Y) of the code introduces the 50% wage rule, thereby improving employees’ financial security. It aims to combine wage and hour regulations under a single framework. The Code on Wages repeals four labour laws in India.

*For a list of repealed laws, refer to the table below.

Code on Wages Central Rules

Notified in 2025, the Code on Wages (Central) Rules establishes the procedural framework for fixing minimum and floor wages based on defined consumption units. It defines a standard working-class family as three units requiring 2700 calories and 66 meters of cloth annually. Rule 13 enforces the 50% deduction cap for recoveries, ensuring employee take-home pay is protected. The rules supersede eighteen prior central regulations, including the Minimum Wages (Central) Rules, 1950.

2. Industrial Relations (IR) Code, 2020

The Industrial Relations Code, 2020, modernizes labour law by officially recognizing trade unions at the central and state levels. It also raises the limit for approval for layoffs to 300 employees. Additionally, the act also provides for a skill retrenchment fund and improves women’s representation in the grievance redressal committee.

The Draft Industrial Code Central Rules

The Industrial Relations (Central) Rules establish the structure for collective bargaining, union recognition, and dispute resolution. It provides for a Negotiating Council in establishments with multiple trade unions to ensure structured representation.

3. Social Security Code, 2020 (Social Security for Everyone)

This code aims to unify laws related to EPF, ESIC, gratuity, and other social security provisions. Most importantly, it provides social security to gig and platform workers, contract workers, and unorganized workers. It simplifies the registration process by providing for registration using the Aadhaar number.

Draft Social Security Code Rules

The Social Security Central Rules define the procedures for managing insurance and retirement funds. Significantly, they set up a Social Security Fund for unorganized and gig workers to ensure wider coverage. Rule 82 mandates the use of the Aadhaar system to verify identity during the registration process.

4. OSH Code – 2020 (Right of Security to Workers in all Situations)

The Occupational Safety, Health and Working Conditions Code, 2020, consolidates and replaces 13 laws related to safety regulations and working conditions. The code aims to unify safety standards and establish rules related to working conditions and health. Another objective of OSHWC is to simplify compliance and improve employee welfare.

OSHWC Central Rules

The Occupational Safety, Health and Working Conditions (Central) Rules, 2025, mandate medical examinations for workers (aged 40 or above) as well as Emergency Medical Services (EMS) systems. Rules 6 and 7 establish a rigorous protocol for assessing worker health, shifting the responsibility of clinical oversight directly onto the employer.

These four new labour laws repeal 29 old labour laws in India. The table below lists the repealed laws and their corresponding new Codes.

Official Resource: https://labour.gov.in/sites/default/files/labour_code_eng.pdf

New Labour Codes vs Old Labour System: What Changed?

Indian labour laws have undergone reform in the areas of minimum wages, social security, and safety. The four new labour codes make some necessary changes to the old labour laws. The table below lists some of the important changes from an employee’s and an employer’s perspective.

Impact of New Labour Laws on Employees

The four new labour codes significantly improve working conditions, provide for women’s representation and participation, improve wage structure, and cover all the workers engaged in formal or informal work. One of the major changes is the 50% wage rule.

1. National floor wage: (Section 9(1)code on wages ) Employees will receive sufficient wages and will be able to improve their living standards. *As of April 2026, the baseline for national floor wages per day is ₹178 as notified in 2019. This baseline would change when the government notifies new national floor wage levels under the COW.
2. The 50% wage rule (Section 2(y), code on wages): This rule ensures that your EPF and gratuity would be higher, improving your financial security in the long term. Earlier, there was no such legally binding provision.
3. Social Security (Sections 114 and 109 of the Social Security Code): Gig, platform, unorganized, and part-time employees will also receive the same EPF and ESI benefits as full-time employees.
4. Extensive coverage: Earlier, labour laws only covered full-time and, to some extent, contract employees. Now, the new labour codes recognize workers across all sectors, including the unorganized sector.
5. Equal representation: (Section 43 OSHWC code) Women can also participate equally in any work, including night shifts. The grievance redressal committee is also required to include women representatives.
6. Working hours: (Section 25(1)(a) OSHWC code) The code reduces the daily working hours from 9 hours to 8 hours.

