Labour Law · Enacted — Not Yet in Force4 Codes · 2019–2020Replaces 44 Central Labour Acts
India's Four Labour Codes
Wages · Industrial Relations · OSH · Social Security
India consolidated 44 central labour laws and 100+ state labour laws into 4 Labour Codes between 2019 and 2020. While all 4 Codes have received Presidential assent, central rules have been notified but commencement dates remain pending most States' rules being finalised. Most States have published draft rules — enforcement is expected imminently. Employers must prepare compliance frameworks now.
4
Labour Codes
44
Acts Replaced
31+
Sections Total
All India
Coverage
The Four Labour Codes at a Glance
2019Replaces 4 Acts
Code on Wages, 2019
Consolidates laws relating to minimum wages, payment of wages, payment of bonus, and equal remuneration into a single unified code.
↳Minimum Wages Act, 1948
↳Payment of Wages Act, 1936
↳Payment of Bonus Act, 1965
+ 1 more acts
2020Replaces 3 Acts
Industrial Relations Code, 2020
Consolidates laws relating to trade unions, standing orders, and industrial disputes including retrenchment, layoffs, and closures.
↳Trade Unions Act, 1926
↳Industrial Employment (Standing Orders) Act, 1946
↳Industrial Disputes Act, 1947
2020Replaces 13 Acts
Occupational Safety, Health and Working Conditions Code, 2020
Consolidates 13 central Acts relating to occupational safety, health, and working conditions across all sectors.
↳Factories Act, 1948
↳Mines Act, 1952
↳Dock Workers (Safety, Health and Welfare) Act, 1986
+ 10 more acts
2020Replaces 9 Acts
Code on Social Security, 2020
Consolidates 9 laws relating to social security — EPF, ESI, gratuity, maternity benefit, and for the first time extends social security coverage to gig workers and platform workers.
↳Employees' Provident Funds and Miscellaneous Provisions Act, 1952
↳Employees' State Insurance Act, 1948
↳Payment of Gratuity Act, 1972
+ 6 more acts
Key Employer Compliance Changes
What changes when the Labour Codes come into force
Definition of "Wages"
Wages under Code on Wages now excludes HRA, overtime, conveyance, PF contributions. Only basic + DA + retaining allowance counts. This changes the computation base for gratuity, ESIC, PF, and bonus — employers with high allowance structures will see compliance cost changes.
Retrenchment Threshold (IR Code)
The prior-approval threshold for retrenchment/layoff/closure has been raised from 100 workers to 300 workers. Establishments with 100–300 workers no longer need government permission to retrench — a significant employer-friendly change.
Fixed-Term Employment
IR Code introduces Fixed-Term Employment (FTE) contracts with pro-rata benefits — FTE workers get the same wages, working hours, and allowances as permanent workers for the same work. No minimum service period for gratuity under FTE.
Floor Wage
Central Government must fix a national floor wage under the Wages Code. No State can set minimum wages below this floor. Currently, the Central floor wage is ₹178/day (unskilled) — but this will be revised periodically.
Social Security for Gig Workers
SS Code 2020 is the first statute to formally cover gig/platform workers. The Central Government can frame social security schemes for gig and unorganised workers — funded by aggregator platforms (1–2% of annual turnover).
OSH Code — Safety Committees
OSH Code mandates safety committees in establishments with 500+ workers. Annual health check for all workers above 45 years. Women cannot be discriminated against in employment in any establishment for any type of work.
2019
Code on Wages, 2019
Consolidates laws relating to minimum wages, payment of wages, payment of bonus, and equal remuneration into a single unified code.
S.2Chapter I
Definitions
Section 2 sets out the foundational definitions for the entire Code on Wages. "Wages" has a specific statutory meaning — it includes basic pay, dearness allowance, and retaining allowance, but expressly excludes bonus, HRA, overtime allowance, gratuity, conveyance allowance, and PF contributions. This definition determines what forms the base for minimum wage calculations, bonus entitlement, and deduction limits. "Employee" is broadly defined to cover all workers (skilled, unskilled, supervisory, managerial, clerical) except apprentices and armed forces personnel. "Employer" includes both private persons and heads of government departments. "Establishment" covers every place where trade, business, manufacture or occupation is carried on — meaning the Code applies to almost every workplace in India.
