Labour Codes II: Revision Notes

The Codes replaced 29 central laws with inconsistent definitions, thresholds and registrations, following the Second National Commission on Labour (2002). The Code on Wages merged 4 laws, the IR Code 3, the Social Security Code 9 and the OSH Code 13. They came into force on 21 November 2025; draft central rules followed in December 2025 and final central rules on 8 May 2026. Central rules govern central undertakings, banks, insurers, railways, ports and mines; most private establishments follow state rules, which are still being notified.

The Code covers all employees, ending scheduled-employment limits on minimum wages and the wage ceiling on payment-of-wages protection. Wages = basic + DA + retaining allowance, with exclusions above 50% of total remuneration added back. Minimum wages are fixed by skill, area and conditions, as a daily rate (÷ 8 hourly, × 26 monthly), revised at least every five years, and cannot fall below the floor wage, which the Centre sets on minimum living standards (rate still to be notified; the old non-statutory level was ₹178 a day in 2019).

Wages must be paid by the 7th of the next month and within 2 working days of leaving; deductions are capped at 50%; overtime is paid at 2×. Equal remuneration now bars discrimination on gender, including transgender identity. The inspector-cum-facilitator advises before prosecuting; underpayment attracts a fine up to ₹50,000, and repeat offences within five years up to three months’ imprisonment and/or ₹1 lakh. Minor first offences can be compounded. Statutory bonus (8.33–20%, wages ≤ ₹21,000) now sits here, and the principal employer pays if a contractor defaults.

The Code keeps contributory insurance (EPF for 20+ employees, mandatory up to PF wages of ₹25,000 from 17 September 2026; ESI for 10+ employees with gross up to ₹21,000), employer liabilities (gratuity, maternity, employee compensation) and welfare funds. Gratuity: 15/26 × wages × years after five years; fixed-term employees after one year; ceiling ₹20 lakh.

Maternity: 80 days’ work in the previous 12 months; 26 weeks for the first two children (up to 8 before delivery), 12 weeks from the third; 12 weeks for adoption of a child under three months and for commissioning mothers; 6 weeks for miscarriage; work from home by agreement; crèche at 50+ employees within 1 km for children under six (or an agreed allowance of at least ₹500 per child); no dismissal during maternity absence. Employer funding outside ESI raises hiring-bias concerns.

Employee compensation for work injuries applies where ESI does not: death 50% of monthly wages × relevant factor (minimum ₹1.2 lakh); permanent total disablement 60% × relevant factor (minimum ₹1.4 lakh). Construction welfare is funded by a 1% cess on construction cost. Employers report vacancies to career centres.

Gig workers earn outside a traditional employment relationship; platform workers reach customers through online platforms. Both are recognised for social security but are not employees. Aggregators contribute 1–2% of annual turnover, capped at 5% of payments to workers, to a Social Security Fund. Workers aged 16+ register on e-Shram with Aadhaar; aggregators had to upload existing workers by 21 June 2026 and update joiners and exits via API. Benefits need 90 days with one aggregator or 120 days across several in the previous year. The 2025 Budget extended PM-JAY health cover to registered platform workers. Rajasthan (2023) and Karnataka (2025) passed state laws; Karnataka’s welfare-fee law was challenged by platforms but not stayed.

The OSH Code applies to establishments with 10+ workers and all mines and docks. A factory now needs 20 workers with power or 40 without (previously 10/20). One registration replaces many. Employers must issue appointment letters to all employees, provide a safe workplace, free annual health check-ups for specified workers (central rules: 40+ in docks, mines, construction), report accidents and provide welfare facilities above thresholds.

Working hours: an 8-hour normal day for daily-wage workers and 48 hours a week; states may allow longer days within 48 hours. Overtime is paid at 2×, needs consent and is capped at 144 hours a quarter (central rules). Annual leave: workers with 180 days in a year earn one day per 20 days worked (240 under the Factories Act). Women may work at night and in hazardous work with written consent, safe transport, facilities, CCTV and POSH compliance.

Contract-labour provisions apply at 50+ contract workers (previously 20), with an option of a single licence across states. Contract labour is barred in core activities except where such work is normally contracted in the industry, isn’t full-time, or meets a sudden surge. The principal employer must pay wages (and minimum bonus) if the contractor defaults and provides basic amenities on its premises; contract workers’ grievances go to a principal-employer committee, then the inspector after 30 days. Regularly employed contractor staff get at least a 2% annual increment. SAIL (2001): abolition does not mean automatic absorption, but sham contracts can be set aside. Contract-labour pay gaps and wage defaults were central to Maruti (2012) and Wistron (2020).

Inter-state migrant workers earning up to ₹18,000 get registration, an annual journey allowance, equal wages and portable benefits.

POSH grew from the Vishaka guidelines (1997). It protects an aggrieved woman (employed or not); “employee” includes interns, trainees and contract staff; “workplace” includes travel, client sites and employer transport. Harassment is judged by unwelcomeness and impact, not intent.

Every workplace with 10+ employees needs an Internal Committee: a senior woman as Presiding Officer, at least two employee members, one external member from an NGO or similar background, at least half women, terms up to three years. A district Local Committee handles smaller establishments and complaints against the employer.

Process: complaint within 3 months (extendable by 3); copy to the respondent within 7 working days and reply within 10; conciliation only at her request and never on money; inquiry with natural justice within 90 days; interim relief (transfer, up to three months’ leave, removing reporting lines); report in 10 days; employer action in 60 days including compensation from the respondent’s salary; appeal within 90 days. Only malicious complaints attract action; confidentiality is mandatory. Penalties: up to ₹50,000, doubled for repeats, with possible licence cancellation. Aureliano Fernandes (2023) pushed proper IC constitution; SHe-Box takes complaints online.

Outside the Codes: the Apprentices Act, 1961 (trainees on stipend under registered contracts; NAPS and NATS), state Shops and Establishments Acts (hours and leave for offices and shops), the Child and Adolescent Labour Act (no work under 14; no hazardous work for 14–18), the RPwD Act, 2016 (equal-opportunity policy and accommodation), the Transgender Persons Act, 2019 (non-discrimination, complaint officer) and the DPDP Act, 2023 for employee data.

HR’s agenda under the Codes: restructure pay for the wage definition; implement the EPF ceiling; issue appointment letters; meet payment and full-and-final deadlines; revise shift and overtime policies; put women’s night-shift safeguards in place; audit contractors monthly; register gig workers if an aggregator; maintain GRC (20+), Works Committee (100+) and IC (10+); move to new registers and returns; and track state rules.