The Four Labour Codes — Overview
Since 21 November 2025, Indian employment law has run on four Labour Codes. They replace 29 separate acts with a single, simpler framework. This page explains what changed and what you need to do about it. Read the specific compliance pages for the current rates and worked calculations.
The four Codes
Section titled “The four Codes”| Code | Covers |
|---|---|
| Code on Wages, 2019 | Minimum wages, payment of wages, bonus, equal remuneration |
| Industrial Relations Code, 2020 | Trade unions, standing orders, fixed-term employment, lay-off, retrenchment, closure |
| Code on Social Security, 2020 | PF, ESI, gratuity, maternity, and welfare funds; gig and platform workers |
| OSHWC Code, 2020 | Working hours, leave, safety, health, working conditions, contract labour |
The central rules under all four Codes were notified in May 2026. Labour is a concurrent subject, so each state also frames rules. Most states have notified theirs; where a state has not, the earlier rules continue during the transition.
The new wage definition
Section titled “The new wage definition”This is the change with the widest impact. Under the Wage Code, wages now include most cash allowances. Basic wages must be at least 50% of total wages. The Code codifies the Vivekananda Vidyamandir principle: an allowance paid universally, necessarily, and ordinarily to all employees is really basic wages, whatever it is called.
A fixed amount paid to every worker — a special allowance, retention allowance, or fixed dearness allowance — counts toward wages. Because the wage base is larger, PF, ESI, gratuity, and bonus are all calculated on a higher figure.
Worked example
Section titled “Worked example”An employee’s monthly pay is ₹30,000:
| Component | Old structure | Code-compliant structure |
|---|---|---|
| Basic | ₹12,000 (40%) | ₹15,000 (50%) |
| HRA | ₹8,000 | ₹8,000 |
| Special allowance | ₹10,000 | ₹7,000 |
| Total | ₹30,000 | ₹30,000 |
Under the old structure, PF was calculated on ₹12,000. The special allowance was excluded. Under the Code, the special allowance counts as wages, and basic must be at least 50%. So the employer restructures to Basic ₹15,000, and PF is calculated on ₹15,000. The employee’s take-home does not fall; the statutory base rises.
What to do: review every salary structure. If basic is below 50% of total pay, restructure it. Keep records of the basis you used, because inspectors will test it.
Working hours and overtime
Section titled “Working hours and overtime”The Code sets a normal working week of up to 48 hours and requires at least one rest day a week. Overtime is paid at twice the normal rate of wages. Working hours and leave rules are set under the OSHWC Code and state rules, which can be more generous.
Fixed-term employment
Section titled “Fixed-term employment”The Industrial Relations Code recognises fixed-term employees. They must receive the same wages, benefits, and working conditions as permanent workers doing the same work. In return, the employer can end the fixed-term contract when the term ends, without retrenchment compensation.
Gig and platform workers
Section titled “Gig and platform workers”The Social Security Code defines gig workers and platform workers for the first time. Aggregators must register them and will contribute to a social security fund. The planned contribution is 1–2% of the aggregator’s annual turnover, capped at 5% of the amounts paid to such workers. The fund and its rates are not yet notified. See Gig and Platform Workers.
What employers must change
Section titled “What employers must change”- Appointment letters are now mandatory for every worker.
- One establishment, one registration replaces separate registrations under the old acts, through a single portal.
- Restructure wages so basic is at least 50% of total wages.
- Reclassify staff — fixed-term, contract, gig, and platform workers each carry their own obligations.
- Track working hours and pay overtime at double the normal rate.
- Watch for the floor wage, a national minimum the central government will fix; state minimum wages must sit at or above it. It is not yet notified.
State readiness
Section titled “State readiness”Most states and union territories have notified rules under all four Codes. As of mid-2026, the states that still have rules in draft for some Codes are Tamil Nadu, West Bengal, Kerala, and Delhi. Check the rules for each state you operate in, because thresholds and procedures differ.