In 2019 and 2020, the Government of India consolidated 29 central labour laws into four new Labour Codes. These codes form the baseline framework for Indian labour law. Each state is preparing its own rules under these codes, and state-wise implementation may vary in thresholds, timing, and procedural nuances — but the central codes are the floor below which no state can fall. This guide explains all four codes, how they affect employers, and the state-wise implementation status as of 2026.
The Four New Labour Codes — At a Glance
| Code | Replaces | Year Passed |
|---|---|---|
| Code on Wages, 2019 | Payment of Wages Act, Minimum Wages Act, Payment of Bonus Act, Equal Remuneration Act | 2019 |
| Industrial Relations Code, 2020 | Trade Unions Act, Industrial Employment (Standing Orders) Act, Industrial Disputes Act | 2020 |
| Code on Social Security, 2020 | EPF Act, ESIC Act, Payment of Gratuity Act, Employees Compensation Act, Maternity Benefit Act + 4 more | 2020 |
| Code on Occupational Safety, Health & Working Conditions (OSH), 2020 | Factories Act, Mines Act, Contract Labour Act, Inter-State Migrant Workmen Act + 9 more | 2020 |
1. Code on Wages, 2019 — What Every Employer Must Know
The Code on Wages introduces a uniform definition of wages across India and applies to every employee in every sector. Key provisions:
- New wage definition: Wages must include at least 50% of total remuneration as basic pay. Allowances cannot exceed 50%. This directly affects PF, gratuity, and bonus calculations.
- Floor wage: Centre will notify a national floor wage; states cannot fix minimum wages below it.
- Timely payment: Salary must be paid by the 7th of every month (for units of 1,000+ workers) or 10th (smaller units).
- Equal pay: No discrimination in wages on grounds of gender for the same or similar nature of work.
- Penalty: Up to ₹50,000 for first offence, ₹1,00,000 for repeat offence.
2. Industrial Relations Code, 2020
Consolidates the law on trade unions, conditions of employment, and industrial disputes. Key changes:
- Threshold for layoff/retrenchment permission raised to 300 workers (from 100). Industrial establishments with fewer than 300 workers can now lay off, retrench, or close without prior government approval.
- Fixed-term employment formalized: Fixed-term workers get the same wages, hours, allowances, and statutory benefits as permanent workers. Gratuity payable after just 1 year (not 5).
- Standing Orders applicable to establishments with 300+ workers (raised from 100).
- Negotiating Union: Single union recognised as the sole negotiating union if it has 51%+ support.
3. Code on Social Security, 2020
Consolidates 9 social security laws including EPF, ESIC, Gratuity, Maternity Benefit, Employees’ Compensation. Key changes:
- Extends social security to gig workers, platform workers, unorganised workers, and inter-state migrants for the first time.
- National Social Security Board to formulate schemes for gig and platform workers.
- Aadhaar-based universal account number for EPF/ESIC portability.
- Gratuity for fixed-term workers payable after 1 year continuous service (was 5 years).
- Voluntary registration for self-employed and unorganised workers.
4. Occupational Safety, Health & Working Conditions (OSH) Code, 2020
Consolidates 13 labour laws covering factories, contract labour, working conditions, and safety. Key changes:
- Single registration for establishments employing 10+ workers (instead of separate registrations under each law).
- Contract Labour Act threshold raised to 50 workers (from 20) for registration/licensing.
- Annual health check-ups mandatory for hazardous occupations.
- Inter-state migrant workers entitled to journey allowance and PDS portability.
- One licence, one return, one inspector-driven inspection for ease of compliance.
