New Labour Codes India 2026 — What Every HR Professional Must Know

When the four Labour Codes were first announced, most HR teams I spoke to treated them as a distant compliance concern — something to deal with "when they're implemented." In 2026, they are a live compliance reality. This is what every HR professional in India needs to understand right now.

India's labour law landscape is undergoing its most significant transformation since Independence. The four Labour 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 — consolidate 29 central labour laws into four.

For HR professionals, this is not an academic exercise. These codes are being notified and implemented across states in 2026, and the compliance implications are significant.

Why the Labour Codes Matter

The stated objectives of the Labour Codes are to simplify compliance, extend protections to more workers (including the unorganised sector and gig workers), and create a regulatory framework suited to a 21st century economy. Whether these objectives are achieved will depend on implementation — but the compliance obligations on employers are real and immediate.

The Four Labour Codes — What Each One Does

1. The Code on Wages 2019

This is the most immediately impactful code for most HR teams. It consolidates the Minimum Wages Act, the Payment of Wages Act, the Payment of Bonus Act, and the Equal Remuneration Act.

The most significant change: the definition of wages. The Code defines wages to include basic pay, dearness allowance, and retaining allowance — and excludes bonuses, HRA, conveyance, and certain other allowances only if these exclusions together do not exceed 50% of total remuneration. In practical terms, this means basic salary must be at least 50% of CTC for most employees.

Other key provisions: F&F settlement must be paid within two working days of the last working day. Overtime must be paid at twice the normal rate for hours worked beyond the standard working day.

Also read: New Salary Structure Compliance Checklist under Labour Codes

2. The Industrial Relations Code 2020

This consolidates the Industrial Disputes Act, the Trade Unions Act, and the Industrial Employment (Standing Orders) Act. Key changes:

• Fixed-term employment is recognised as a formal employment category — fixed-term employees are entitled to the same wages and statutory benefits as permanent employees, and to pro-rata gratuity
• The threshold for prior government approval before retrenchment or closure is raised from 100 to 300 workers
• Standing orders are now mandatory only for establishments with 300 or more workers (up from 100)
• Reskilling fund — employers must contribute 15 days wages per retrenched worker to a national reskilling fund

3. The Social Security Code 2020

This consolidates the EPF Act, the ESI Act, the Gratuity Act, the Maternity Benefit Act, and several other social security statutes. Key provisions:

• Gratuity: fixed-term employees are entitled to pro-rata gratuity regardless of whether they have completed five years of service
• Gig workers and platform workers: for the first time, gig workers are entitled to social security benefits — the specifics are to be determined by the Central Government
• Maternity benefit: the 26-week paid maternity leave provision is retained

4. The Occupational Safety Health and Working Conditions Code 2020

This consolidates 13 statutes including the Factories Act. Key provisions:

• Working hours: maximum 8 hours per day and 48 hours per week, with overtime at twice the normal rate
• Annual leave: one day for every 20 days worked — the leave accumulation rules have been rationalised
• Health and safety: expanded obligations on employers for health and safety management

What HR Must Do Now

Audit your salary structure: Is basic salary at least 50% of CTC for all employees? If not, restructure immediately. The PF and gratuity implications of the 50% rule are significant.

Review your F&F process: Can you settle F&F within two working days? If your current process takes 30-45 days, build a faster process now.

Update your employment contracts: Fixed-term employment contracts need to reflect the new entitlements under the Industrial Relations Code.

Review standing orders: If you have fewer than 300 workers, standing orders are no longer mandatory — but having a documented code of conduct and disciplinary policy is still best practice.

Plan for gig worker social security: If your organisation uses gig workers or platform workers, the social security obligations will crystallise once the Central Government notifies the relevant rules.

Also read: HR Audit Checklist for Indian Companies 2026

Labour Code Compliance Checklist

• Basic salary is at least 50% of CTC for all employees
• F&F settlement process is capable of settling within two working days
• Overtime is paid at twice the normal rate
• Fixed-term employment contracts updated for new entitlements
• Pro-rata gratuity process in place for fixed-term employees
• State-specific rules checked — states have flexibility in notifying rules
• Gig worker arrangements reviewed for social security implications

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