The Four Labour Codes: What Delhi NCR Employers Must Do Now They Are in Force

Parliament enacted four Labour Codes between 2019 and 2020, consolidating 29 Central labour laws into a rationalised framework. The Central Government brought all four Codes into force on 21 November 2025, and the Acts they consolidate stood repealed from that date. Rules under the Codes are still being finalised by the Centre and the States, including Delhi and Haryana (covering the Delhi NCR corridor). In the meantime, transitional provisions keep rules, schemes and notifications under the earlier laws operative where consistent with the Codes. Employers should be operating to the Codes now, not preparing for them. ## The Four Codes: What They Cover **1. Code on Wages 2019**: Consolidates the Minimum Wages Act 1948, Payment of Wages Act 1936, Payment of Bonus Act 1965, and Equal Remuneration Act 1976. All employees (without a wage ceiling for most provisions) are covered. Key changes: - Universal applicability of minimum wage — the concept of "scheduled employments" is replaced with a floor wage applicable to all - Uniform definition of "wages" — includes basic pay and dearness allowance but excludes most allowances. This definition, when applied, increases the base for provident fund, gratuity, and bonus calculations - Consolidated compliance — one register, one return, one inspector for wage law compliance **2. Code on Industrial Relations 2020**: Consolidates the Industrial Disputes Act 1947, Trade Unions Act 1926, and Industrial Employment (Standing Orders) Act 1946. Major changes: - Threshold for Chapter VB (prior government permission for retrenchment/closure) raised from 100 to 300 workers — establishments with fewer than 300 workers can retrench without government permission - "Fixed-term employment" formally recognised — fixed-term workers get proportionate benefits (gratuity, bonus) but can be discharged at the end of the term without triggering retrenchment provisions - Standing Orders threshold raised to 300 workers - Worker definition broadened to include supervisors earning up to ₹18,000/month **3. Code on Social Security 2020**: Consolidates nine statutes including the Employees' Provident Funds and Miscellaneous Provisions Act 1952, Employees' State Insurance Act 1948, Gratuity Act 1972, and others. Key changes: - Gig workers and platform workers brought within the social security framework — platform companies will contribute to a separate fund - Gratuity for fixed-term employees after one year of service under the contract (no 5-year minimum) - Voluntary Provident Fund portability improvements - Extended ESIC coverage to more categories of establishments **4. Code on Occupational Safety, Health and Working Conditions 2020**: Consolidates 13 statutes. Key changes: - Applies to establishments with 10 or more workers - Working hour cap maintained at 48 per week but overtime rate increased - Annual health checks mandatory for workers above prescribed age - Inter-State migrant workers protections strengthened ## What Has Not Changed Several protections that employees have historically relied on are preserved or strengthened under the Codes: - Retrenchment compensation remains at 15 days' pay per year of service for establishments under 300 workers; the government permission requirement applies above 300 - The principle of natural justice in disciplinary proceedings is preserved - Anti-victimisation provisions for trade union activities - Maternity benefit of 26 weeks' paid leave carries over into Chapter VI of the Code on Social Security, which subsumes the Maternity Benefit Act 1961 ## The "Wages" Definition: The Compliance Landmine The unified definition of "wages" across the Codes is the provision that most disrupts existing payroll structures. Currently, many employers structure compensation to maximise the non-wages component — HRA, special allowances, conveyance — to reduce the base for PF, ESI, and gratuity calculations. Under the Codes, the permissible allowance exclusions are capped: allowances cannot exceed 50% of total wages. If total remuneration is ₹1 lakh, at least ₹50,000 must fall within "wages" for the purpose of PF, ESI, and gratuity calculation. For Delhi NCR employers with mid-to-senior salaried workforces where allowance structuring is common, this change will: - Increase PF contribution bases - Increase gratuity liability - Increase bonus bases (where applicable) The cost impact is material for employers with allowance-heavy salary structures, and should be modelled employee by employee rather than estimated in aggregate. ## Fixed-Term Employment: A Genuine Flexibility Tool The formal recognition of fixed-term employment under the IR Code is a significant employer-friendly provision. A fixed-term employee: - Is entitled to the same working hours, wages, and statutory benefits as a permanent employee - Is entitled to pro-rata gratuity after one year of service (no 5-year threshold) - Can be discharged at the end of the term without retrenchment procedures - Cannot be automatically converted to permanent status This makes fixed-term contracts genuinely usable for seasonal or project-based hiring without the compliance risk that plagued the prior framework where "fixed-term" arrangements were frequently challenged as disguised permanent employment. ## Steps Delhi NCR Employers Should Take Now **Audit current salary structures**: Map all components against the Codes' "wages" definition. Identify the increase in PF, gratuity, and bonus liability under the new structure. **Review headcount thresholds**: Are you above or below 300 workers? Establishments with 100 to 299 workers that were subject to Chapter VB of the repealed IDA no longer need government permission to retrench under the IR Code — but terminations effected before 21 November 2025 remain governed by the old threshold. **Review Standing Orders**: The threshold for mandatory Standing Orders is now 300 workers. If you have between 100 and 299 workers, Standing Orders certified under the 1946 Act are no longer mandatory — decide deliberately whether to keep them as contractual terms, and update them to the Codes' terminology if you do. **Update employment contracts**: Introduce fixed-term contract templates where appropriate. Ensure employment contracts reference the Codes' definitions and comply with the new wage structuring requirements. **Train HR and compliance teams**: The unified inspection regime and digital compliance portal under the Codes require changes to record-keeping and return-filing processes. **Monitor Central and State rules**: Delhi's and Haryana's rules under the Codes settle forms, registers, returns and procedure. Track their notification and update processes as each set is finalised. ## The Transition: Old Laws Still Matter The 29 statutes were repealed when the Codes commenced on 21 November 2025, but the repeal does not wipe out past non-compliance. Liabilities incurred under them — unpaid minimum wages, PF defaults, ESI non-registration — remain actionable, and rules and schemes framed under them continue to operate during the transition where consistent with the Codes. The transition is not a compliance holiday. Corpus Juris Legal's Employment & Labour practice advises Delhi NCR employers — from IT companies in Cyber City to manufacturing units in NOIDA Special Economic Zone — on both current compliance and Labour Code preparedness. If you need a Labour Code compliance audit or a review of exposure under the repealed laws for earlier periods, our employment law team can deliver both.