The four codes
| Code | Replaces, among others | Covers |
|---|---|---|
| Code on Wages, 2019 | Payment of Wages, Minimum Wages, Payment of Bonus and Equal Remuneration Acts | Wages, minimum wages, bonus, deductions and when pay is due |
| Industrial Relations Code, 2020 | Industrial Disputes, Trade Unions and Standing Orders Acts | Standing orders, fixed-term employment, layoffs, retrenchment and strikes |
| Code on Social Security, 2020 | EPF, ESI, Payment of Gratuity and Maternity Benefit Acts | PF, ESIC, gratuity, maternity benefit and gig workers |
| Occupational Safety, Health and Working Conditions Code, 2020 | Factories and Contract Labour Acts | Working hours, leave, safety, appointment letters and contract labour |
Pay and wages
- One definition of wages: basic, DA and retaining allowance, plus any allowances above 50% of total pay. It drives PF, ESIC, gratuity and bonus. The 50% rule explained.
- Pay on time: monthly wages by the 7th of the next month, and dues on leaving within two working days. Full and final settlement.
- Deductions capped at half of the month's wages.
- Overtime at twice the ordinary rate of wages.
- Equal pay for the same or similar work, with no discrimination on gender, including transgender employees.
- Minimum wages for everyone, not only listed industries. Minimum wages by state.
Joining, leave and working conditions
- An appointment letter for every employee, including existing staff who never received one.
- Earned leave after 180 days of work in a year (it was 240), at one day for every 20 days worked.
- Women may work night shifts with their consent and the safeguards the rules set out.
- A free yearly health check-up for employees of the age the rules prescribe.
Fixed-term staff, gratuity and exits
- Fixed-term employees get the same pay and benefits as permanent staff doing the same work, and gratuity after one year. Gratuity rules.
- Standing orders are needed from 300 workers (it was 100).
- Layoff, retrenchment and closure need government permission from 300 workers (it was 100).
- Re-skilling fund: a retrenched worker gets 15 days' wages through the fund, on top of retrenchment compensation.
- A grievance committee for establishments with 20 or more workers.
- Strike notice of 14 days applies to every establishment.
Social security
- PF applies from 20 employees and ESIC from 10, as before. ESIC rules.
- Maternity benefit and crèche rules carry over into the Code on Social Security. Maternity leave explained.
- Aggregators contribute to a social security fund for gig and platform workers.
Your checklist
- Check every salary structure against the 50% rule, and the PF, ESIC and gratuity wages that follow from it.
- Issue appointment letters to anyone who does not have one.
- Make sure salaries are paid by the 7th, and full and final settlements within two working days.
- Update the leave policy for earned leave after 180 days.
- Give fixed-term staff the same benefits, and gratuity after a year.
- Check that overtime is paid at twice the rate.
- Watch for your state's rules under the Codes, which fill in details such as registers, returns and forms.
How HR Bingo handles it
HR Bingo applies the Labour Code wages rule to PF, ESIC and gratuity in every payroll, makes an appointment letter when an employee is added, works out the full and final settlement so it can be paid within two working days, and pays overtime at the multiplier you set.
Sources
Frequently asked questions
When did the Labour Codes come into force?
All four came into force on 21 November 2025.
Do the Labour Codes reduce take-home pay?
They can. If allowances are more than half of total pay, the excess counts as wages for PF, so PF deductions can rise and take-home pay fall, unless PF is already capped at the wage ceiling. Retirement savings rise with it.
Do small companies have to follow the Labour Codes?
Yes. Wages, timely payment, appointment letters and equal pay apply to all. Other rules start at a headcount, such as ESIC at 10, PF at 20 and standing orders at 300.
Are state rules needed as well?
Yes. The Codes leave forms, registers and many details to central and state rules, so check your state's rules too.