New Labour Codes 2025 — A Plain Checklist for Small Businesses Across India

New Labour Codes — What Changes for a Small Firm

On 21 November 2025 India brought the four labour codes into force — the Code on Wages, the Industrial Relations Code, the Code on Social Security and the Occupational Safety, Health and Working Conditions (OSH) Code — replacing 29 older central laws. Central rules followed in 2026, and states are notifying their own rules. If you run a firm in Patna, Lucknow, Ranchi, Raipur, Bhopal, Bhubaneswar or Kolkata, here is the short version.

1. The 50% wage rule

"Wages" (basic + DA + retaining allowance) must be at least half of total pay. If allowances are more than 50%, the excess is added back to wages.

Why it matters: PF, ESI, gratuity and bonus are calculated on wages. A salary of Rs 20,000 with Rs 6,000 basic now has a wage base of Rs 10,000 — PF and gratuity go up.

Action: review every salary structure; recompute PF and gratuity on the new base.

2. Minimum wage for everyone

The old "scheduled employments" list is gone. Every employee in every sector gets at least the state minimum wage, and a national floor wage sits under the state rates.

Action: check the lowest-paid staff — helpers, office boys, shop assistants — against the current state notification (most states revise in April and October).

3. Gratuity after one year for fixed-term staff

Fixed-term employees become eligible for gratuity after one year, not five.

Action: tag contract / fixed-term staff correctly and track their joining dates.

4. Appointment letters and wage slips

Every worker must get a written appointment letter, and wages must be paid on time with a wage slip. Digital records are accepted.

Action: send appointment letters and salary slips the staff can open on their phone, and keep a log of who received what.

5. Working hours and overtime

Hours and overtime limits are set by the OSH Code and state rules; overtime needs the worker's consent and is paid at twice the ordinary rate.

Action: keep attendance against each person's real schedule, not one office timing for all.

6. Gig and platform workers, social security for all

Aggregators contribute to a social security fund for gig workers, and the ESIC net widens to more districts and smaller units.

A 10-point checklist

1. Salary structures meet the 50% wage rule

2. PF / ESI / gratuity recomputed on the new wage base

3. Every employee at or above the state minimum wage

4. Fixed-term staff tagged; gratuity tracked from year one

5. Appointment letters issued to all staff

6. Wage slips delivered every month

7. Attendance per schedule, with overtime and consent

8. State rules checked — PT, LWF, holidays differ by state

9. Records kept digitally, with who changed what

10. One person responsible for watching state notifications

Where HRPM fits

HRPM keeps attendance per work schedule, sends e-mails from templates the firm can edit, keeps a log of every change, and lets each firm set its own rules instead of fixed defaults — so when a state changes a rate, the firm updates a setting, not the software.

Sources

• Bird & Bird — India's new labour codes
• AZB & Partners — overview of changes
• K&S Partners — 50% wage rule
• Outlook India — labour codes take effect

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