Replaces: Minimum Wages Act, 1948, Payment of Wages Act, 1936 + 2 more
S.3Chapter II
Prohibition of discrimination on grounds of gender
This section is the statutory equal pay guarantee — an employer cannot pay different wages to male and female employees for the same work or work of a similar nature. "Similar nature" is defined functionally: the test looks at skill, effort, experience, training, responsibility, and working conditions — not job title. This provision consolidates and strengthens the Equal Remuneration Act, 1976. Corporates must audit their compensation bands across gender lines to ensure compliance, because the CCPA or Labour Commissioner can take cognisance of complaints.
Replaces: Equal Remuneration Act, 1976
S.6Chapter II
Fixation of minimum rate of wages
The Central Government must fix a "floor wage" — an absolute minimum below which no State can go. State governments can fix higher minimum wages for their scheduled employments, but not lower than the Central floor. Minimum wages can be differentiated by skill level (unskilled, semi-skilled, skilled, highly skilled), geography, and type of work (time-rate, piece-rate, overtime, night shifts). Mandatory review every 5 years. For employers in Delhi NCR, both Central and Delhi/Haryana/UP State minimum wage notifications must be tracked — the higher applies.
Replaces: Minimum Wages Act, 1948
S.9Chapter III
Payment of wages
Wages must be paid in legal tender — cash, cheque, or direct bank credit (NEFT/RTGS/UPI). The key deadlines are: (a) establishments with fewer than 1,000 employees — wages for a month must be paid by the 7th of the following month; (b) establishments with 1,000 or more employees — by the 10th of the following month. Where employment is terminated, final settlement must be completed within 2 working days of termination. For corporates, particularly those running large payrolls or using contract labour, this creates hard statutory deadlines and "full and final" settlement obligations on exit.
Replaces: Payment of Wages Act, 1936
S.13Chapter III
Deductions which may be made from wages
An employer can only deduct from wages what is expressly permitted by this section — there is no residual power to deduct for other reasons. The permitted deductions are an exhaustive list: tax deductions (TDS), PF/ESI contributions, advance recovery, fines, absence deductions, loan repayments, and court-ordered deductions. The aggregate deduction cap is 50% of wages (or 75% where co-operative society payments are involved). Any deduction outside this list — for instance, deducting wages as "liquidated damages" for an employee quitting mid-project — is illegal. This section is critical for payroll compliance audits.
Replaces: Payment of Wages Act, 1936
S.17Chapter III
Maintenance of registers and records
Every employer must maintain statutory wage registers and display prescribed abstracts in the workplace. Critically, records can now be maintained digitally — HRMS/payroll software outputs are acceptable provided they can be produced on demand. The Inspector-cum-Facilitator (the new single unified labour inspector under the Code) is empowered to inspect these records. Non-maintenance is a cognisable offence. Corporates should ensure their HRMS captures all fields required by the applicable State rules under this Code.
Replaces: Payment of Wages Act, 1936, Minimum Wages Act, 1948
S.26Chapter V
Eligibility for bonus
Any employee who has worked for at least 30 days in an accounting year is entitled to a statutory bonus. The minimum bonus is 8.33% of wages or INR 100, whichever is higher — payable regardless of whether the company made a profit. When allocable surplus is available, the bonus can scale up to a maximum of 20% of wages. The bonus eligibility salary cap (carried forward from the Payment of Bonus Act) means only employees drawing up to a statutory threshold (currently INR 21,000/month) are covered. This is an important payroll liability for corporates to provision for annually.
