New Labour Codes Compliance 2026
We help employers move to India's four new Labour Codes with a structured readiness assessment, financial impact modelling and hands-on implementation, so the transition is planned, costed and compliant across every state you operate in.
The biggest change to Indian labour law in decades
India has consolidated 29 central labour laws into four Labour Codes: the Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020 and the Occupational Safety, Health and Working Conditions Code, 2020. The Codes were brought into force in November 2025, and central and state rules are being finalised through 2026.
The Codes change definitions that drive payroll costs, simplify registrations and returns, extend social security to gig and platform workers and fixed-term employees, and revise thresholds for standing orders, layoffs and contractor licensing. For most employers the impact is felt first in salary structures, PF and gratuity costs, and HR policies.
Nhancesmart runs a dedicated Labour Codes readiness assessment across all four Codes. We map each change to your workforce, model the financial impact before implementation and help you align payroll, policies, registrations and contracts, with system-level changes rather than cosmetic fixes.
What's included
- Readiness assessment across all four Labour Codes and the applicable state rules
- Wage structure review against the uniform definition of wages and the 50% rule
- Financial impact modelling of PF, gratuity, bonus and take-home pay changes
- Gratuity eligibility review for fixed-term employees
- Updates to appointment letters, HR policies and standing orders
- Registration and licensing transition under the new single registration regime
- Contract labour model review under the OSH Code
- Board and leadership briefing with a phased implementation plan
Laws and rules covered
- Code on Wages, 2019
- Uniform definition of wages, floor wage, timely payment, and equal remuneration; subsumes four wage laws.
- Code on Social Security, 2020
- PF, ESI, gratuity, maternity benefit and social security for gig and platform workers; gratuity for fixed-term employees after one year.
- Industrial Relations Code, 2020
- Standing orders, trade unions, dispute resolution, and a higher 300-worker threshold for layoff and retrenchment approvals.
- Occupational Safety, Health and Working Conditions Code, 2020
- Registration, licensing, working conditions, contract labour and factory obligations; subsumes 13 laws including the Factories Act and CLRA.
How our labour codes compliance service works
- STEP 01
Assess
We compare your current practices, structures and registrations with each Code and the rules notified for your states.
- STEP 02
Model
AI-assisted simulation models the cost of each change, including PF, gratuity and take-home pay, before anything is rolled out.
- STEP 03
Implement
Salary structures, policies, contracts, registrations and payroll settings are updated in a planned sequence.
- STEP 04
Sustain
New obligations are added to your compliance calendar in Complysmart so the change is enforced every month.
New Labour Code implementation advisory
Our new Labour Code implementation advisory starts with labour code gap analysis services: we compare your policies, contracts, salary structures and registrations with the four Codes and the state rules, and rank every gap by financial and legal impact.
For transactions and board reviews, our labour code audit and due diligence gives investors and leadership an independent view of Labour Code exposure. It sits alongside our HR statutory audit services, so Labour Code readiness and existing statutory compliance are reviewed together.
The 50% wage rule and what it means for your payroll
Under the Code on Wages, wages include basic pay, dearness allowance and retaining allowance. Certain allowances are excluded, but if the excluded components exceed 50% of total remuneration, the excess is added back to wages. Because PF, gratuity and other benefits are calculated on wages, companies with low basic pay and high allowances will see contributions rise.
We model this for your actual salary structures and suggest compliant restructuring options, so you can decide how to balance employer cost and employee take-home pay before the change takes effect.
Other changes employers should plan for
Beyond wages, these changes affect HR operations most often:
- Full and final settlement within two working days of exit
- Gratuity for fixed-term employees after one year of service
- Social security contributions for gig and platform workers by aggregators
- Women permitted to work night shifts with consent and safeguards
- Single registration, licence and return replacing multiple filings
- Higher thresholds for standing orders and retrenchment approvals
Trusted by 2000+ businesses across India
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Labour law compliance software
Powered by Complysmart
Complysmart has built-in readiness for the four Labour Codes, mapping each new obligation to your establishments and tracking it alongside existing compliance.
Prefer to run it in-house? Explore Complysmart's Labour Code Audit Management software on comply-smart.com.
Labour Codes Compliance: frequently asked questions
The Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020, and the Occupational Safety, Health and Working Conditions Code, 2020. Together they consolidate 29 central labour laws.
The Codes were brought into force in November 2025. Central and state rules are being finalised through 2026, so employers should align with the Codes now and track state rules as they are notified.
They can. If allowances excluded from wages exceed 50% of total pay, the excess is added to wages for calculating PF, gratuity and other benefits. Companies with low basic pay are most affected. We model the exact impact on your payroll.
Yes. Under the Code on Social Security, fixed-term employees become eligible for gratuity on a pro-rata basis after one year of continuous service.
Start with a readiness assessment: review salary structures against the new wage definition, update policies and contracts, and plan registration changes. Our assessment gives you a prioritised plan.
Yes. Complysmart is built around 29+ central labour laws with built-in readiness for the four Labour Codes, including state-level variations.
Explore related compliance services
Payroll Compliance Services
We make sure every payroll run follows Indian wage and social security law, from minimum wages and PF to Professional Tax and bonus, so employees are paid right and you never face a penalty for a missed deduction.
Learn more →Statutory Compliance Audit
Our statutory compliance audit checks every labour law obligation your business carries, from registrations and registers to remittances and returns, and gives you a risk-rated report with a clear plan to fix each gap before an inspector finds it.
Learn more →CLRA and Contract Labour Compliance Services
We manage your obligations under the Contract Labour (Regulation and Abolition) Act, from principal employer registration and contractor licences to registers, returns and welfare facilities, so your contract workforce is fully compliant.
Learn more →Read practical guidance on these topics on the Nhancesmart blog, or see all our services.
Book a free compliance check
Tell us about your business and our team will map your labour codes compliance obligations and the gaps to close first.