Old Labour Acts vs New Labour Codes, Clause by Clause

The four new Labour Codes consolidate 29 old central labour acts into a single framework, and while they came into force nationally on 21 November 2025, most states have not yet finished notifying their own rules - so old and new frameworks are, in practice, coexisting during this transition.

Key facts at a glance

• All four Labour Codes (Wages, Industrial Relations, Social Security, OSH) came into force 21 November 2025.
• The Codes consolidate 29 separate central labour acts into 4.
• Central rules were pre-published in draft 30-31 December 2025; final Central rules were 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.
• The Code on Wages generally caps allowances at 50% of total remuneration for wage-definition purposes.
• The Industrial Relations Code extends the standing orders applicability threshold, bringing more establishments into scope.

Why the Consolidation Happened

Before the Codes, India's labour compliance landscape was spread across 29 distinct acts covering wages, industrial disputes, social security, and workplace safety, each with its own definitions, thresholds and filing requirements. The Labour Codes were designed to simplify this into four unified statutes: the Code on Wages, the Industrial Relations Code, the Code on Social Security, and the Occupational Safety, Health and Working Conditions Code. The goal was a single, more consistent set of definitions (like "wages" and "employee") across what used to be fragmented, sometimes inconsistent, legislation.

What Actually Changed, Area by Area

Wage Definition

Under the old acts, "wages" was defined differently across the Payment of Wages Act, the Minimum Wages Act, and others, creating ambiguity in what counted toward PF or gratuity calculations. The Code on Wages standardises this, generally capping non-wage allowances at 50% of total remuneration - meaning a higher share of CTC must now be treated as "wages" for statutory contribution purposes, which can increase PF and gratuity liability for structures that previously used heavy allowance components.

Industrial Relations and Standing Orders

The old Industrial Disputes Act and the Industrial Employment (Standing Orders) Act had thresholds that exempted many smaller establishments from formal standing orders and certain retrenchment procedures. The Industrial Relations Code extends applicability, meaning establishments that previously fell below the threshold may now need formally adopted standing orders and be subject to the Code's dispute-resolution and retrenchment framework.

Social Security Coverage

The old Employees' Provident Funds Act, Employees' State Insurance Act, and Payment of Gratuity Act (among others) are now folded into the Code on Social Security, with the EPF Scheme 2026 (effective 29 June 2026) aligning EPF administration with the new framework. The Rs 15,000/month EPF wage ceiling and 12%/12% contribution rates remain unchanged.

Occupational Safety and Working Conditions

The old Factories Act and related safety legislation are consolidated into the OSH Code, which standardises safety, health and working-condition requirements including provisions on working hours and welfare facilities across a broader range of establishments than some of the old acts individually covered.

Side-by-Side Comparison

What Employers Should Actually Do Right Now

Because the Codes are nationally in force but state rules are still incomplete, the safest approach is to track your specific state's notification status rather than assume either the old regime still fully applies or the new one is fully operational everywhere. Reviewing wage structures against the new allowance cap and checking whether your establishment now crosses the standing orders threshold are two concrete steps worth taking regardless of your state's current rule-notification status, since both changes are directionally certain even if the exact enforcement date in your state is not yet fixed.

If you are not sure how the Labour Codes affect your specific business, ComplianceCheck's labour code assessment gives you a clear picture in a few minutes.

Sources

• Ministry of Labour and Employment - labour.gov.in
• Respective state labour department notifications

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.