What Is the New Labour Code 2026, and What Changes?

The new 4 labour codes are four consolidating statutes that replaced 29 central labour laws, and each one governs its own list of subjects. Salary, minimum wages, bonus and pay-days belong to the Code on Wages, 2019, Act 29 of 2019. Provident fund, state insurance, gratuity and gig-worker benefits belong to the Code on Social Security, 2020, Act 36 of 2020. Unions, standing orders, retrenchment and closure belong to the Industrial Relations Code, 2020, Act 35 of 2020. Safety, working hours, leave, appointment letters and establishment registration belong to the Occupational Safety, Health and Working Conditions Code, 2020, Act 37 of 2020, the OSH Code.

Contract labour is an OSH Code subject: section 45 of that Code sets the applicability test, and section 47 puts the licence on the contractor. App-based riders are Code on Social Security, 2020 subjects, because sections 113 and 114 place them with the aggregator rather than on your payroll. Sort your own open questions by which Code answers each of them this week, and list separately everyone you engage through a vendor or an app.

No instrument made in 2026 changed which Code governs which subject. The Ministry of Labour and Employment notified four sets of Central Rules on 8 May 2026, one under each Code, and those rules supply the forms, formats and figures each Code left to be prescribed.

Gratuity is a Chapter V subject in the Code on Social Security, 2020, and the wage figure used to compute it comes from section 2(88) of that Code. Section 2(y) of the Code on Wages, 2019 does not apply to gratuity, so a payroll team that routes the question by instinct routes it wrong. A bonus claim is governed by two Codes in sequence. It starts as a Code on Wages, 2019 question about eligibility and quantum. It becomes an Industrial Relations Code, 2020 question the moment someone raises it as an industrial dispute, because Chapter VII of that Code then supplies the forum and the procedure.

Nandini Rao runs HR at a 220-employee auto-components maker with a Pune plant and a Bengaluru office. She sorts her open questions the same way. Wage components go to the Code on Wages, 2019. Her 34 fixed-term contracts and their gratuity go to the Code on Social Security, 2020. Appointment letters and rosters go to the OSH Code. She has no union matter open, and any that arose would fall under the Industrial Relations Code, 2020. Each of the repealed Acts was repealed by the Code that replaced it.

Where a workforce is unionised, Chapter III of the Industrial Relations Code, 2020 governs union recognition, and Chapter VIII governs the notice a strike needs. Section 14(2) recognises a sole union on criteria the rules prescribe. Where more than one union is functioning, section 14(3) sets 51 per cent of the muster roll, and section 14(4) constitutes a negotiating council from unions with 20 per cent or more.

Yes. The provisions listed in the four commencement orders took effect on 21 November 2025, and the four sets of Central Rules took effect on 8 May 2026. Commencement is national. The rule, rate, form or portal you file under is not, so a Code can be in force while the instrument you need is still pending in your State.

The Ministry of Labour and Employment made the Central Rules for the Central sphere, which covers mines, major ports, banking, insurance, the railways and undertakings the central government owns or controls. A private manufacturer in Maharashtra or a services firm in Karnataka answers to the State as its appropriate Government, and the State's rules supply the form numbers, the registers and several of the rates. Anyone tracking the new labour code implementation date should hold two dates, not one: the date the Code became effective, and the date their own State completed its rules.

Some provisions are in force and still not performable, because nobody has exercised the power inside them. Section 9 of the Code on Wages, 2019 is commenced and reads that the Central Government shall fix a floor wage, and no floor wage is fixed. No welfare scheme is notified under Chapter IX of the Code on Social Security, 2020, and no start date under section 114(5) for aggregator contributions. An employer told that the Codes are implemented now still cannot perform a duty for which no instrument exists. Each provision that took effect on 21 November 2025 did so under one of the four commencement orders.