Replaces: Payment of Bonus Act, 1965
S.28Chapter V
Disqualification for bonus
An employee loses the right to statutory bonus if dismissed for: fraud, violent behaviour on company premises, theft or misappropriation of company property, or conviction for sexual harassment. Note that the Sexual Harassment ground was added by the Code on Wages — it was not in the original Payment of Bonus Act. For HR and legal teams handling terminations, documenting the specific ground of dismissal (and matching it to one of these four heads) is critical when withholding bonus. A mere performance-based termination does not disqualify an employee from bonus.
Replaces: Payment of Bonus Act, 1965
2020
Industrial Relations Code, 2020
Consolidates laws relating to trade unions, standing orders, and industrial disputes including retrenchment, layoffs, and closures.
S.2Chapter I
Definitions
Section 2 of the IR Code carries the definitional architecture of the entire Code. "Industry" is broadly defined — it includes all systematic economic activity for production/supply/distribution of goods or services, but carves out hospitals, educational institutions, charitable organisations, agricultural operations (standalone), government sovereign functions, and small professions (fewer than 10 persons). "Industrial dispute" covers all employment-related disputes between employer-worker, employer-employer, or worker-worker — including disputes over non-employment (layoff/retrenchment) and conditions of labour. "Worker" is limited to those earning up to INR 15,000/month in supervisory roles — those above are managers/officers and have different statutory protections.
Replaces: Trade Unions Act, 1926, Industrial Employment (Standing Orders) Act, 1946 + 1 more
S.3Chapter II
Registration of Trade Unions
A minimum of 7 founding members can apply to register a trade union. However, there is a new threshold condition: on the date of application, at least 10% of workers in the establishment/industry or 100 workers (whichever is less) must be members. This minimum membership condition was absent from the Trade Unions Act, 1926 — it is a significant new requirement intended to prevent multiplicity of very small, unrepresentative unions. The Registrar must register if the application is complete and there is no statutory ground for refusal. Management must be aware that valid registered trade unions have significant statutory rights including the right to collective bargaining.
Replaces: Trade Unions Act, 1926
S.20Chapter III
Standing Orders — conditions of service
Standing Orders are the statutory contract of employment for workers in large establishments. Any establishment with 300 or more workers must have certified Standing Orders specifying the terms and conditions of employment. Previously, under the Industrial Employment (Standing Orders) Act, 1946, the threshold was 100 workers — the new Code raises it to 300. This means establishments with 100-299 workers are now no longer mandatorily required to certify Standing Orders (though they may do so voluntarily or if the State Government lowers the threshold). Standing Orders must specify: worker classification, working hours, leave rules, termination notice, acts of misconduct, and grievance redress. Misconduct definitions in Standing Orders are critical to employment litigation.
Replaces: Industrial Employment (Standing Orders) Act, 1946
S.43Chapter VI
Prohibition of strikes and lockouts — notice period
Both strikes and lockouts are permitted — but only with advance statutory notice and outside certain "cool-off" periods. A 14-day notice is required before a strike can commence. During pendency of conciliation or tribunal proceedings, and for a specified period after their conclusion, strikes and lockouts are prohibited. The critical new addition in the IR Code is the 60-day notice period for strikes (applicable to public utility services) — significantly more than the older 6-week requirement. For corporate employers facing union action, this section defines the legality of industrial action. An illegal strike can result in the workmen losing their wages and facing disciplinary action.
Replaces: Industrial Disputes Act, 1947
S.55Chapter VII
Lay off — compensation
When an employer cannot provide work to a permanent workman (not casual or temporary) due to power shortage, breakdown, or natural calamity — that is a "lay-off." A workman who has completed 1 year of continuous service is entitled to 50% of basic wages plus dearness allowance for each day of lay-off. Beyond 45 days of lay-off in a 12-month period, the employer and workman can agree to waive further compensation. For establishments with 300 or more workers, prior government permission is required before lay-off (S.62). Lay-off is distinct from retrenchment — the employment relationship is not terminated.
