Labour & employment
Do the new Labour Codes (in force since 21 November 2025) apply to my business?
Yes — if you employ anyone in India, the four Labour Codes (Wages; Industrial Relations; Social Security; Occupational Safety, Health & Working Conditions) apply to you in principle, because they came into force nationwide on 21 November 2025 with no transition period. What varies by your size and state is which specific obligations bite: the 50% wage-definition floor affects every employer's salary structure and PF/gratuity outgo; OSH Code registrations apply to establishments above headcount thresholds; and many state rules that operationalise the Codes are still being notified — which is exactly why this needs monitoring rather than a one-time checklist.
What actually changed on 21 November 2025
The Government of India brought all four Labour Codes into force on 21 November 2025, consolidating 29 central labour laws. The implementing notifications did not provide a transitional period — compliance obligations began immediately, even though several central rules and many state rules under the Codes are still being finalised.
For a small employer the practical effect is a period of dual reality: the Codes are law, but the forms, registers and state-specific procedures you actually file are arriving in pieces, state by state. Tracking your own state's notifications is now part of payroll compliance.
The 50% wages rule — the change that touches every employer
The Codes define 'wages' so that the components counted as wages must be at least 50% of total remuneration. If your offer letters were structured with a small basic salary and large allowances, the wage base for PF, gratuity and leave encashment rises — increasing both employer outgo and the terminal benefits employees accrue.
This is not a big-company problem: a 12-person SaaS startup or a 20-worker unit with ₹15,000-basic/₹45,000-CTC structures is exactly who feels it. Re-papering CTC structures is the single most common Labour-Codes action item for small employers.
Other changes worth knowing at small scale
Fixed-term employment is now recognised across the Codes with the principle of parity: fixed-term employees get benefits on par with permanent staff, and gratuity eligibility for them arrives after one year rather than five. Hiring on 11-month contracts to avoid benefits no longer works the way folklore says it does.
Headcount thresholds decide several obligations: standing orders and certain IR provisions apply at higher thresholds (300 for some provisions), while OSH registrations, welfare provisions and social-security coverage step in at various sizes — and the gig/platform-worker provisions of the Social Security Code create new aggregator obligations entirely.
- Every employer: wage-definition impact on PF/gratuity; updated offer letters and payroll mapping.
- 10+ employees: check OSH Code registration and welfare obligations for your establishment class (factory, shop, contract labour).
- Fixed-term staff: parity of benefits, one-year gratuity eligibility.
- Multi-state employers: each state's rules under the Codes differ and many are still drafts — confirm before assuming the central position.
Why a static checklist is the wrong tool here
The defining feature of this reform is staggered notification: the Codes are in force, central rules are partly notified, and state rules are landing month by month. Any checklist written in late 2025 is already partly stale. The honest answer to 'what applies to me' is a profile-specific one — your state, headcount, establishment type and staffing model — re-evaluated when your state notifies its rules. That continuous re-evaluation is what Compliance Radar's watcher is built to do.
Frequently asked questions
I have 8 employees. Do the Labour Codes apply to me?
Yes — the Code on Wages applies to all employments, so the wage-definition rule and timely-payment provisions reach you regardless of size. Many OSH and IR obligations have higher headcount thresholds, so your total obligation set is smaller than a 100-worker factory's, but 'too small for the Codes' is not a category that exists.
Do the old laws (PF Act, Shops & Establishments, etc.) still matter?
The 29 subsumed central laws are replaced by the Codes, but state Shops & Establishments Acts continue separately, and the machinery of PF/ESIC continues under the Social Security Code. In practice your registrations mostly carry forward; what changes is definitions, thresholds and consolidated returns as rules are notified.
Has my state notified its rules yet?
It depends on the state and is changing monthly — several states had draft rules pending when the Codes commenced. This is precisely the kind of state-specific, recency-sensitive fact a static page can't answer reliably; check your state labour department's notifications or use a monitoring tool.
Check what applies to your business
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