New Labour Codes: A Compliance Guide for Employers

India’s labour landscape has entered a historic transition with the notification of the four consolidated Labour Codes—the Code on Wages (2019), Industrial Relations Code (2020), Code on Social Security (2020), and the Occupational Safety, Health and Working Conditions Code (2020)—effective 21 November 2025. Replacing 29 fragmented laws, the Codes unify wage regulations, hiring norms, social security, and workplace safety, into a single, modern framework. For employers, this is not merely a compliance guide but a fundamental reset in how workforces are structured, compensated, and protected.

However, while the central framework is in place, detailed implementation rules and operational compliance guidelines are still being issued by individual states. Employers must therefore watch for state-specific notifications on wage thresholds, social-security contributions, reporting formats, and safety standards before executing final changes. In the interim, employers would be well advised to strengthen HR and payroll readiness, formalise documentation, and align internal processes for rapid and compliant execution.

Code on Wages: Clarity and Accountability

The Code on Wages introduces a national floor wage and a uniform definition of “wages,” providing the much-needed clarity for employers who previously navigated overlapping and inconsistent regulations. Appointment letters, wage slips, and timely payments are now mandatory, formalising employment practices that were once informal.

For employers, this means updating payroll systems, revising salary structures, and ensuring compliance across all employee categories, including fixed-term and contract workers. Companies must also embed digital processes to generate accurate wage documentation and monitor timely disbursement. The new wage definitions would require recalibration of allowances and CTC structures, impacting statutory contributions and labour costs.

Industrial Relations Code: Flexibility Within Compliance

The Industrial Relations Code modernises hiring and employment termination norms while balancing flexibility and worker protection. It formalises fixed-term employment (FTE), granting parity in wages and benefits with permanent employees.

Employers now have a structured mechanism to manage seasonal, project-based, or gig-oriented workforce requirements while maintaining legal compliance. At the same time, stricter provisions around retrenchment, layoffs, and dispute resolution necessitate proactive HR governance. Companies must revise employment contracts, update termination policies, and strengthen internal communication channels to prevent industrial disputes. This code encourages organisations to adopt a formalised yet flexible workforce strategy that aligns operational needs with regulatory obligations.

Code on Social Security: Extending Benefits to All

For the first time, the Code on Social Security brings gig, platform, contract, and fixed-term workers under statutory benefit coverage, including PF, ESIC, gratuity, health insurance, and leave entitlements. Employers, particularly MSMEs and startups, must now contribute to social-security funds for previously excluded worker segments.

This expansion requires organisations to upgrade HR policies, payroll systems, and reporting mechanisms to ensure accurate tracking and timely contributions. While compliance increases labour costs, it also enhances employee trust and stability, improving retention and organisational credibility. Forward-looking companies can leverage this compliance guide to position themselves as employers of choice, attracting talent in a competitive market.

Occupational Safety, Health, and Working Conditions Code: Workplace Wellbeing

The OSH Code codifies workplace safety, working hours, and health provisions. Employers are mandated to implement an 8-hour workday, 48-hour workweek, overtime pay, safe night shifts for women, and annual health check-ups. This is particularly relevant for businesses with large contract or gig workforces where safety enforcement was historically inconsistent.

From an implementation perspective, companies must invest in safety infrastructure, monitor compliance, and train managers and employees on health and safety protocols. Integrating these requirements into HR, operations, and payroll systems ensures accountability and audit-readiness, reducing the risk of accidents, penalties, or legal disputes.

Strategic Implications for Employers

Taken together, the four Labour Codes require employers to modernise HR systems, revise payroll and compensation structures, formalise contracts, and strengthen workplace safety programs. While statutory labour costs may increase, compliance also brings tangible benefits: improved workforce stability, productivity gains, and enhanced organisational reputation.

The codes are an opportunity for employers to align workforce management with long-term business strategy. Early adoption not only ensures compliance but also positions companies to benefit from formalisation, transparency, and a capable, protected workforce—key drivers for growth, operational efficiency, and ESG credibility.

The new Labour Codes consolidate decades of labour legislation into a single, modern framework. For employers, success will depend on how quickly compliance is embedded into workforce strategy. Organisations that act early—modernising HR, payroll, contracts, and safety practices—will gain productivity, credibility, and long-term competitive advantage.