State-Wise Implementation — Why Each State Varies
While the Centre has notified all four codes, labour is a concurrent list subject — meaning both Centre and States have power to legislate. The central codes are the baseline framework; each state must:
- Frame its own rules under each code
- Notify the date of operationalisation in its state
- Adapt thresholds and procedures within the bounds of the central code (states cannot dilute employee protections below central minimums but can be more generous)
State Implementation Status (as of 2026)
| State | Code on Wages Rules | Industrial Relations | Social Security | OSH |
|---|---|---|---|---|
| Maharashtra | Draft (2026) | Draft (2026) | Draft (2026) | Draft (2026) |
| Gujarat | Notified | Notified | Notified | Notified |
| Karnataka | Notified | Notified | Notified | Notified |
| Tamil Nadu | Notified | Notified | Notified | Notified |
| Uttar Pradesh | Notified | Notified | Notified | Notified |
| Telangana | Notified | Notified | Notified | Notified |
| Haryana | Notified | Notified | Notified | Notified |
| Punjab | Notified | Notified | Notified | Notified |
| West Bengal | Draft | Draft | Draft | Draft |
| Delhi | Notified | Notified | Notified | Notified |
Status changes frequently — always verify the latest from your state labour department or with TMS compliance experts.
Key Compliance Impact — What Employers Must Do
- Recalculate payroll structures — basic pay must be at least 50% of total. Many existing salary structures will need restructuring.
- Update offer letters and employment contracts with new wage definition and fixed-term provisions.
- Reassess gratuity provisioning — higher basic pay = higher gratuity liability + fixed-term workers now qualify after 1 year.
- Review contract labour arrangements — new 50-worker threshold under OSH Code.
- Single online compliance portal — register on Shram Suvidha for unified return filing.
- Track state notifications — operational date varies state-to-state.
Penalty Framework Under the New Codes
The new codes significantly increase penalties for non-compliance:
- Code on Wages: ₹50,000 first offence, ₹1,00,000 repeat
- Industrial Relations Code: ₹1,00,000–₹10,00,000 for layoff/closure violations
- Social Security Code: Up to ₹1,00,000 + imprisonment for non-payment of contributions
- OSH Code: ₹3,00,000 for safety violations leading to death
How TMS Helps With Labour Code Compliance
Adapting to the four Labour Codes affects nearly every operational dimension — payroll structure, contracts, working hours, contract labour engagement, and statutory contributions. Most Indian employers will need to restructure salaries, redraft contracts, and reset compliance workflows.
TMS has been helping 450+ Indian companies stay compliant for 20 years. Our Labour Code transition services include:
- Full statutory compliance management under the new codes — PF, ESIC, gratuity, POSH, contract labour, all consolidated under Social Security & OSH Codes
- Payroll restructuring under the new wage definition — recalculating basic pay, allowances, PF and gratuity provisioning
- Compliant contract staffing under the new OSH Code thresholds
- Employer of Record for foreign companies entering India — we absorb all Labour Code compliance on your behalf
- State-wise compliance tracking — we monitor every state’s notifications so you don’t have to
Speak to a TMS Labour Code expert →
FAQs — India Labour Codes 2026
When will the Labour Codes become operational nationwide?
The central codes have been passed by Parliament. Operationalisation depends on each state notifying its own rules. Many states have already done so (Gujarat, Karnataka, Tamil Nadu, UP, Telangana, Haryana, Punjab, Delhi). Maharashtra and West Bengal are at draft stage.
Will state-specific rules override the central codes?
No. The central codes are the baseline. States can be more generous to workers but cannot dilute central protections.
What is the biggest impact on payroll?
The new wage definition mandates basic pay at least 50% of total. This increases PF contributions, gratuity liability, and bonus payouts. Most existing salary structures will need restructuring.
Do small establishments (under 10 employees) have to comply?
The OSH Code single registration applies from 10 employees. Code on Wages and Social Security apply more broadly. Verify the exact threshold for each code with your state department.
Does Maharashtra have its own Labour Code rules yet?
Maharashtra has issued draft rules for all four codes in 2026. See our state-specific guides: Maharashtra Code on Wages Draft Rules, Industrial Relations, and OSH.
