The Government of India has enacted four new labour codes consolidating 29 central labour laws. These codes – the Code on Wages, 2019, the Industrial Relations Code, 2020, the Social Security Code, 2020, and the Occupational Safety, Health and Working Conditions Code, 2020 – have been implemented with effect from April 1, 2026, after the finalization of rules by the central and state governments.
At Hashmi Law Associates (HLAPL), we advise corporate clients on labour law compliance. This comprehensive guide explains the key provisions of the four codes, changes from previous laws, compliance requirements, and penalties for non-compliance.
1. Overview of the Four Labour Codes
The four labour codes replace 29 central labour laws and harmonize labour regulations across India. Here is a summary of each code:
| Code | Enactment | Replaced Laws | Effective Date |
|---|---|---|---|
| Code on Wages, 2019 | August 8, 2019 | 4 laws (Payment of Wages Act, Minimum Wages Act, etc.) | April 1, 2026 |
| Industrial Relations Code, 2020 | September 28, 2020 | 3 laws (Industrial Disputes Act, Trade Unions Act, etc.) | April 1, 2026 |
| Social Security Code, 2020 | September 28, 2020 | 9 laws (EPF Act, ESI Act, Maternity Benefit Act, etc.) | April 1, 2026 |
| OSH Code, 2020 | September 28, 2020 | 13 laws (Factories Act, Contract Labour Act, etc.) | April 1, 2026 |
Citation: Code on Wages, 2019 (Act No. 29 of 2019); Industrial Relations Code, 2020 (Act No. 35 of 2020); Social Security Code, 2020 (Act No. 36 of 2020); OSH Code, 2020 (Act No. 37 of 2020).
2. Code on Wages, 2019 – Key Changes for Employers
2.1 Universal Definition of "Wage"
For the first time, the Code on Wages provides a universal definition of "wage" applicable across all industries. Wage includes basic pay, dearness allowance, and retaining allowance, but excludes:
- Bonus payable under any law or contract
- Value of any house accommodation, supply of light, water, medical attendance
- Contribution to pension or provident fund
- Conveyance allowance (up to prescribed limit)
- House rent allowance
Threshold: Wage cannot be less than 50% of gross salary – a key change from previous laws.
2.2 National Floor Level Minimum Wage
The central government sets a national floor level minimum wage, which states must adopt or set higher rates. As of April 2026, the national floor wage is ₹375 per day (approximately ₹9,750 per month).
2.3 Payment of Wages Timelines
- Establishments with less than 1,000 employees: wages to be paid by the 7th of the following month
- Establishments with 1,000 or more employees: wages to be paid by the 10th of the following month
- No wage period can exceed one month
- Deductions from wages permitted only for specified reasons (fines, absence, damage to property, advance payments, etc.)
2.4 Equal Remuneration
The Code prohibits discrimination in wages on grounds of gender. Employers must pay equal wages to men and women performing similar work or work of similar nature.
2.5 Bonus Provisions
The Code on Wages consolidates bonus provisions (previously governed by the Payment of Bonus Act). Key provisions include:
- Eligibility: Employees earning up to ₹21,000 per month
- Minimum bonus: 8.33% of wages or ₹100, whichever is higher
- Maximum bonus: 20% of wages
- Exclusions: Employees of LIC, RBI, etc.
Citation: Code on Wages, 2019, Sections 2(y) – definition of wage; Section 6 – payment of wages timeline; Section 3 – national floor wage.
3. Industrial Relations Code, 2020 – Key Changes for Employers
3.1 Standing Orders – Threshold Reduced
The threshold for mandatory standing orders has been reduced from 100 to 300 employees. Establishments with 300 or more workers must have certified standing orders covering classification of workers, shift timing, leave, termination, disciplinary action, and grievance redressal.
3.2 Fixed-Term Employment Introduced
The Code formally recognizes fixed-term employment, allowing employers to hire workers for a specific period without the obligation of permanent employment. Key features:
- Fixed-term employees are entitled to the same benefits as permanent employees (proportionate to service period)
- No requirement to pay severance or retrenchment compensation on expiry of term
- All statutory benefits (EPF, ESI, bonus) apply to fixed-term employees
- Fixed-term contract can be for any duration as agreed between parties
3.3 Threshold for Closure, Lay-off, and Retrenchment
| Action | Previous Threshold (Industrial Disputes Act) | New Threshold (Industrial Relations Code) |
|---|---|---|
| Lay-off / Retrenchment | 100+ workers (prior permission required) | 300+ workers (prior permission required) |
| Closure | 100+ workers (prior permission required) | 300+ workers (prior permission required) |
| Lay-off compensation | 50% of basic + DA | 50% of wages (including allowances) |
| Retrenchment compensation | 15 days wages per completed year | 15 days wages per completed year (unchanged) |
3.4 Re-skilling Fund for Retrenched Workers
Employers retrenching workers must contribute to a re-skilling fund established by the central government. The contribution is 15 days' wages for each year of service (in addition to retrenchment compensation).
3.5 Recognition of Trade Unions
The Code introduces provisions for recognition of trade unions at the central and state level, with a defined procedure for verification of membership and recognition.
Citation: Industrial Relations Code, 2020, Sections 2(k) – fixed-term employee; Section 14 – standing orders; Section 25 – closure permission threshold; Section 27 – re-skilling fund.