Impact of New Labour Laws on Employers

For employers, the new labour laws simplify compliance. However, they also affect salary structure and employee classification.

1. Compliance: A unified process for returns and registration would reduce compliance burden. (Section 33(2) of the OSHWC code, read with Rule 66 of the draft OSH rules)
2. Wage and salary structure: Employers will need to reconsider their wage structure, as the wage code introduces the 50% wage rule.
3. 50% basic salary: According to section 2(y) of the code on wages, basic pay, DA, and retaining allowance should be at least 50% of the total remuneration, increasing statutory liability for gratuity, EPF, and ESI.
4. Payroll and payment of wages: Establishments will need to pay wages on time to all employees. So, employers will need to have sufficient cash flows. (Section 17(1) of the Code on Wages).
5. Workplace safety and health: The OSHWC code introduces a number of safety regulations, including mandatory health check-ups. So, employers will need to revisit their benefits administration policies. (Section 6(1)(c) of the OSHWC code read with Rule 6 of the draft OSHWC rules)
6. Employer-employee relations: Provisions in the IR code provide for mandatory notice before strikes. This can be beneficial for employers as they would have time to reschedule projects. (Section 62(1) of the Industrial Relations Code)

Types of Workers Who Get Benefits under the New Labour Law

There are eleven categories of workers that benefit from the four new labour codes, including full-time, part-time, contract, gig, and platform workers.

1. Full-Time Employees

Codes that cover them: Code on Wages, Social Security Code, OSHWC Code, Industrial Relations Code

Benefits

• Unified wage rules ensure predictable salary, overtime, and bonus calculations.
• Stronger social security coverage, including PF, ESIC, gratuity, and maternity benefits.
• Safer workplaces with mandatory welfare facilities and health monitoring.
• Greater job clarity through defined service conditions and dispute mechanisms.

2. Contract Workers

Codes that cover them: Code on Wages, Social Security Code, OSHWC Code

Benefits

• Standardized wage rules regardless of contractor engagement.
• Coverage under PF/ESIC is determined on the basis of the establishment and contractor registration.
• Mandatory safety, sanitation, and welfare facilities at contractor-managed sites.
• Clear responsibility is placed on the contractor and principal employer.

3. Fixed-Term Employees

Codes that cover them: Industrial Relations Code, Code on Wages, Social Security Code

Benefits

• Same pay and working conditions as permanent staff for the contract’s duration.
• Access to key statutory benefits, including gratuity on a pro-rata basis.
• Predictable terms of engagement through written fixed-term agreements.
• Social security benefits are available throughout the contract period.

4. Gig Workers

Codes that cover them: Social Security Code

Benefits

• Dedicated social security framework designed for gig-based work.
• Accident, disability, and health-support schemes are funded through the government and aggregators.
• Registration-based access to welfare benefits without traditional employment relations.
• Digital registration for access to future schemes.

5. Platform Workers

Codes that cover them: Social Security Code

Benefits

• Access to platform-specific welfare plans (health, social insurance, risk cover).
• Aggregators are required to contribute a percentage of turnover toward welfare funds.
• National and state-level welfare boards for improving scheme implementation.

6. Daily-Wage & Unorganized Sector Workers

Codes that cover them: Social Security Code, Code on Wages

Benefits

• Minimum wage and floor-wage protection across all categories of casual work
• Digital enrolment into unorganized-worker welfare programs
• Access to health, life insurance, skill-building, and construction-worker welfare schemes
• Access to state-level support

7. Women Workers

Codes that cover them: Social Security Code (maternity), Code on Wages, OSHWC Code

Benefits

• Expanded maternity and nursing benefits and childcare facility access, where mandated.
• Equal wage protection and gender-neutral job classifications. Permission to work night shifts with safety, transport, and consent requirements.
• Improved workplace hygiene, privacy, rest facilities, and welfare amenities.

8. IT, Remote & Knowledge Workers

Codes that cover them: Code on Wages, Social Security Code, OSHWC Code (as applicable)

Benefits

• Consistent wage calculations for bonuses, PF, and allowances.
• Eligibility for social security when engaged through covered establishments.
• Flexibility under standing-order models for remote and hybrid work setups.
• Duty-of-care standards for employer-managed workspaces or designated remote hubs.

