Alert

Final Central Rules notified under all four Labour Codes

Background

The notification of the final Central Rules under the four Labour Codes marks a significant milestone in India’s labour law reform framework. The Rules operationalise key aspects under the Code on Wages (‘CoW’), Industrial Relations Code (‘IRC’), Occupational Safety, Health and Working Conditions Code (‘OSHWC’) and the Code on Social Security (‘COSS’). While several states are yet to finalise their corresponding State Rules, organisations falling under the Central Government’s jurisdiction may need to immediately ensure compliance with Labour Codes.

Applicability and coverage

The Central Rules will apply primarily to establishments where the Central Government acts as the appropriate authority, including sectors such as banking, insurance, telecommunications, mines, air transport services, railways (including metro, mines, oilfields & major ports) and central Public Sector Undertakings.

In addition, the Social Security framework has broader relevance for organisations operating in multiple states. Such organisations are required to follow the Central Rules issued under COSS for all the matters covered under COSS.

Key updates under Code on Wages (Central) Rules, 2026:

1. Overtime
The overtime provision under CoW is applicable to an employee whose minimum rate of wages has been fixed under this Code. If such an employee works on any day in excess of the number of hours constituting a normal working day, the employer is required to pay him/her overtime for such additional hours at a rate not less than twice the normal rate of wages.

2. Deductions from wages

As per the draft rules, the employer was required to provide intimation to inspector cum facilitator for recovery of any damages from the employee. As per the final rules, such prior intimation is to be given to the employee only and not to the inspector.

3. Formats for key register/ forms prescribed:

  • Form I:  Employee Register
  • Form IV: Register of Wages, Overtime, Advances, Fines & Deductions for Damages and Loss
  • Form V: Wage Slip Format
  • Form IX: Attendance Register cum Muster Roll

4. Floor wages: The manner of fixing the floor wage by the Central Government is prescribed in the rule. However, the floor wage limits for different skill categories are not yet notified.

Key updates under Code on Social Security (Central) Rules, 2026:

1. Definition of wages for gratuity:

The final Social Security Rules do not retain the detailed exclusions proposed under the draft Rules for determining ‘wages’ for gratuity purposes. Accordingly, in order to assess the impact of the definition of ‘wages’, employers may need to look at the definition as provided under the Codes and read with the relevant FAQs issued by the Ministry of Labour & Employment to date.

2. Gig and platform worker registration:

Aggregators are required to register gig and platform workers on the designated portal within the prescribed timeline of 45 days. This indicates the Government’s intent to operationalise social security coverage for such workers.

3. Parental benefit provisions: The employer is required to create a provision of creche facility with CCTV, trained staff and emergency arrangements for employees (of either gender) in the establishment, and if such facility is not provided, the employer is required to pay creche allowance of at least INR 500 per month per child. 

Key Updates under Occupational Safety, Health and Working Conditions (Central) Rules, 2026:

1. Working hours and overtime: The OSHWC Rules prescribe the requirement of payment of overtime to workers at twice the rate of wages if they work beyond normal working hours. No additional requirements are prescribed in the Rules with respect to overtime payment.

2. Contract labour compliance: The Rules introduce enhanced obligations on principal employers and contractors relating to payment of wages, minimum bonus, contractor settlements, experience certificates and common licensing mechanisms.

3. Mandatory appointment letters and employee welfare

  • The prescribed format of the appointment letter is provided in the OSHWC Rules.
  • These Rules provide a mandate of free-of-cost annual health examination for employees above the age of forty years employed in dock work, building or other construction work and such other class of establishments as may be notified by the Central Government.
  • These Rules prescribe sector-specific requirements relating to health, safety, working conditions and welfare facilities.
  • These Rules provide workplace standards to be followed by the specified category of employers, such as cleanliness and hygiene, ventilation, lighting, drinking water and sanitary facilities, washing facilities, canteens and crèches.

Key updates under Industrial Relations Code (Central) Rules, 2026:

1. Standing Orders: Industrial establishments employing 300 or more workers may need to evaluate existing standing orders and alignment with the notified Model Standing Orders for manufacturing, mines and service sectors. Key takeaways from Standing Orders are as follows:

  • Publication of working timings, holidays, pay days and wage rates on the employee portal - The industrial establishment is required to display working hours, shift timings, holidays, pay days, and wage rates for all categories of workers on the notice board/electronic notice board and portal/website in Hindi, English, and the local language.
  • Transfer - Every industrial establishment is required to formulate a transfer policy, communicate it to workers, and make the details available on the Human Resource portal.
  • Service record - Every industrial establishment is required to maintain a service record/service card for each worker, either electronically or manually, containing employment-related particulars in Form (ii), and such particulars shall be updated periodically with the worker’s knowledge.
  • Mandatory medical examination upon appointment: All workers to be employed in the industrial establishment shall be required to clear the medical examination by the medical authority nominated by the industrial establishment for such purpose, at the time of first appointment.

2. Worker re-skilling fund: Under the IRC Rules, a retrenched worker will be entitled to a worker re-skilling fund amounting to 15 days’ last drawn wages. The Employer is required to transfer this amount within 10 days of such retrenchment, in an account to be maintained by the prescribed labour commissioner. Further, within 45 days of separation, this amount will be transferred to the account of the retrenched worker to be utilised towards re-skilling.

BDO India’s Comments

The rules provide the first detailed insights into how the Labour Codes will operate in practice. A practical compliance roadmap should include:

  • Undertake a Labour Code applicability and compliance readiness assessment
  • Review wage structures and gratuity computation methodologies
  • Assess contractor management and contract labour governance frameworks
  • Evaluate HR policies relating to working hours, overtime and women employees
  • Review standing orders, employee documentation and record-keeping practices
  • Strengthen governance around grievance redressal and safety committees
  • Prepare for digitised labour law compliance and portal-based filings

The commencement of the Labour Codes signals a shift toward a more structured, formal and compliance-driven labour ecosystem. While the new framework introduces opportunities for simplification and increased workforce participation, organisations will need to prepare for changes to wage structures, HR systems, social security provisioning, and compliance governance.

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