New Labour Law In India
New Labour Law in India: Key Changes and What They Mean for You
India’s labour laws have gone through a major change with the introduction of the four Labour Codes. These codes replace 29 central labour laws and make the overall legal framework simpler and easier to follow. As more implementation updates and guidelines are being issued, it is important for employers, HR professionals, payroll teams, and employees to understand how these changes can affect salaries, PF, gratuity, working hours, compliance, and other employee benefits.
Latest Update on the New Labour Law (2026)
The Four Labour Codes are gradually being implemented, and employers should be ready for the upcoming compliance changes. Here are the key updates:
- The Central Government has notified the rules under all four Labour Codes.
- Employers should review their salary structure and payroll process.
- HR teams should update company policies and employee handbooks.
- Companies should review appointment letters, employment contracts, and other compliance documents.
- Businesses should assess whether their current HR and payroll practices meet the new requirements.
- Since labour is a concurrent subject, some provisions will take effect only after individual states notify their own rules.
- Businesses should stay updated with state notifications and prepare for changes related to wages, social security, industrial relations, and workplace safety.
In this post, we will discuss India’s new labour laws and how they affect working hours, compensation, and employee benefits. These changes are intended to protect workers’ rights and improve working conditions. Continue reading to learn about the changes and what they include for firms and employees.
Let’s look at each section in detail:
What are the Labour Codes?
Labour Codes are four new labour laws introduced by the Government of India to replace 29 separate central labour laws. The main aim is to simplify labour laws, make compliance easier for employers, and provide better protection, wages, and social security benefits for employees. They also create a more uniform system so that both employers and employees can understand and follow the law more easily.
Major Changes Under the New Labour Codes
The four Labour Codes introduce several important changes that employers and employees should be aware of. These changes may require businesses to review their salary structure, update HR policies, and make necessary changes to their payroll and compliance processes.
1. New Definition of Wages
One of the most important changes under the Labour Codes is the introduction of a single definition of wages. Earlier, different labour laws had different definitions, which often created confusion for employers. The new definition brings uniformity and makes compliance easier.
Under the Labour Codes, wages mainly include Basic Pay and Dearness Allowance (DA). Some salary components, such as certain allowances, are excluded, but only up to the limits specified under the Code.
Since many statutory benefits are calculated based on wages, employers may need to review and restructure employee salary packages. The new definition can affect the calculation of Provident Fund (PF), gratuity, bonus, and other employee benefits.
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2. 50% Wage Rule
The 50% wage rule is one of the most discussed changes under the Labour Codes because it can affect how employee salaries are structured.
Under the new definition of wages, Basic Pay and Dearness Allowance (DA) should generally make up at least 50% of an employee’s total remuneration. If a large portion of the salary is paid as allowances, employers may have to revise the salary structure to comply with the new rules.
A higher basic wage can increase statutory benefits such as the Provident Fund (PF) and gratuity. However, since PF contributions are calculated based on wages, both employer and employee contributions may increase. As a result, some employees may see a slight reduction in their monthly take-home salary while receiving higher long-term retirement benefits.
3. Social Security for Gig and Platform Workers
One of the major changes under the Labour Codes is the inclusion of gig workers and platform workers under the social security framework. Earlier, these workers were not covered under most labour laws. The new Codes aim to extend social security benefits to them.
The Code on Social Security provides for social security schemes for eligible gig and platform workers. It also requires eligible aggregators to contribute towards these schemes. To receive the benefits, workers may have to register as per the rules notified by the government after the Labour Codes are implemented.
4. Fixed Term Employment
The Labour Codes clearly define the rights and benefits of employees hired on a fixed term. The aim is to ensure that these employees are treated fairly during their period of employment.
A fixed term employee is entitled to the same wages, working conditions, and statutory benefits as a permanent employee doing the same or similar work. They are also eligible for leave, gratuity, and other benefits as provided under the Labour Codes, subject to the applicable conditions.
5. Working Hours Under the New Labour Codes
Many people believe that the new Labour Codes make a 12 hour workday mandatory. However, this is not true.
The maximum working hours continue to be 48 hours per week. Depending on the nature of work and the rules applicable to an establishment, daily working hours may differ. Employers must also follow the rules relating to rest breaks, weekly holidays, and overtime.
If an employee works beyond the prescribed working hours, they are entitled to overtime wages as per the Labour Codes and the applicable rules.
Overview of the Four New Labour Codes
The Ministry of Labour and Employment has implemented a number of changes aimed at raising workers’ living standards, with benefits to both organised and unorganised sectors. These reforms benefit workers while also making it easier to run business, creating jobs, and raising productivity. All employees will now have access to benefits such as the Employee Provident Fund (EPF), the Employee Pension Scheme (EPS), and full medical coverage through employee insurance.
1.Code on Wages, 2019
- Wants to regulate wages and bonus payments for all employment in any organised and unorganised sector.
- Check minimum wages at every interval of 5 years.