Replaces: Industrial Disputes Act, 1947
S.60Chapter VII
Retrenchment — notice, compensation and last-in-first-out
Retrenchment (involuntary termination for operational/economic reasons) of workers with 1 or more years of service requires: (a) one month's written notice or pay in lieu; (b) retrenchment compensation of 15 days' average pay for each completed year of service; and (c) notice to the appropriate government authority. The LIFO (last-in-first-out) principle applies — the most recently hired in a category must be retrenched first, unless reasons are recorded for departing from LIFO. Retrenched workers also have a statutory right of re-employment preference if the employer rehires in that category within 1 year. For establishments with 300+ workers, prior government permission is required before retrenchment (S.62).
Replaces: Industrial Disputes Act, 1947
S.64Chapter VII
Transfer of undertaking
In M&A and business transfer transactions, this section is of paramount importance. When an undertaking is transferred — whether by agreement (acquisition, merger, slump sale) or by operation of law — every workman with 1+ year of service is entitled to retrenchment notice and compensation unless the three conditions are all satisfied: (a) service continuity is maintained without interruption; (b) service terms post-transfer are not less favourable; and (c) the new employer contractually assumes liability for pre-transfer service for retrenchment compensation purposes. In structuring acquisitions, buyers must assess and address this liability in the transaction documents — failure to do so can create a significant statutory compensation obligation.
Replaces: Industrial Disputes Act, 1947
S.74Chapter VII
Closure — notice to government and compensation
Establishments with 50 or more workers that intend to close down must give 60 days' notice to the appropriate government before closure. For establishments with 300 or more workers, prior government permission (not just notice) is required. Workmen with 1 or more years of service in the closing establishment are entitled to retrenchment-equivalent compensation. Closures due to unavoidable circumstances (force majeure) are exempt from the notice requirement. This section is critical for businesses planning wind-downs, shutdowns of underperforming units, or restructuring of multi-location operations.
Replaces: Industrial Disputes Act, 1947
S.82Chapter VIII
Industrial Tribunal
Industrial Tribunals are the primary adjudicatory bodies for industrial disputes in India. They are constituted by State Governments (or the Central Government for the National Industrial Tribunal), presided over by a single officer who must be (or have been) a High Court Judge or senior District Judge. The IR Code consolidates the previous multiplicity of Labour Courts and Industrial Tribunals into a single-tier Tribunal system. Tribunal decisions are binding and enforceable as decrees. For corporates facing union disputes, wrongful termination claims, or retrenchment challenges, the Industrial Tribunal is the primary first forum.
Replaces: Industrial Disputes Act, 1947
S.89Chapter VIII
Reference of disputes to Tribunal
Industrial disputes can reach the Tribunal by two routes: (a) Government reference — the appropriate Government on its own motion refers a dispute; or (b) Application by a party — any party to a dispute (including an individual worker) may apply directly to the Tribunal. The right of direct application to the Tribunal (sub-section 3) for individual termination disputes is an important new provision — workers no longer need government reference for individual termination cases. This significantly affects litigation risk for corporates handling dismissals, as terminated employees can access the Tribunal directly.
Replaces: Industrial Disputes Act, 1947
2020
Occupational Safety, Health and Working Conditions Code, 2020
Consolidates 13 central Acts relating to occupational safety, health, and working conditions across all sectors.
S.2Chapter I
Definitions — factory, worker, hazardous process
The OSH Code consolidates 13 separate Acts into a single framework. "Factory" is defined as premises with 10+ workers (with power-aided manufacturing) or 20+ workers (without power) — the threshold determines when OSH Code's factory-specific provisions apply. "Hazardous process" is of critical importance for industries involving chemicals, pharmaceuticals, petroleum, and heavy manufacturing — these carry heightened safety obligations and liability. "Worker" is broadly defined to include contract labour and inter-state migrant workers, making principal employers liable for OSH compliance even for their contractors' workers. "Establishment" covers virtually every workplace.