9. Factory & Industrial Workers

Codes that cover them: OSHWC Code, Social Security Code, Code on Wages, Industrial Relations Code

Benefits

• Strict hazard-management rules and safety controls for manufacturing and industrial sites.
• Welfare amenities like canteens, rest areas, medical rooms, and protective equipment.
• Annual medical checks, working-hour standards, overtime rules, and shift safeguards.
• Clear industrial-relations procedures for disputes, layoffs, and re-skilling.

10. Apprentices & Trainees

Codes that cover them: Industrial Relations Code, Code on Wages, Social Security Code

Benefits

• Recognized classification with protected training terms and regulated stipend.
• Defined training hours and structure for skill-building.
• Access to select welfare measures and safety protections inside establishments.
• Safeguards against misuse of “trainee” status.

11. Audio/Visual Content Creators (Audio-Visual Workers)

Codes that cover them: OSHWC Code (dedicated chapter), Code on Wages

Benefits

• Mandatory written contracts stating wages, timelines, safety terms, and dispute process.
• Registration of each engagement with the designated authority.
• Clear rules for working hours, safe studio/production conditions, and welfare facilities.
• Secure electronic wage payments for transparency and auditability.

Structural & Regulatory Changes under the New Labour Codes

New Definition of Wages and the 50% Rule

Before the new labour laws came into effect, wages were primarily defined by the Payment of Wages Act, 1936, and the Minimum Wages Act, 1948. These definitions covered which components to include/exclude, but did not specify the 50% threshold. Under the code on wages, section 2(Y) specifies that basic pay, dearness allowance, and retaining allowance should not be less than 50% of total remuneration. Let’s understand this with an example.

• Old Way: Employers might set Basic at ₹20,000 and Allowances at ₹80,000. PF is only calculated on ₹20,000.
• New Rule: Allowances cannot exceed ₹50,000. The “excess” ₹30,000 from the allowances is added back to the wages. Your new “Wage” base for PF/Gratuity becomes ₹50,000.

National Floor Wage

Under the Minimum Wages Act, the concept of a national floor wage was advisory in nature. States could set minimum wages below the floor wage. Now, under the wage code, Section 9 empowers the Central Government to fix a National Floor Wage after consulting with the Central Advisory Board. This wage acts as a mandatory minimum threshold across India, ensuring that no state sets a minimum wage below this limit.

Gender Neutrality

Section 3 of The Code on Wages, 2019, prohibits discrimination in wages and recruitment for all genders. Earlier, the Equal Remuneration Act, 1976, only covered women, and in effect, did not prohibit discrimination against other genders. Additionally, section 43 of the OSHWC code removes employment restrictions on women by allowing them to work on night shifts with their consent. older labour laws like The Factories Act, 1948, and The Mines Act, 1952, prohibited women from working on night shifts.

Inspector-Cum-Facilitator System

Old labour laws like the Payment of Wages Act, the Minimum Wages Act, and the Contract Labor Act emphasized the punitive role of an inspector. Now, section 51 of the Code on Wages, 2019 establishes the ‘Inspector-cum-Facilitator’, replacing the traditional, punitive ‘Inspector’ role with one that primarily advises employers on compliance issues. The facilitator promotes a culture of voluntary compliance and transparency through a web-based inspection scheme and electronic records.

Mechanisms for Dispute Resolution

Before, the Industrial Disputes Act, 1947, limited internal grievance redressal committees to 6 members. The IR code expanded these committees to 10 members. The code also makes proportional representation of women mandatory. The 1947 act provided for only one woman in the GRC. Additionally, sections 4(10) and 53 (6) enable faster resolution by providing direct access to the tribunal.

Simplified Compliance

Before, fragmented laws like the Minimum Wages Act, 1948, and the Contract Labour (Regulation and Abolition) Act, 1970, required employers to maintain separate, manual registers for attendance, wages, and fines. Now, Section 123 of the Code on Social Security, 2020, and Rule 54 of the SS Rules, 2025, unify compliance into a single electronic return and standardized digital registers.

