What the four labour codes that replaced 29 Indian laws require of employers
India's four labour codes replaced 29 central labour laws in November 2025. Here is what they require of employers on contracts, working hours and dismissals.
India's four labour codes took effect on 21 November 2025. Together they replace 29 central labour laws. The four codes are the Code on Wages, the Industrial Relations Code, the Code on Social Security and the Occupational Safety, Health and Working Conditions (OSH) Code. Employers with staff in India now work under these texts rather than the older statutes they replace.
The codes are not fully operational. Central rules were pre-published at the end of December 2025, and state governments have notified their own rules at uneven speeds. The sources reviewed for this article differ on several details, and those differences are noted below.
Effective dates and rules still pending
A government notification made all four codes effective on 21 November 2025, according to a May 2026 status review by iPleaders. The OSH Code summary by Lakshmikumaran & Sridharan lists the same commencement date. Central rules under each Code were pre-published on 30 and 31 December 2025. According to iPleaders, the Ministry of Labour and Employment issued additional FAQs on wages, overtime, gratuity and full-and-final settlement on 16 March 2026.
The iPleaders review says 1 April 2026 was the targeted date for full enforcement, and that several states still had pending notifications as of May 2026. As of the review's 8 May 2026 verification, Maharashtra, Gujarat, Karnataka, Madhya Pradesh and Delhi had notified rules under all four codes. West Bengal and Nagaland had notified none. Tamil Nadu, Andhra Pradesh, Telangana and Uttar Pradesh had partial or pending notifications. Those figures may have changed since May.
Wages, the 50% rule and gratuity
The Code on Wages defines wages in Section 2(y), which lists eleven categories of payments that are excluded from wages. Under a test in the same section, payments under clauses (a) to (i) that exceed one-half of total remuneration are added back into wages. Taxmann's analysis says only clauses (a) to (i) are tested. Gratuity and retrenchment compensation fall in a later clause, so they sit outside the test pool but still count toward total remuneration. The Central Government may notify a different percentage.
The iPleaders review reports gratuity at 15 days' wages for each year of service, with permanent employees needing five years of service. It also says wages due on cessation of employment must be paid within two working days. Employers should confirm these figures against the Code text and the rules in their state, because the review is a secondary source.
Fixed-term staff and contract labour
The Industrial Relations Code recognises fixed-term employment. LiveLaw's summary of the Code says fixed-term workers receive all statutory benefits available to permanent workers, in proportion to their service, even if they do not meet the usual qualifying period. The iPleaders review adds that fixed-term workers become eligible for gratuity after one year of continuous service, paid pro rata. It also says the Ministry FAQ confirms that fixed-term contracts cannot be used to deny social security benefits that the Social Security Code makes universal.
Under the OSH Code, contract labour provisions are triggered at 50 contract workers, up from 20 under the earlier law, according to the Lakshmikumaran & Sridharan summary. Contract labour is generally prohibited in core activities, with three exceptions: a sudden increase in the volume of work, work not ordinarily done by regular workers, and intermittent work. Illegal use of contract labour in a core activity carries a fine of up to ₹1 lakh. The same summary says the provisions also apply to establishments employing 10 or more inter-state migrant workers.
The sources reviewed describe no separate hiring rules for permanent staff.
Working hours and overtime
The sources give different limits. The Lakshmikumaran & Sridharan summary of the OSH Code says the maximum working day is 8 hours. It says overtime is payable at twice the normal wage rate and requires the worker's consent. That summary also gives two different figures for the earlier daily limit that the Code replaced, so that detail should be checked.
The iPleaders review gives a different picture. It says daily hours, including breaks, are capped at 12 and weekly hours at 48. It says overtime at twice the ordinary wage applies beyond 8 hours a day, and that a four-day week is permitted but not required. The review also notes that its own text describes the overtime trigger in two ways. The consent requirement appears only in the Lakshmikumaran & Sridharan summary. The sources do not reconcile the 8-hour and 12-hour figures.
“Many of the new obligations switch on at a headcount, so the number of staff at each site matters.”
Layoffs, standing orders and strikes
The Industrial Relations Code raises the threshold for prior government permission for lay-off, retrenchment and closure. LiveLaw's summary says permission is needed only for industrial establishments such as mines, factories and plantations with more than 300 workers, up from 100. It says permission is deemed granted if the government does not respond within 60 days. The iPleaders review says notice, compensation and last-in-first-out ordering still apply to retrenchment.
Standing orders now apply to establishments with 300 or more workers, up from 100, and must cover grievance redressal. The definition of an industrial dispute now includes discharge, dismissal, retrenchment and termination. A strike requires 14 days' prior notice in all industrial establishments, not only public utility services. LiveLaw describes the strike notice as valid for 60 days, up from six weeks, and it does not give a lock-out notice period.
Industrial Tribunals replace existing adjudicating bodies such as the Court of Inquiry, the Board of Conciliation and the Labour Courts, according to LiveLaw. The iPleaders review reports that a single judge of the Kerala High Court upheld Section 104(1-A) of the Industrial Relations Code on 8 April 2026, in a case captioned M.K. Suresh Kumar v. Union of India. That section keeps existing labour tribunals functioning. The ruling is a single-judge decision.
Which thresholds decide when a rule applies
Many of the new obligations switch on at a headcount. The sources reviewed use 10 inter-state migrant workers, 50 contract workers, and 300 workers for standing orders and layoff permission. These counts are set per establishment in the sources, so the number of staff at each site is the figure to check.
The sources do not state whether the 300-worker thresholds apply at exactly 300. Standing orders apply to establishments with '300 or more' workers, while the layoff permission applies to those with more than 300. For a company with Indian staff, the sources also do not single out foreign-owned employers. They describe obligations on employers and establishments in general.
