Labour Codes: 9 Things HR Must Fix in the Next 90 Days
A practical 90-day checklist for HR teams to align with India's four Labour Codes, from wage structures to appointment letters and leave rules.
If you lead HR or payroll at an Indian company, the four Labour Codes are already in force and your 90-day list should start with the wage definition, not the paperwork.
Key facts at a glance
- All four Labour Codes (Wages, Industrial Relations, Social Security, Occupational Safety Health and Working Conditions) came into force on 21 November 2025.
- Central rules were pre-published in draft on 30-31 December 2025, with final central rules expected around April 2026.
- Labour is a concurrent subject, so each state must separately notify its own rules before the Codes are fully operational there.
- As of mid-2026, most states have not yet fully notified their rules, creating a patchwork of readiness across the country.
- The new wage definition requires basic pay plus dearness allowance to be at least 50 percent of total remuneration for compliance calculations.
- Employers should track their specific state's status rather than assume nationwide, uniform enforcement has begun.
Why "in force" does not mean "fully applicable" yet
The Codes are legally in force, but the practical experience for any given employer depends on whether their state has notified rules. This creates a gap between what the law says on paper and what a labour inspector will actually check on the ground today. HR teams that wait for "full clarity" risk being caught unprepared once their state does notify, because payroll systems and contracts cannot be redesigned overnight.
The safer approach is to treat the national commencement date as the trigger for internal readiness work, and treat state notification as the trigger for final enforcement. That way the 90-day window is used for building, not waiting.
The 9 fixes, in priority order
| Priority | Fix | Why it matters |
|---|---|---|
| 1 | Rework wage structure to the 50 percent basic-pay rule | Cascades into PF, gratuity, overtime and leave encashment |
| 2 | Reissue appointment letters for every employee | Mandatory under the OSH Code, including for existing staff |
| 3 | Recalculate gratuity accrual and eligibility | Fixed-term employees now accrue gratuity differently |
| 4 | Update overtime and working-hour policies | New caps and flexibility rules affect shift design |
| 5 | Review night-shift arrangements for women employees | Consent and safety conditions apply |
| 6 | Audit gig or platform worker arrangements | Aggregators have new social security obligations |
| 7 | Update standing orders and IR documentation | Industrial Relations Code changes classification thresholds |
| 8 | Refresh leave and layoff/retrenchment policies | Timelines and thresholds have shifted under the Codes |
| 9 | Track your state's rule-notification status monthly | Enforcement timing depends entirely on state action |
Where to start if you can only do three things
If the full list feels like too much for 90 days, prioritise the wage structure, appointment letters, and gratuity recalculation first. These three touch every employee on payroll, are the most visible to a labour inspector, and are the hardest to fix retroactively once payroll cycles have already run under the old structure for several months.
A note on payroll software
Most payroll vendors have already begun rolling out Labour-Code-compliant wage templates. Confirm with your vendor whether the 50 percent basic-pay rule is applied automatically or needs manual configuration, since a silent miscalculation here is the single most common compliance gap HR teams report.
What happens if you wait
Employers who delay past the 90-day mark typically face a compressed, higher-pressure scramble once their state notifies rules, because payroll changes require lead time for employee communication, system updates and, in many cases, renegotiation of CTC structures with existing staff. Retroactive fixes are also harder to defend during an audit than a documented, phased rollout.
If you are not sure where your business stands on Labour Code readiness, ComplianceCheck's labour code assessment gives you a clear picture in a few minutes.
Sources
- Ministry of Labour and Employment - labour.gov.in
- Employees' Provident Fund Organisation - epfindia.gov.in
- Employees' State Insurance Corporation - esic.gov.in
- Respective state labour department websites
This guide is general information, not legal advice. Requirements vary by state, sector and headcount - confirm specifics with a compliance professional or the relevant authority.
Frequently Asked Questions
- Are the Labour Codes actually in force right now?
- Yes, all four Labour Codes came into force nationally on 21 November 2025, but each state must also notify its own rules before they are fully operational there, so applicability is still uneven across states as of mid-2026.
- What is the single most urgent fix for HR teams?
- Reworking the wage structure so that basic pay plus dearness allowance equals at least 50 percent of total remuneration, since this single change cascades into PF, gratuity and overtime calculations.
- Do small companies need to comply with the Labour Codes too?
- Coverage thresholds vary by provision and by code, but many Labour Code obligations, including appointment letters and wage definition changes, apply well below the largest-employer thresholds, so most registered employers should check their exposure rather than assume exemption.
- Has every state notified its own Labour Code rules?
- No. As of mid-2026 most states have not yet fully notified their state-level rules, so employers should track their specific state's status rather than assume the Codes are fully operational everywhere.
- What happens if HR does not update appointment letters?
- The Occupational Safety, Health and Working Conditions Code requires a written appointment letter for every employee, so failing to issue one exposes the employer to compliance risk once the relevant state rules are enforced.
- Does the wage definition change affect take-home salary?
- Yes, because a higher basic pay under the new wage definition increases PF and gratuity contributions, which typically reduces the in-hand cash component of the same total cost to company.
- Where can HR teams check their state's Labour Code notification status?
- The Ministry of Labour and Employment's portal (labour.gov.in) and the respective state labour department website are the primary sources to track state-level rule notifications.
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.