Labour Codes 2025: What Every Indian Employer Must Do
A plain-English checklist for India's 4 new Labour Codes — what changes for wages, working hours, leave and social security, and how to prepare before they take effect.
India is consolidating 29 existing labour laws into 4 new Labour Codes. Together they change how almost every employer handles wages, working hours, leave, and social security. This guide explains what is changing and gives you a checklist to prepare.
The 4 Labour Codes at a glance
| Code | What it covers |
|---|---|
| Code on Wages, 2019 | Minimum wages, timely payment, a single definition of "wages", equal remuneration |
| Code on Social Security, 2020 | EPF, ESI, gratuity, and new coverage for gig and platform workers |
| Occupational Safety, Health & Working Conditions Code, 2020 | Working hours, overtime, leave, safety, and worker welfare |
| Industrial Relations Code, 2020 | Standing orders, retrenchment, trade unions, and dispute resolution |
What actually changes for employers
A single definition of "wages"
The Codes introduce one definition of wages across PF, gratuity and other benefits. As a rule, allowances cannot exceed 50% of total remuneration — the rest must count as "wages". For many companies this raises the wage base used to calculate PF and gratuity, increasing both cost and take-home structure complexity.
Working hours and overtime
- Daily working hours are capped (typically 8 hours), with the option of a longer day offset by a shorter week.
- Overtime must be paid at twice the ordinary rate, and overtime hours are capped per quarter.
Leave
Employees generally become eligible for annual leave after 180 days of work in a year (down from 240), accruing roughly 1 day of leave for every 20 days worked.
Social security expansion
Gratuity rules ease for fixed-term employees, and gig/platform workers gain a framework for social security contributions.
Your readiness checklist
- Recalculate your wage structure so allowances stay within 50% of total remuneration.
- Re-estimate PF and gratuity costs on the new wage base.
- Review working-hour and overtime policies against the new caps.
- Update leave policy for the revised accrual and carry-forward rules.
- Check applicability thresholds — standing orders, for example, typically apply at 300+ workers.
- Refresh appointment letters and HR policies to reflect the new definitions.
- Budget for implementation — payroll changes, system updates, and potential increases in statutory contributions.
When do the Labour Codes take effect?
The Codes have been passed and rules largely drafted; the government is rolling out implementation, expected from November 2025. Because the wage-definition change ripples through payroll, PF and gratuity, it is worth modelling the impact now rather than waiting.
This guide is general information, not legal advice. Applicability depends on your state, industry and headcount.
Check your status
Labour Code Readiness
Readiness assessment for India's 4 new Labour Codes (Wages, Social Security, OSH, Industrial Relations), with implementation cost estimates.