An employer who ignores a duty in force because no State form exists is still in breach of the Code. The obligation applies from the commencement date, and only the mechanism is missing. What protects that employer is a dated record showing the decision taken, the instrument relied on, and the date the filing mechanism was found to be unavailable. The rate or form you file under exists only once your State's rules are notified.

A payroll owner needs one definition settled before any other number means anything. Section 2(y) of the Code on Wages, 2019 fixes what counts as wages. The definition opens on all remuneration payable to a person in respect of his employment, and then includes basic pay, dearness allowance and retaining allowance by name. Everything payable is wages unless an exclusion removes it, so a component is included in the definition unless a clause excludes it. The section then lists those exclusions, and adds part of the list back where the excluded components exceed one-half of the total remuneration. The add-back applies to clauses (a) to (i) of the exclusion list. Gratuity and retrenchment compensation, in clauses (j) and (k), stay outside that comparison, so an employer who includes them in the one-half test adds back more than section 2(y) requires. A second proviso then takes conveyance allowance, house rent allowance, remuneration under an award or settlement and overtime allowance back into the computation of wage, for two purposes only: equal wages to all genders, and payment of wages. A team that computes one figure and uses it for the pay-day and deduction rules as well will under-state the base for section 17 and for the section 18(3) ceiling.

Section 2(y) of the Code on Wages, 2019 fixes no ratio between basic pay and CTC, which disposes of the first of three claims about the new CTC rules for 2026 in India.

No provision of any Code makes 50% basic salary mandatory. Section 2(y) of the Code on Wages, 2019 compares the specified exclusions with one-half of total remuneration, and not with basic pay.

Section 2(y) of the Code on Wages, 2019 governs wages, bonus and equal pay. Section 2(88) of the Code on Social Security, 2020 governs provident fund, state insurance, gratuity and maternity benefit. Section 2(1)(zzj) of the OSH Code governs overtime. Section 2(zq) of the Industrial Relations Code, 2020 governs the average pay on which retrenchment and lay-off compensation are computed. Those four provisions are closely drafted and separately enacted, so a payroll engine that computes one figure and applies it everywhere will be wrong somewhere.

Anyone who wants to calculate salary as per the new labour code needs a current CTC break-up, one recent payslip, and the list of allowance labels payroll uses rather than the ones the offer letter names. With those three in hand, your own component mix can be tested figure by figure. The add-back test compares the specified exclusions against one-half of total remuneration, and the excess counts as wages whatever the components are called.

Which allowances are wages, and which are excluded, depends on the exclusion list as section 2(y) of the Code on Wages, 2019 sets it out. A higher employee PF deduction can reduce take-home even where the earning lines of a re-based salary structure stay unchanged. The employer's own contribution must be kept separate: section 124 of the Code on Social Security protects wages and employment benefits against reduction merely to meet contribution costs, and paragraph 21 of the EPF Scheme prohibits recovering the employer's share from the employee. Section 17 of the same Code fixes the pay-days. Section 18 is the deductions provision: 18(1) makes the list of permitted deductions exhaustive, and 18(3) caps the total in a wage period at half the wages. The bonus provisions are separate again, in Chapter IV.

A minimum rate is fixed by the appropriate Government, and not by the wage definition in section 2(y). Section 6 of the Code on Wages, 2019 is the fixing power, exercised through the section 8 procedure, and section 6(6)(a) takes into account the skill required under the unskilled, semi-skilled, skilled and highly-skilled categories, or geographical area, or both. Section 5 is the matching prohibition on the employer, that no employee be paid less than the notified rate. An unskilled worker and a highly-skilled worker in the same office therefore carry different minimum rates, as do two workers of the same skill in different notified areas. Section 9 of the same Code obliges the Central Government to fix a floor wage below which those rates may not fall, and no floor wage has been fixed.

Gig workers and platform workers are named in a social-security statute for the first time. Section 113 of the Code on Social Security, 2020 provides for registration of the worker, and section 114 provides for schemes funded partly by aggregator contributions. Both provisions remain frameworks rather than operating cover. No scheme stands notified under Chapter IX. Section 114(5) of that Code requires the Central Government to notify the date from which aggregator contributions begin, and no such date exists. The portal that section 113 of that Code refers to has not been designated. An employer engaging riders should record that position and watch it, and should never tell a rider that cover is running.