4. Social Security Code, 2020 – Key Changes for Employers
4.1 Social Security for Gig Workers and Platform Workers
For the first time, the Code extends social security benefits to gig workers (Uber, Ola, Zomato, Swiggy, etc.) and platform workers. Aggregators must contribute 1-2% of their annual turnover (up to a maximum of 5% of the value of each transaction) towards a social security fund for gig workers.
4.2 Universal Social Security
The Code provides for social security coverage to self-employed workers, unorganized workers, and gig/platform workers through a Social Security Fund.
4.3 EPF and ESI Changes
- EPF wage ceiling: Increased from ₹15,000 to ₹21,000 per month (employer contribution: 12%)
- ESI wage ceiling: Increased from ₹21,000 to ₹24,000 per month (employer contribution: 3.25%)
- Aadhaar linking: Mandatory for availing social security benefits
4.4 Maternity Benefit
- 26 weeks of paid maternity leave (12 weeks for commissioning/surrogacy mothers)
- 6 weeks for women who have two or more surviving children
- Establishments with 50+ employees must provide creche facility (within walking distance)
- Paternity benefit: 15 days of paternity leave (new provision under the Code)
4.5 Employee Deposits Linked Insurance (EDLI)
EDLI benefits (life insurance cover under EPF) are extended to all EPF members. The benefit amount is up to ₹7 lakh (increased from ₹6 lakh).
Citation: Social Security Code, 2020, Sections 2(35) – gig worker; Section 2(60) – platform worker; Section 112 – social security fund for gig workers.
5. Occupational Safety, Health and Working Conditions (OSH) Code, 2020
5.1 Applicability
The OSH Code applies to establishments with 10 or more workers (previously 20+ for most laws). For hazardous industries, the threshold is 5 or more workers.
5.2 Annual Health Check-ups
Employers must provide annual health check-ups for all employees (previously required only for certain categories).
5.3 Working Hours and Overtime
- Maximum daily working hours: 9 hours (including overtime)
- Maximum weekly hours: 48 hours (standard) / 48-54 hours (with overtime)
- Overtime wages: twice the ordinary rate of wages
- Maximum overtime: 125 hours per quarter (no change from previous laws)
5.4 Leaves and Holidays
- Annual leave: One day for every 20 days worked (18 days for certain industries)
- Sick leave: 12 days per year (new provision)
- Casual leave: 12 days per year (new provision)
- National and festival holidays: At least 8 paid holidays per year
5.5 Contractor and Inter-state Migrant Workers
- Principal employer liable for any unpaid wages of contract labour
- Inter-state migrant workers must be provided journey allowance, displacement allowance, and free housing for 3 months
- Contractor must provide safety equipment and maintain registers
6. Penalties Under the New Labour Codes
The new codes have significantly increased penalties for non-compliance. Key penalties include:
| Violation | Previous Penalty | New Penalty |
|---|---|---|
| Failure to pay wages on time | ₹1,000-2,000 | ₹5,000-50,000 + interest |
| Contractor not registering under Code | ₹1,000 | ₹10,000-50,000 |
| Illegal lay-off/retrenchment | ₹1,000 per day | ₹50,000-1,00,000 + possible imprisonment |
| Failure to provide social security | ₹1,000-5,000 | ₹10,000-1,00,000 |
| Discrimination in wages (gender) | ₹5,000 | ₹25,000-1,00,000 + possible imprisonment |
Citation: Social Security Code, 2020, Section 134; Industrial Relations Code, 2020, Section 84; OSH Code, 2020, Section 126.
7. Compliance Checklist for Employers (2026)
- ☐ Update employment contracts to comply with fixed-term employment provisions
- ☐ Register under the relevant codes (if not already registered under replaced laws)
- ☐ Update wage structure to ensure "wage" is at least 50% of gross salary
- ☐ Ensure wages are paid within prescribed timeline (7th or 10th of month)
- ☐ Calculate bonus eligibility under new threshold (₹21,000 per month)
- ☐ Update standing orders if establishment has 300+ workers
- ☐ Verify EPF/ESI contributions under increased wage ceilings (₹21,000 / ₹24,000)
- ☐ Provide creche facility if 50+ employees
- ☐ Conduct annual health check-ups for all employees
- ☐ Maintain registers and display notices as required by the codes
- ☐ File annual returns under the Social Security Code
- ☐ For aggregators (Uber, Zomato, etc.), contribute to gig worker social security fund
8. How HLAPL Can Help with Labour Law Compliance
At Hashmi Law Associates (HLAPL), we offer comprehensive labour law compliance services:
- Labour Law Audit: Complete review of your HR policies, employment contracts, and compliance with the four codes
- Policy Drafting: Updated HR policies, standing orders, and employment contracts under the new codes
- Registration Assistance: Registration under the codes and obtaining licenses for contractors
- Compliance Management: Ongoing advice on wage payments, social security contributions, and leave management
- Inspection and Investigation: Representation during labour inspections and investigations
- Litigation: Representation before labour courts, tribunals, and appellate authorities
- Employee Training: Training programs on employee rights and employer obligations under the new labour codes
Contact our employment law experts in New Delhi for a comprehensive labour law compliance audit.
Citation: Code on Wages, 2019 (Act No. 29 of 2019); Industrial Relations Code, 2020 (Act No. 35 of 2020); Social Security Code, 2020 (Act No. 36 of 2020); Occupational Safety, Health and Working Conditions Code, 2020 (Act No. 37 of 2020); Code on Wages (Central) Rules, 2026; Social Security (Central) Rules, 2026; OSH (Central) Rules, 2026; Ministry of Labour and Employment Notifications, 2026.