- Universal Declaration for the timely payment of wages to all workers.
- The central government has confirmed the provision of National floor wages.
- Four Labour acts, namely, The Minimum Wages Act,1948; The Payment of Wages Act,1936; The Payment of Bonus Act, 1936 and the Equal Remuneration Act, 1976.
- The fixation of minimum wages became easy for the categories of skill level, demographic and geographical area.
- The Wages Act payment has increased the remuneration level from RS.18,000 to RS.24,000.
- Provision to provide Equal remuneration for female and male workers.
2.Industrial Relations Code, 2020
- If a worker loses his job, in that case, the worker will get the benefit under Atal Bimit Vyakti Kalyan Yojana.
- The tribunal will provide faster justice to the worker.
- Under the scheme of Atal Bimit Vyakti Kalyan, any worker in the organised sector who loses his job gets financial benefits from the government. The benefits are acceptable to the workers covered under the ESI scheme. That is a kind of unemployment allowance.
- Provision of assault of offences.
- Worker issues would be resolved by the tribunal within a year.
- The industrial tribunal has two members. The individual can adjudge all issues except those related to reduction, strikes, etc.
- Wages of the 15 days for the re-skilling of the employee at the time of reduction will be credited directly to the workers’ bank account.
- Labour acts include the Industrial Dispute Act, 1947; The Trade Unions Act, 1926; The Industrial Employment Act, 1946.
- At the inception of industrial trade, a trade union with 51% of the votes would be accredited as a sole corporation union.
- ESIC is available for workers in all sectors, including unorganised sectors.
- The facilities of ESIC have increased from 566 districts to all 740 districts of the country.
- ESIC is also available for Gig workers who are engaged in new technology.
- Provision to provide EPFO to all employee sectors, including the self–sector.
- The Social Security funds are bestowed on unorganised sectors.
- The National database is for unorganised sectors through registration on the portal.
- Provision of Universal Account Number (UAN) for ESIC, EPFO, and Unorganised Sector workers.
- Aadhaar-based Universal Account Number (UAN) is used to ensure seamless portability.
- Labour Acts, Employees provident funds, Miscellaneous provision Act, Employees State Insurance Act, Payment of Gratuity Act, Maternity Benefit Act, Employee Compensation Act, Building and Other Construction Workers Welfare Cess Act.
4.Occupational Safety, Health, and Working Conditions Code, 2020
- Many provisions are there that will ease the lives of migrant workers.
- Women empowerment via the labour codes.
- Provide medical helpline numbers in every state for migrant worker grievances.
- Right to women workers to work in any organisation.
- The Women have the Right to work the night shift with their consent and ensure that the employer makes a proper arrangement to provide safety and security.
- Paid maternity leave for women workers from 12 to 26 weeks, and ensured a creche facility in all organisations of 50 or more workers.
- The national database is to be created for migrant workers.
- A travelling allowance is provided for the migrant worker.
- Provision for mandatory, free annual health check-ups of workers to be provided by the employers.
- An appointment letter to the workers has been compulsory.
- Provision to provide Cess funds to the construction workers.
- Under the “One Nation – One Ration Card”, Migrant workers will get ration facilities in the state.
- Under the code, the workers can register themselves as a migrant worker on the National portal under the Atma Nirbhar.
- Labour Acts relating to Factories, Mines, Dock, Construction Workers, Plantation, Motor Transport, Beedi and Cigar, Contact Labour & Interstate Migrant Workers.
Old Labour Laws vs New Labour Codes
| Old Labour Laws | New Labour Codes |
| 29 separate labour laws | 4 Labour Codes |
| Different wage definitions under different laws | One common definition of wages |
| Separate compliance under each law | Simpler and more streamlined compliance |
| Limited social security coverage | Wider social security benefits for more workers |
| Separate registrations for different laws | Common registration process in many cases |
Conclusion
India’s new employment and labour laws now focus on workers’ welfare, often at the company’s expense. It remains to be seen how state governments will adapt these laws to create a fairer balance between employers and employees.
We have reached the end of this post. Please post your questions in the comments section below.
FAQs
1.What are the regular working hours in India?
Ans: Regular working hours in India usually are 9am to 6pm, which equals an 8-hour workday. Actual hours may vary depending on industry standards, job roles, and corporate policies.
2.What are the IT working hours in India?
Ans: Working hours in India’s IT sector might extend beyond 9 a.m. to 6 p.m., with flexible schedules and additional hours based on project demands and deadlines.
3.Is it legal to work for 12 hours in India?
Ans: In some cases, a 12-hour workday may be permissible, provided that labour rules and regulations in India are followed. However, following legal obligations such as overtime compensation and employee permission is essential.
4.Does an 8-hour workday in India include lunch?
Ans: The usual 8-hour workday in India does not include lunch breaks. Lunch breaks are often taken separately and are not considered part of the official working hours in India. Employees are entitled to a defined meal break under Indian labour regulations and corporate policy.
3.Code on Social Security, 2020