India's Four Labour Codes Are Now in Force: What Every Employer Must Know

After years of anticipation, India's Four Labour Codes came into force on 21 November 2025, replacing 29 legacy labour laws with a consolidated framework across four pillars: the Code on Wages, 2019; the Industrial Relations Code, 2020; the Social Security Code, 2020; and the Occupational Safety, Health and Working Conditions Code, 2020. This is the most sweeping reform of India's labour law architecture since Independence. While the Central Government has enacted the Codes, final Central Rules are expected to be notified by 1 April 2026, and State Governments are at varying stages of notifying their own State-specific rules. Employers across sectors — manufacturing, IT, services, gig economy, and hospitality — must urgently review their HR policies, payroll structures, and compliance programmes.

The four Codes introduce significant structural changes to employment law. Under the Code on Wages, 2019, a new definition of 'wages' includes basic pay plus dearness allowance and retaining allowance, directly impacting PF contributions and gratuity calculations. The Industrial Relations Code, 2020, raises the threshold for retrenchment and layoff approvals — establishments with up to 300 workers can now retrench without prior government permission (up from 100). The Social Security Code, 2020, extends ESIC and EPFO coverage to gig and platform workers for the first time, a landmark shift for aggregators like food delivery and cab-hailing platforms. The Occupational Safety Code consolidates 13 laws into one, mandating annual health check-ups for workers in hazardous conditions and introducing digital maintenance of registers and records.

The practical impact on employers is substantial. Payroll systems must be recalibrated to reflect the new definition of 'wages,' which affects provident fund contributions (at least 50% of total remuneration must constitute wages), gratuity computations, and overtime pay. HR policies on fixed-term employment now gain statutory backing nationally — fixed-term employees must receive all benefits proportionate to their tenure, including gratuity after one year. For companies with gig workers or platform workers, extending social security benefits is now a statutory obligation, not a voluntary choice. Employers should also review their standing orders to ensure alignment with the new Code provisions, and update employment contracts, especially non-compete and non-solicitation clauses, to reflect the current legal position.

The window between now and 1 April 2026, when final rules are expected, is the ideal time for businesses to undertake a comprehensive labour law compliance audit: mapping current practices against Code requirements, identifying gaps in payroll, benefits, safety, and disciplinary procedures, and updating policy documentation before enforcement kicks in fully. Non-compliance with the Labour Codes can attract penalties ranging from fines to imprisonment depending on the violation. Sansa Kanoon Pranali Partners provides labour law compliance audits, employment contract reviews, gig worker structuring advice, and standing order drafting under the new Codes. Contact us at sansalegal.com to begin your compliance review before the April 2026 deadline.