• What is the contribution base? Provident fund and state insurance are computed on section 2(88) of the Code on Social Security, 2020, and not on section 2(y) of the Code on Wages, 2019. The two definitions are close and separately enacted, so the figure must be computed twice. The PF changes under the new labour code follow from the section 2(88) definition, and the contribution rates and wage ceilings apply to the figure that definition produces.
• Who gets gratuity after one year? A fixed-term employee is entitled to gratuity on a pro rata basis when the fixed term expires after one year of continuous service under that contract. The entitlement arises on expiry of the term, not resignation. Section 53 of the Code on Social Security, 2020 removes the five-year requirement on that expiry. The one-year condition itself is prescribed by rule 33(1)(a) of the Social Security (Central) Rules, 2026, and from section 2(o)(c) of the Industrial Relations Code, 2020. Rule 33 binds the Central sphere alone, so a State-sphere employer takes the one year from that section rather than from the rule. Section 2(o) defines fixed term employment for a worker, and section 2(zr) of the same Code excludes a manager and a supervisor above ₹18,000 a month from that definition, so that statutory provision does not apply to them and rule 33 is the only source for a State-sphere manager.
• What does an aggregator owe? An aggregator’s contribution becomes payable from the section 114(5) date. Its registration duties do not. Rule 48(2)(b) of the Social Security (Central) Rules, 2026 required every aggregator to share the details of its engaged gig and platform workers by API within forty-five days of 8 May 2026. That period expired around 22 June 2026. Rule 48(2)(c) then requires real-time or daily registration of every new worker. Those aggregator duties belong to the platform, and not to the client engaging riders through it.

The Code on Social Security, 2020 defines categories of worker that no earlier statute named, including unorganised workers, gig workers and platform workers, each with its own registration route. Employees are covered under section 2(26) of the Code on Social Security, 2020, which counts a person employed by an establishment either directly or through a contractor. Each chapter of that Code names the categories it applies to, so coverage is decided chapter by chapter rather than for the Code as a whole. A person can be a worker within a category defined by the Code on Social Security, 2020 without appearing on any employer's payroll, which is what makes the question of which workers are recognised under the Social Security Code wider than the payroll question.

Section 17 of the Code on Social Security, 2020 puts the contribution on the principal employer, with a right to recover it from the contractor. Section 17(2) lets a contractor recover only that employee's own share, by deduction from that employee's wages. Section 17(3) bars recovery of the employer's contribution or the administration charges from that employee by any route. An employer who leaves contributions to the vendor remains the person section 17 charges, and answers for any shortfall.

Nandini's non-permanent staff fall into three categories before any benefit figure can be computed. Her 34 fixed-term employees are her own employees, on her payroll, and their gratuity falls due when the term expires. Her 18 contract-labour workers reach her through one vendor, and section 2(26) of the Code on Social Security, 2020 counts them as employed by her establishment for headcount purposes even though the vendor pays them. Her 6 app-engaged riders are platform workers, so the aggregator and not Nandini owes their contributions once a date exists, and owes their portal registration already.

An employer planning a lay-off, a retrenchment or a closure at a factory, mine or plantation needs prior government permission once it employs 300 or more workers on an average per working day over the preceding twelve months. Section 77(1) opens by excluding an establishment of a seasonal character, and one in which work is performed only intermittently, and section 77(2) makes the appropriate Government's decision on that question final. Chapter X of the Industrial Relations Code, 2020 imposes that requirement, and section 77 sets the threshold. Below it, Chapter IX still applies, and section 70 has no minimum establishment headcount. It protects a worker in continuous service for not less than one year, and it needs one month's written notice giving the reasons or wages in lieu, compensation of fifteen days' average pay for every completed year of continuous service or any part of a year in excess of six months, and notice to the appropriate Government. That is owed whatever the size of the establishment, and the appropriate Government may notify a number of days other than fifteen. Chapter X applies only to a non-seasonal factory, mine or plantation, so an office, a shop or a software unit stays outside it at any headcount. Employers who quote retrenchment thresholds from the old hundred-worker figure are quoting a repealed Act.