National OSH Board (Occupational Safety & Health)

Before, sector-specific laws like the BOCW Act, 1996, and the Mines Act, 1952, established separate advisory committees for construction and mining safety. Now, Section 16 of the OSHWC Code, 2020, replaces these with a single National Occupational Safety and Health Advisory Board to monitor standards across all sectors. Additionally, this Board is empowered to recommend research and frame unified safety rules for factories, docks, and plantations. Older labour laws relied on state-level inspections.

Social Security Board

Earlier, the Unorganized Workers’ Social Security Act, 2008, established a National Board, but its scope was limited to traditional unorganized sectors. Now, Section 6 of the Code on Social Security, 2020, creates a National Social Security Board that specifically includes gig and platform workers. Additionally, it advises on welfare schemes for life, disability, and health benefits for these previously excluded categories.

Employer Compliance Checklist

This is a checklist for improving compliance with the four new labour codes.

• Update employment contracts, as the new labour laws provide a number of new employee benefits and change criteria related to old benefits.
• Review the salary structure, and check your state’s labour commission’s website for updated minimum wages.
• Ensure proper wage breakup, as wage components like ESI and EPF are necessary to include even in the payslips of contract and gig workers.
• Ensure timely wage payment: even platform workers and contractual employees are entitled to timely wage payment under the new labour laws in India.
• Maintain employee records online: a unified process for registration is digital. So, storing employee records digitally can help improve efficiency.

From Compliance to Care: Redefining Worker Experience in India

The new labour laws in India not only improve compliance but also employee welfare. Provisions like unified processes for returns simplify compliance. Mandatory health check-ups improve employee health and well-being.

Additionally, social security coverage for gig, platform, unskilled, and contract workers can improve their living conditions. Mandatory appointment letters for all the workers, including audio-visual workers, ensure that employment is formalized, and all the workers receive benefits introduced under the four new labour codes.

FAQs

How do the New Labour Codes Affect Employers in India?

Manpower costs rise as at least 50 % of CTC must count as “wages,” increasing PF, gratuity, and other benefits. Compliance is simpler with single registration, unified returns, and retrenchment approvals now required only for 300+ workers.

What are the Key Labour Law Changes for Employees in 2026?

Workers, including gig, platform, contract, and fixed‑term staff, get extended social‑security coverage, mandatory appointment letters, timely wages, equal pay, and safe night shifts for women. Fixed‑term employees qualify for gratuity after one year.

How does the Minimum Wage Rule Change under the New Labour Codes?

The national floor wage prevents states from setting minimum pay below a baseline, standardizing wages across sectors. Coverage now extends to all workers, including informal and gig employees.

What is the 50% Wage Rule? What is Its Impact on Employees?

The 50% rule mandates that “wages” (Basic, DA, and Retaining Allowance) must comprise at least half of total remuneration. If other allowances exceed this 50% cap, the excess is added to the wage base. For employees, this improves long-term financial security.

How Can Employers Simplify Compliance under the New Codes?

The 29 old laws are consolidated into four codes, reducing complexity. Employers now need one registration and a unified annual return, cutting paperwork and streamlining compliance.

What are the Penalties for Non-Compliance with Labour Laws in 2026?

Minor procedural lapses are mostly decriminalized, with fines replacing jail for first-time breaches. Serious violations like unsafe conditions or non-payment of statutory benefits still attract heavy penalties.

How do the Labour Code Changes Affect Contract and Temporary Workers?

Contract and fixed‑term workers now get benefits similar to permanent staff, including social security, leave, and medical cover. Fixed-term employees are eligible for gratuity after one year, and gig/platform workers are formally covered under social security.

Are there any Regional Differences in Implementing the New Labour Laws 2026?

Labour is a concurrent subject. While central laws set minimum standards, states must enact rules individually, so some provisions vary regionally until state rules are finalized.

How Can HR Teams Prepare for the New Labour Law Compliance Requirements?

HR teams must reconfigure payroll to comply with the 50% wage rule, update contracts and job descriptions for fixed-term or gig workers, issue mandatory appointment letters, and implement digital compliance and reporting systems.

What are the Updated Gratuity Provisions under New Labour Laws in India 2026?

Fixed-term employees qualify for gratuity after one year instead of five. The redefined wage base increases payouts, ensuring higher gratuity payments when employees exit.

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