Replaces: Factories Act, 1948, Mines Act, 1952 + 5 more
S.10Chapter II
Safety Officer
Any establishment with 500 or more workers is required to appoint a qualified Safety Officer — a statutory position with prescribed duties and powers. For hazardous process industries, the threshold may be lower as specified by State rules. The Safety Officer is distinct from a general HR or compliance officer — they must hold specific qualifications prescribed under the Rules. Failure to appoint a Safety Officer in a qualifying establishment is a compliance violation that can attract prosecution under S.65. For large corporate campuses, manufacturing facilities, and construction projects, this is a mandatory appointment.
Replaces: Factories Act, 1948
S.11Chapter III
Health provisions
Every employer has a statutory duty to provide and maintain prescribed health facilities in their establishment. Notable requirements: a creche must be provided where 50 or more women workers are employed; a canteen must be provided above specified worker thresholds; first-aid boxes must be maintained. These are non-negotiable minimum standards — they cannot be contracted out or waived. For corporates running large offices, manufacturing plants, or construction sites, a compliance audit against these specific health provisions is essential, particularly the creche requirement which is often overlooked in office environments with significant female workforce.
Replaces: Factories Act, 1948
S.12Chapter III
Welfare provisions
Beyond health provisions, employers must provide prescribed welfare facilities including washing facilities, changing rooms, sitting arrangements, meal facilities, and specific provisions for inter-state migrant workers (housing accommodation). Migrant worker provisions are new — the OSH Code incorporates the obligations of the Inter-State Migrant Workmen Act, requiring employers using migrant labour to arrange suitable accommodation and pay a displacement allowance. State governments can exempt establishments that already provide facilities above the minimum standard. Large employers using migrant contract labour — particularly in construction and manufacturing — must comply.
Replaces: Factories Act, 1948, Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979
S.16Chapter III
Working hours — 8 hours per day, 48 hours per week
The statutory working time standard is 8 hours per day and 48 hours per week. Any work beyond this is overtime and must be paid at twice the ordinary rate. Workers must be given a rest interval of at least 30 minutes after every 5 hours of continuous work. Overtime in a quarter cannot exceed 115 hours. For IT/ITES companies and services sector establishments, the State-specific rules under this section (as many States have issued IT-specific exemptions under legacy law) need to be verified. Shift scheduling, flexi-hours, and hybrid work models must all be tested against this framework. Compensatory time off is not a substitute for overtime pay.
Replaces: Factories Act, 1948
S.23Chapter III
Employment of women
Women can be deployed in night shifts (7 pm to 6 am) only if: their written consent is obtained; prescribed safety measures are in place; their dignity is protected; and transportation from the establishment to their home (nearest point) is arranged. In hazardous/dangerous process establishments, women cannot be employed in night shifts at all. This section has significant implications for BPO/call centre operations, hospitals, pharmaceutical manufacturing, and any 24x7 operation with female employees. The transportation obligation and safety measures (CCTV, security, HR protocols) must be formally documented.
Replaces: Factories Act, 1948
S.65Chapter XI
Penalties
Any contravention of the OSH Code — by the employer or any person in charge of the establishment — attracts a fine up to INR 2,00,000. Repeat offences attract a higher fine (up to INR 3,00,000) plus imprisonment up to 3 months. For accidents resulting in death, the minimum fine is INR 2,00,000; for serious injuries, INR 1,00,000. Personal liability extends to directors, managers, and any officer who was responsible for the relevant aspect of the business — standard corporate compliance structures must include OSH Code delegations of authority and compliance programmes. This is particularly important for manufacturing, mining, and construction companies.
Replaces: Factories Act, 1948
2020
Code on Social Security, 2020
Consolidates 9 laws relating to social security — EPF, ESI, gratuity, maternity benefit, and for the first time extends social security coverage to gig workers and platform workers.
S.2Chapter I
Definitions — building worker, gig worker, platform worker, aggregator
The Code on Social Security 2020 is the most transformational of the four Labour Codes because it extends social security — for the first time — to gig workers and platform workers. "Gig workers" are those working outside traditional employment relationships (think delivery executives, freelancers on digital platforms). "Platform workers" work through online platforms (Ola, Swiggy, Zomato drivers, Urban Company professionals). "Aggregators" like ride-hailing and food-tech companies are now statutorily responsible for contributing to social security funds for their gig/platform workers. This is entirely new law with no precedent in India. Traditional employees retain full EPF, ESI, and gratuity coverage.