Section 28 of the Industrial Relations Code, 2020 applies the standing-orders chapter to an industrial establishment where 300 or more workers are employed, or were employed on any day of the preceding twelve months. If Chapter IV applies to your establishment, check two things. Standing orders that existed on 21 November 2025 continue, and section 30(11) deems them certified under section 30(8), so far as they are not inconsistent with the Code or its rules. Where you had none to continue, section 30(1) gave you six months from commencement to prepare drafts on the Model Standing Orders, 2026 and forward them for certification, and that window closed on 21 May 2026. Section 77 of the same Code counts 300 or more workers on an average per working day over the preceding twelve months. An establishment that reaches 300 workers on a single day falls inside section 28, and stays outside section 77 unless its twelve-month average also reaches 300. Both provisions are headed "Application of this Chapter", and each states its own count.

Both counts depend on who is a worker under the new labour code, and each Code defines the term for itself. Section 2(zr)(iv) of the Industrial Relations Code, 2020 excludes a person employed in a supervisory capacity drawing wages exceeding ₹18,000 a month, or such amount as the Central Government may notify. The power is not confined to raising that figure, and nothing has been notified, so ₹18,000 stands. It belongs to that Code alone. Worker and employee do not mean the same thing across the four Codes, so one person can be a worker for one purpose and outside the definition for another.

An employer who puts a person in the wrong category gets the wage, benefit and termination consequences wrong together, and redoes all three when the classification is corrected. The classification tests are applied Code by Code, and one person can pass one and fail another.

You apply the 300 test to the workforce register, counting per establishment rather than per company, so a group employing 600 people across three sites may stay outside Chapter X at every one of them. Borderline sites turn on the twelve-month average rather than on today's headcount, and that average is worth computing before anyone plans a reduction.

Nandini's position. Her Pune plant employs fewer than 300 workers, and section 77 of the Industrial Relations Code, 2020 counts per industrial establishment, so the permission regime is not her problem this quarter. Section 70 still is: at 220 workers she owes notice, compensation and notice to the appropriate Government on any retrenchment. Her Bengaluru office is not a factory, a mine or a plantation, so Chapter X does not apply to it at any headcount. A factory employing 400 workers must plan for it now. The wage, appointment-letter and social-security duties apply to both employers alike, because no provision on those subjects uses a 300-worker threshold.

A grievance committee starts at 20 workers under section 4(1) of the Industrial Relations Code, 2020, while standing orders start at 300 under section 28 of the same Code.

A worker's day is capped at eight hours by the statute itself. Section 25(1)(a) of the OSH Code fixes that cap for every worker in an establishment to which the Code applies, and the figure appears in the Code rather than in a rule. Three sub-sections displace it on the face of the section. Section 25(2) puts a working journalist on a separately prescribed regime capped at 144 hours in four consecutive weeks. Section 25(3) opens "notwithstanding anything contained in sub-sections (1) and (2)" and gives a sales promotion employee or a working journalist earned leave and medical leave on a separate footing. Section 25(4) makes an adolescent worker’s hours subject to the Child and Adolescent Labour (Prohibition and Regulation) Act, 1986.

The eight-hour cap is not the line at which overtime starts, and the two are constantly run together. Section 27 of the same Code requires wages at twice the rate of wages for overtime work. It applies only where a worker works for more than such hours in any day or in any week as the appropriate Government prescribes, computed daily or weekly, whichever is more favourable to the worker. A proviso makes overtime conditional on the worker's consent. Rule 69(1) of the OSH Central Rules, 2026 supplies the prescribed figure for the Central sphere: more than eight hours in a day for a daily wager, and more than forty-eight hours in a week for everyone else. Rule 64(1) sets the 48 hours a week ceiling itself, and a State may prescribe its own ceiling, its own trigger, its own intervals and its own spread-over.

