New Labour Codes: Every Employer Should Know

The four new Labour Codes came into effect from 21 November 2025, bringing major changes to the way wages, employment, social security and workplace conditions are managed. The four Codes replace and consolidate 29 existing Central labour laws.

Here are the major changes employers and HR professionals should know:

New Definition of Wages: The Labour Codes introduce a common definition of wages. If certain allowances exceed 50% of total remuneration, the excess amount is added back to wages for statutory calculations.

This can affect PF, gratuity and other employee benefits and may require companies to review their salary structures.

Minimum Wages for All Employees: Minimum wage protection has been extended to all categories of employees, rather than being limited to scheduled employments under the earlier system. A statutory floor wage will also act as a minimum benchmark.

Appointment Letters Became Mandatory: Employers are required to provide employees with a formal appointment letter, clearly establishing the terms and conditions of employment.

Social Security for Gig and Platform Workers: The Social Security Code formally recognises gig workers and platform workers and provides a framework for extending social security benefits to them. This is an important change for India's growing platform and gig economy.

Changes to Gratuity for Fixed-Term Employees: Fixed-term employees can become eligible for gratuity after completing one year of service under the fixed-term contract, instead of the traditional five year requirement applicable in the usual case.

Women Can Work in Night Shifts: Women can work in all types of establishments and in night shifts, subject to their consent and prescribed safety requirements. This creates greater flexibility for women working in sectors that operate beyond normal working hours.

Annual Health Check-Ups: The Occupational Safety, Health and Working Conditions Code provides for free annual health check-ups for employees above the specified age, as prescribed under the applicable rules.

Wider Social Security Coverage: The new framework expands social security coverage to different categories of workers, including unorganised, migrant, gig and platform workers, subject to the applicable schemes and provisions.

What Employers Should Do: HR and management teams should review their:

1. Salary structures and wage components 2. Employment and appointment letters 3. HR policies and employment contracts 4. Gratuity calculations 5. PF and ESI compliance 6. Records and registers 7. Working hours and overtime practices 8. Women night-shift policies and safety measures

Conclusion: The new Labour Codes represent a major change in India's employment framework. For employers, the focus should now be on reviewing existing HR practices, updating documentation and ensuring compliance with the new requirements. For employees, the Codes aim to provide stronger protection relating to wages, social security, safety and employment conditions.