India's four labour codes, the Code on Wages 2019, the Industrial Relations Code 2020, the Code on Social Security 2020 and the Occupational Safety, Health and Working Conditions Code 2020, came into force on 21 November 2025 and replaced 29 central labour laws. The central rules were notified on 8 May 2026. Key changes include a uniform definition of wages with the 50 percent rule, gratuity for fixed-term employees after one year, social security for gig and platform workers, and mandatory appointment letters.
India’s labour law used to be spread across 29 central Acts, some dating back to the 1920s, with different definitions of wages, worker and establishment in each. The four labour codes consolidate them. They were passed by Parliament in 2019 and 2020, came into force on 21 November 2025, and the Centre notified its final rules on 8 May 2026. States, which share the subject under the Concurrent List, have been notifying their own rules. This guide explains what has changed and what it means for your salary slip.
The four codes and the laws they replace
| Code | Laws subsumed |
|---|---|
| Code on Wages, 2019 | Payment of Wages Act 1936, Minimum Wages Act 1948, Payment of Bonus Act 1965, Equal Remuneration Act 1976 |
| Industrial Relations Code, 2020 | Trade Unions Act 1926, Industrial Employment (Standing Orders) Act 1946, Industrial Disputes Act 1947 |
| Code on Social Security, 2020 | EPF Act 1952, ESI Act 1948, Employees’ Compensation Act 1923, Maternity Benefit Act 1961, Payment of Gratuity Act 1972, and four others including the Unorganised Workers’ Social Security Act 2008 |
| Occupational Safety, Health and Working Conditions Code, 2020 | 13 laws including the Factories Act 1948, Mines Act 1952, Contract Labour Act 1970, Inter-State Migrant Workmen Act 1979 and the Working Journalists Act 1955 |
1. A single definition of wages and the 50 percent rule
This is the change most salaried people will notice. All four codes use one definition of wages. It includes basic pay, dearness allowance and retaining allowance. Some components are excluded, such as house rent allowance, conveyance, overtime, bonus and employer contributions to PF. The key rule is that if the excluded components add up to more than 50 percent of total pay, the excess is added back and treated as wages.
Why it matters: provident fund contributions, gratuity and some other benefits are calculated on wages. Employers who kept basic pay low and allowances high will see wages rise for these calculations. For many employees this means higher PF and gratuity savings, and in some cases a lower monthly take-home, depending on how the employer restructures the salary.
2. Minimum wages and a national floor wage
Minimum wages now apply to all employees, not only to scheduled employments as under the old Act. The Centre will set a national floor wage, and states cannot fix their minimum wages below it. Wages must be paid on time: by the 7th of the following month for monthly wages, and within two working days of resignation or removal for final settlement.
3. Gratuity for fixed-term employees after one year
Under the old Gratuity Act, you needed five years of continuous service. Under the Code on Social Security, fixed-term employees become eligible for proportionate gratuity after one year of service. The five-year rule continues for permanent employees. The IR Code also formally recognises fixed-term employment, and fixed-term workers must get the same wages and benefits as permanent workers doing the same work.
4. Social security for gig and platform workers
For the first time, the law defines gig workers, platform workers and aggregators. Food delivery, ride-hailing and similar platforms must contribute 1 to 2 percent of their annual turnover, capped at 5 percent of the amount paid to gig and platform workers, to a social security fund. Schemes under this fund can cover life and disability cover, accident insurance, health and maternity benefits and old age protection. Workers register on the e-Shram portal to get a universal account number. See our e-Shram registration guide.
5. Appointment letters and health check-ups
Every employer must issue an appointment letter to every employee. Employers in covered establishments must provide a free annual health check-up for workers above an age notified by the government. ESIC coverage has been extended across the country, including to establishments with even one worker in hazardous processes on a voluntary or notified basis.
6. Working hours and overtime
The OSH Code keeps the limit of 8 hours a day and 48 hours a week. Rules allow flexibility, such as longer shifts on fewer days, as long as the weekly limit is not crossed. Overtime is paid at twice the normal rate of wages and needs the worker’s consent. Women can work night shifts in all establishments with their consent and with safety arrangements provided by the employer.
7. Layoffs, retrenchment and strikes
- Factories, mines and plantations need government permission for layoff, retrenchment or closure only if they employ 300 or more workers, up from 100. States can raise this threshold further.
- Standing orders on conditions of service are required only for establishments with 300 or more workers.
- Workers in all industrial establishments must give 14 days’ notice before a strike, a rule that earlier applied only to public utility services.
- Retrenched workers get 15 days’ wages from a new worker re-skilling fund, in addition to retrenchment compensation.
8. Other threshold changes
- Factory definition: 20 or more workers with power, up from 10, and 40 or more without power, up from 20.
- Contract labour provisions apply to establishments with 50 or more contract workers, up from 20.
- Inter-state migrant workers get an annual journey allowance and portability of ration and benefits.
What employees should check now
- Look at your salary structure. If allowances other than HRA and conveyance are more than half your pay, your PF wage may change.
- Make sure you have an appointment letter.
- If you are on a fixed-term contract, note that gratuity now applies after one year.
- If you are a gig or platform worker, register on e-Shram.
- Check your state’s labour rules, since states can set different thresholds and procedures.
What employers should check
- Restructure pay to comply with the 50 percent wage rule and recalculate PF, ESI and gratuity liabilities.
- Issue appointment letters to all employees and update records under the single registration and return system.
- Review working hours, overtime and women’s night shift policies against the OSH Code and state rules.
- Update full and final settlement processes to meet the two-day timeline.
Criticism
Trade unions argue that raising the layoff and standing orders thresholds to 300 weakens job security in most factories, that strike restrictions limit collective bargaining, and that gig worker benefits depend on schemes the government has yet to design fully. Industry bodies argue the codes reduce compliance costs and encourage formal hiring.
Sources
- Code on Wages, 2019; Industrial Relations Code, 2020; Code on Social Security, 2020; Occupational Safety, Health and Working Conditions Code, 2020 (labour.gov.in)
- Ministry of Labour and Employment notifications bringing the codes into force from 21 November 2025, and central rules notified on 8 May 2026
Last updated: 23 September 2026. Details of state rules vary. Check your state labour department for local provisions.
Frequently asked questions
When did the new labour codes come into force?
All four labour codes came into force on 21 November 2025. The central rules under them were notified on 8 May 2026.
How many labour laws do the four codes replace?
They replace 29 central labour laws: 4 under the Code on Wages, 3 under the Industrial Relations Code, 9 under the Code on Social Security and 13 under the OSH Code.
What is the 50 percent wage rule in the labour codes?
If excluded components like HRA, conveyance and bonus exceed 50 percent of total remuneration, the excess is added to wages. This affects calculations of PF, gratuity and other benefits.
Is gratuity now payable after one year?
For fixed-term employees, yes. They are eligible for proportionate gratuity after one year of service. Permanent employees still need five years of continuous service.
Do the labour codes cover gig workers?
Yes. The Code on Social Security defines gig and platform workers and requires aggregators to contribute 1 to 2 percent of turnover, capped at 5 percent of payments to such workers, to a social security fund.