Take the two apart before designing a roster. Section 25(1)(a) allows no worker more than eight hours in a day, so a 12-hour shift breaches the cap whatever the week looks like. Three provisions can lift it. Section 127(1) lets the appropriate Government direct by notification that any provision of the Code shall not apply to an establishment or class of establishments, and section 127(2) lets a State exempt a new factory to create economic activity and employment. Section 128 covers a public emergency, disaster or pandemic, and section 129 a workshop attached to a public institution. No notification under section 127 has been located. So whether a 12-hour shift is legal in India is answered no, by the cap and the absence of an exemption rather than by the cap alone. The pay basis changes the overtime bill and leaves the cap alone. A daily wager earns twice the rate of wages from the ninth hour. A monthly-paid worker earns nothing extra until the week passes forty-eight hours. In a State that has prescribed no trigger there is no section 27 entitlement to compute at all. A roster must also satisfy the rest intervals and leave the appropriate Government prescribes.

The new working hours come from four provisions rather than one, and the length of the shift is none of them.

• The daily cap, which section 25(1)(a) of the OSH Code fixes at eight hours for every worker in an establishment to which the Code applies.
• The weekly ceiling, which rule 64(1) of the OSH Central Rules, 2026 sets at 48 hours for the Central sphere and a State may set for its own.
• The overtime rate and the consent condition, both in section 27 of the OSH Code, computed daily or weekly, whichever is more favourable to the worker.
• The overtime trigger, which rule 69(1) sets for the Central sphere at eight hours a day for a daily wager and forty-eight hours a week for everyone else.

Women are allowed to work night shifts under section 43 of the OSH Code, with their consent, and subject to the conditions the appropriate Government prescribes. Rule 83 of the OSH Central Rules, 2026 sets those conditions for the Central sphere, and rule 83(a) is what requires the consent to be taken in writing. Section 133(2)(zf) of the OSH Code makes them a matter for the appropriate Government, so a State's own night-work safeguards apply instead of the Central ones rather than in addition to them.

Section 6(1)(f) of the OSH Code requires every employer to issue an appointment letter to every employee on appointment, and it is one of eight duties in section 6(1). Where an employee was already on the rolls at commencement, the same clause gave three months, and that window closed on 21 February 2026. The appropriate Government prescribes the form under section 133(2)(g) of the same Code. Rule 6 of the OSH Central Rules, 2026 goes further for the Central sphere: no employee may be employed in an establishment unless an appointment letter has been issued in the sixteen-field format that rule sets out. In a State that has not notified its rules, neither that prohibition nor a prescribed format yet exists, and the Central format is the available model. Section 2(1)(v) fixes a ten-worker threshold for an establishment under its first three sub-clauses, counting workers as section 2(1)(zzl) defines them rather than employees. Sub-clause (iv), a mine or a port or the vicinity of a port where dock work is carried out, is an establishment at any headcount.

Classification comes before payroll. In the first thirty days, list every person, every site and every contract, because every later decision depends on that list. Days 31 to 60 are for testing consequences: run your current wage components through the statutory wage definition, then check what moves for provident fund, state insurance, gratuity, overtime and bonus. Days 61 to 90 are for documents and evidence, which means appointment letters, contracts, policies, registers, wage slips, and a written record of each decision with the instrument it is based on.

Employers who begin with a payslip redesign do it twice, because a person's classification determines how that person's wages are computed. The workforce register comes first, and no step after it can start until that register exists.

A decision log records what was decided, the instrument relied on, the effective date, the owner and the review date.

