Alert

BACKGROUND

The Ministry of Labour & Employment has issued a series of notifications bringing into effect key provisions of the following Codes under India’s new labour law framework, starting 21 November 2025:

• The Code on Wages, 2019

• The Code on Social Security, 2020

• The Industrial Relations Code, 2020

• The Occupational Safety, Health & Working Conditions (OSHWC) Code, 2020

This marks the most significant legislative transition in India’s labour law framework in decades, replacing 29 Central Acts with four unified Codes intended to promote formalisation, social security, compliance simplification, and workforce protection.

The final rules under the Labour Codes by the Central and State Governments are still to be notified, but are expected to follow shortly. During transition, the relevant provisions of the existing labour Acts and their respective rules, regulations, notifications, standards, schemes, etc. will continue to remain in force.

Scope of Notifications and Applicability

Code	Status as of 21 Nov 2025	Notes
Code on Wages, 2019	Partially notified	Multiple sections relating to definitions, wage & bonus entitlements, payment timelines, and enforcement are effective.
Code on Social Security, 2020	Partially notified	Provisions relating to Employee State Insurance (ESI), maternity, gratuity, and governance bodies are now active. Mechanical provisions relating to EPF are also active, helping the Government to form rules and the new scheme, while continuing with the current EPF Scheme.
Industrial Relations Code, 2020	Fully notified	All provisions relating to trade unions, standing orders, dispute resolution, and retrenchment requirements are effective.
Occupational Safety, Health and Working Conditions Code, 2020	Fully notified	Mandates on working hours, health & safety, registers, and employer obligations are effective.

Key Structural Changes Introduced by the Codes

• Standardised definitions and coverage expansion:

  • New statutory classifications of workforce, notably “worker”, “employee”, “platform worker”, “gig worker”, and “inter-state migrant worker” will now determine eligibility for various entitlements such as overtime, social security, workplace safety protections, and dispute mechanisms.   

  • The uniform definition of “wages” across all Codes is prescribed to calculate various statutory entitlements, such as minimum wages, overtime, gratuity, leave encashment, ESI, statutory bonus, etc. This may provide consistency but may also increase the cost of employment. The employers are required to revamp salary structures to align it with new definition and ensure compliance.

• Employment models regularised:
  • Fixed-term employment is formally recognised, entitling such employees to gratuity after one year of continuous service.

  • Contract labour engagement is restricted for core activities of business, subject to specified exceptions.

  • Expanded provisions for women at work, including night shift permissions with prescribed safeguards.

• Social Security framework significantly extended:
  • Coverage now extends to gig workers, platform workers, fixed-term workers, and unorganised sector workforce.
  • For gig workers, the aggregators may be required to contribute 1–2% of annual turnover, capped at 5% of total payments to platform workers.
  • The portability of benefits through Aadhaar-linked identifiers aims to simplify access across locations and employers.

• Industrial Relations & workforce transition requirements
  • The threshold for prior government approval for retrenchment, closure, and lay-off has now increased from 100 to 300 employees.
  • A Reskilling Fund must be contributed to upon retrenchment — equal to 15 days’ last drawn wages per worker.
  • Updated requirements around standing orders, grievance redressal committees, and digital registers now apply.

• Workplace safety, hour regulations, and facilities with the full implementation of the OSHWC Code:
  • Working hours, overtime, record maintenance, and welfare provisions (including free annual medical check-ups for workers aged 40+).
  • Mandatory appointment letters, register formats and employer-provided facilities (drinking water, restrooms, creches where applicable).

BDO India’s Comments

While the Codes and select sections stand notified, corresponding Central and State rules, schemes, and digital compliance infrastructure (including single registration and return system) remain pending. Employers may therefore experience a dual compliance environment where legacy State legislation continues to apply until superseded.

A practical compliance roadmap should include:

• Review of employee categorisation against new definitions

• Payroll benchmarking considering new “wage” definition impacts

• Revision of contracts, vendor models, fixed-term arrangements

• Alignment of HR policies, standing orders, and documentation

• Gap assessment against OSHWC safety and facility standards

• Monitoring of State-level notification rollouts

The phased 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.

Given the evolving notification landscape, proactive planning and monitoring will be essential to ensure compliance continuity while avoiding operational disruption.