Replaces: Employees' Provident Funds and Miscellaneous Provisions Act, 1952, Employees' State Insurance Act, 1948 + 7 more
S.14Chapter III
Employees Provident Fund — provident fund schemes
The Employees' Provident Fund framework continues under the Code on Social Security. The mandatory contribution rate remains 12% of wages from both employer and employee (24% combined). Where contract labour is deployed, the principal employer is liable for both the employee's and employer's shares — the contractor's default does not absolve the principal employer. Employers can obtain exemption from the EPF Scheme if they operate a private provident fund that is at least as favourable as the statutory scheme. The EPF Scheme is framed by the Central Government under this Code (currently the EPF Scheme, 1952 as modified continues to operate).
Replaces: Employees' Provident Funds and Miscellaneous Provisions Act, 1952
S.41Chapter IV
Employees State Insurance — ESI
ESI covers all employees in qualifying establishments (factories, shops, establishments above specified size thresholds). Current ESI contribution rates are 3.25% from the employer and 0.75% from the employee — total 4%. Employees earning below a prescribed wage threshold (currently INR 176/day) are exempt from employee's contribution but the employer still contributes. As with PF, the principal employer is responsible for both contributions even for contract employees. ESI entitles employees to medical care, sickness cash benefits, disablement benefits, dependent benefits, and maternity benefits through the ESI hospitals and dispensary network.
Replaces: Employees' State Insurance Act, 1948
S.53Chapter V
Gratuity — 15 days per year of service
Statutory gratuity is a mandatory terminal benefit payable to all employees (regardless of establishment size) after 5 years of continuous service. Calculation: 15 days' last drawn wages for each completed year of service (or part thereof exceeding 6 months). The maximum gratuity is currently INR 20,00,000 (twenty lakhs) as notified by the Central Government. On death or disablement, the 5-year threshold is waived. For monthly-rated employees: (15/26) × last monthly wage × number of years of service. Fixed term employees are entitled to gratuity on completion of their fixed term. Gratuity is tax-exempt up to statutory limits under the Income Tax Act.
Replaces: Payment of Gratuity Act, 1972
S.57Chapter VI
Maternity benefit — 26 weeks
Maternity benefit is 26 weeks of fully-paid leave for the first two children; reduced to 12 weeks from the third child onwards. Up to 8 weeks can be taken before the expected delivery date. Adoptive mothers and surrogacy (commissioning mothers) are entitled to 12 weeks. A medical bonus of INR 2,500 is payable if the employer does not provide free pre/post-natal care. For establishments with 50+ employees, a creche must also be provided (S.11 of OSH Code). This section, read with the requirement of work-from-home flexibility post-maternity, represents one of India's strongest statutory maternity protections. Employers must provision for this liability in leave accounting and payroll.
Replaces: Maternity Benefit Act, 1961
S.109Chapter IX
Gig workers and platform workers — social security
This is entirely new law — the first statutory social security framework for gig and platform workers in India. Aggregators (Ola, Uber, Swiggy, Zomato, Urban Company, etc.) must: (a) register all gig/platform workers on a national portal; (b) contribute 1–2% of their annual turnover to a Central/State welfare fund; and (c) the contribution cannot exceed 5% of the total amount paid to gig/platform workers. The welfare fund will cover life insurance, disability cover, accident insurance, health, maternity, and old age protection. For Indian tech startups and platform economy companies, this creates a new and significant compliance obligation and financial liability. Implementing rules are pending notification.
Replaces: Unorganised Workers Social Security Act, 2008
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Schedule a ConsultationCorpus Juris Legal advises businesses on Labour Code compliance readiness — wage structure audits, standing orders under the IR Code, gratuity and PF implications of the Wages Code definition change, and gig worker classification under the Social Security Code.