Over the past few years, India has taken major steps to consolidate and simplify labour laws. With the intent to improve “Ease of Doing Business” and ensure enhanced social security for workers, 29 central labour laws have been restructured into 4 comprehensive Labour Codes.
However, many organisations still have confusion about what has been notified, what is still pending, and what actions should be taken to ensure compliance.
This blog summarises the key points discussed in our Labour Codes session, presented by Team TrusComp, in a simple and practical way for HR, Legal, and Compliance professionals.
The Four Labour Codes – At a Glance
| Labour Code | Objective |
|---|---|
| Code on Wages, 2019 | Uniform definition of wages, payment & minimum wages |
| Code on Social Security, 2020 | PF, ESIC, Gratuity, Maternity benefits & social security |
| Industrial Relations Code, 2020 | Trade unions, strikes, dispute resolution |
| Occupational Safety, Health & Working Conditions Code, 2020 (OSH) | Health, safety & working conditions for all establishments |
What Has Not Been Notified Yet?
Although the Codes have been passed by Parliament, not all provisions have been notified. This leaves organisations uncertain about when to fully adopt the new requirements.
However, HR teams should start preparing internally rather than waiting for notifications, because once notified, compliance timelines will be short.
Code on Wages – What Employers Need to Note
One of the biggest shifts under the Wage Code is the uniform definition of “Wages”.
What is Included in Wages?
• Basic Pay
• Dearness Allowance
• Retaining Allowance
Exclusions (Allowed Only Up to 50% of CTC)
Exclusions such as HRA, overtime, bonus, etc., are permitted only up to 50% of total CTC. If exclusions exceed 50%, the extra portion must be added back to wages.
Key takeaway: Organisations with low basic (e.g., 25–30%) may need to restructure salary slabs.
Code on Social Security – Major Compliance Highlights
| Topic | Expected Change |
|---|---|
| ESI | Extended to new segments as the Act is repealed |
| PF | Existing Act continues — mechanisms move under the Code |
| Gratuity | Possible eligibility on completion of 1 year for fixed-term employees |
| Bonus Ceiling | Limit to be prescribed by the appropriate government |
Industrial Relations Code – Important Changes
• Individual termination is now part of “Industrial Dispute”
• Introduction of Negotiating Union / Negotiating Council
• Strikes require prior notice
• Recognition of Trade Union becomes structured
These changes aim to create a more organised industrial relations framework.
OSH Code – Workplace Safety & Working Conditions
• Annual health check-up
• Women permitted in night shifts with safety measures
• Compulsory appointment letters
• Working hours & overtime ceiling defined
• Single-window grievance redressal
• Fines replace imprisonment for first-time violations
Should Companies Wait for the Rules?
Short answer — No.
Businesses should act now to align with the Labour Codes to avoid sudden compliance risk once notified.
What Employers Must Begin Working On
• Review wage structure (basic at least 50% of CTC)
• Strengthen HR documentation and appointment orders
• Maintain working hours, overtime & leave records accurately
• Prepare budgets for increased PF/Gratuity impact
• Ensure safety & welfare norms for contract and gig workers
Conclusion
The Labour Codes are not just a legislative reform — they are a shift toward standardisation of employment practices across India.
Organisations that start compliance readiness today will avoid penalties and industrial disputes later.
At TrusComp, we support companies with:
• Labour law compliance audits
• Policy drafting and implementation
• Statutory registers & documentation
• End-to-end factory & shop compliance services