Nandini works through those windows in order. By day 15 she holds a workforce register with five categories. Four of them make up her 220: 162 permanent employees, 34 fixed-term employees, 18 contract labour through one vendor and 6 app-engaged riders. The fifth is 3 retainers under review, who join the count only if the review finds them to be employees. By day 45 she has tested three sample structures against the statutory wage definition and knows which of her allowance labels are exposed. By day 80 she has issued appointment letters, re-based four policies, and holds a decision log with 11 entries, each carrying its instrument, effective date, owner and review date.

A new labour code employer checklist is built from that register, and what HR should change now falls into one-time migration items and recurring duties. One-time migration items are done once: the workforce register, the appointment letters, and the re-based policies and templates. The duties that recur continue after the one-time migration is finished, and they are the ones employers implement last. You convert each recurring duty into a dated entry, and a repeating compliance calendar fixes when each one falls due.

What the Codes themselves require binds you now. A form, a rate or a portal exists only once your State notifies its rules. Every action in the ninety-day table is therefore one of two things: a duty a Code imposes in its own words, or a duty that needs an instrument from your State. An employer who says our State has not notified rules still performs every duty in the first category.

An action falls into one column or the other on three tests.

• Whether a Code imposes the duty in its own words, or a rule must first supply a form, a rate or a portal.
• Whether the appropriate Government for that establishment is the Centre or the State.
• Whether the action can be evidenced by a dated internal record, with nothing filed anywhere.

You can be late only on the actions in the left column. Each of them depends on no instrument that is still pending, and the duties behind them have run since 21 November 2025. An action in the right column cannot fall due while the filing route does not exist. Whether the actions are Central or State ones for your establishment turns on which Government is your appropriate Government, and your State's status changes as each State completes its rules.

Contract labour, gig riders, apprentices and fixed-term employees are each defined in a different statute, no statute defines a consultant or an intern, and none of these six classifications turns on what the contract is called. Which Code applies depends on how the person is engaged and who directs the work. Contract labour is the only one of the six with a headcount trigger, and the OSH Code sets it at fifty contract labour.

Gig worker and platform worker are categories of the Code on Social Security, 2020 alone, so the Code that covers gig and delivery workers is that one, through sections 113 and 114. Whether another Code also applies to a rider turns on that Code's own definition of employee or worker. For headcount and contributions, contract workers are employees under the new labour code: section 2(26) of the Code on Social Security, 2020 counts a person employed by an establishment either directly or through a contractor, subject to the provisos to that section. For wages, section 55 of the OSH Code puts payment on the contractor. On default or short payment, the principal employer pays the balance in full and recovers it from the contractor by deduction from sums due under the contract or as a debt. The contractor, and not the principal employer, applies for the contract-labour licence under section 47 of the OSH Code.

An employer whose establishment comes into existence after commencement applies electronically to the registering officer within sixty days of the OSH Code applying to it, under section 3(1) of that Code, and a late application may still be entertained on payment of the fee the appropriate Government prescribes. Almost every existing employer follows the alternative registration route. Section 3(8) deems an establishment already registered under a Central labour law to be registered under the Code, but only if the holder gives the registering officer the prescribed details, and rule 3(6) of the OSH Central Rules, 2026 gives six months from 8 May 2026 to update the particulars in FORM-I. That filing closes on 8 November 2026, and the deeming is what turns on it.

An employer who engages people under several of those six labels reads a different statute for each one, and you can only say which labour code applies to your issue once you have named the engagement correctly.

Nandini's 18 contract-labour workers count toward her establishment headcount and are paid by the vendor, and section 55 of the OSH Code governs what happens if the vendor does not pay. Her 6 riders are engaged through an app, so the aggregator and not Nandini owes their contributions. Her 34 fixed-term employees are her own employees for wages, records and social security, and their gratuity falls due when the term expires. The 3 retainers are the ones still under review, and they are also the ones that cost most if the review comes out wrong. A consultant who works your hours, on your systems, under your supervision is an employee whatever the retainer says, and you then owe wages, provident fund, gratuity and termination dues for that person.