The four Labour Codes are India's consolidation of 29 central labour laws into four unified codes covering wages, social security, industrial relations, and workplace safety. They are the Code on Wages, the Code on Social Security, the Industrial Relations Code, and the Occupational Safety, Health and Working Conditions Code. The codes aim to simplify and standardize India's labour framework, and they introduced a single definition of wages that has direct consequences for payroll, provident fund, gratuity, and bonus calculations.
What are the four codes?
Each code groups together related laws that previously stood on their own. Together they cover most of the employment relationship.
- Code on Wages: wages, minimum wage, payment timelines, and bonus.
- Code on Social Security: provident fund, gratuity, insurance, maternity benefit, and coverage for gig and platform workers.
- Industrial Relations Code: trade unions, standing orders, and rules on layoffs and termination.
- Occupational Safety, Health and Working Conditions Code: working hours, leave, safety, and conditions of work.
When did the Labour Codes take effect?
The codes were passed between 2019 and 2020 and came into force on 21 November 2025. Final central and state rules that govern the day-to-day detail were still being notified after that date, so a transition period applies and some specifics continue to settle. Employers should confirm the current position for their state and workforce.
What changes for payroll?
The headline change is a single definition of wages, often called the 50 percent rule, with knock-on effects across statutory calculations.
- The 50 percent rule: basic pay plus dearness allowance must be at least half of total remuneration, which can raise provident fund, gratuity, and bonus amounts.
- Faster final settlement: full and final settlement on exit is required within two working days of separation in most cases.
- Fixed-term gratuity: fixed-term employees become eligible for gratuity after one year of service, rather than five.
- Overtime and leave: overtime is payable at twice the normal wage, and leave encashment rules are standardized.
| Code | Main coverage |
|---|---|
| Code on Wages | Wages, minimum wage, bonus |
| Social Security Code | PF, gratuity, insurance, maternity |
| Industrial Relations Code | Unions, standing orders, termination |
| OSH&WC Code | Hours, leave, safety, conditions |
This information is for general guidance. The rules are still being finalized; confirm current provisions and consult legal experts for your specific situation.
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