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India’s labour laws were historically complicated—spread across 29 acts, multiple ministries, outdated definitions, unclear enforcement, and state-wise variations.
To solve this, the Government of India introduced four major codes:
✔️ The Code on Wages, 2019
✔️ The Industrial Relations Code, 2020
✔️ The Social Security Code, 2020
✔️ The OSHWC Code, 2020
These codes modernise India’s labour landscape by:
Replaces: Minimum Wages Act, Payment of Wages Act, Payment of Bonus Act, Equal Remuneration Act
Key features:
➡️ Ensures fairer, transparent salary practices.
Merges major acts like EPF, ESI, Maternity Benefits, etc.
Key features:
➡️ Brings millions under formal protection.
Replaces Trade Unions Act, Industrial Disputes Act, Standing Orders Act.
Key features:
➡️ More flexibility + better structure for industrial relations.
D. 🏗️ OSH & Working Conditions Code, 2020
Covers factories, mines, construction, IT, logistics & more.
Key features:
➡️ Creates safer, modern workplaces.
Basic Salary + DA must be at least 50% of CTC.
Before:
Basic 30%, Allowances 50%, Bonus 20% → Low PF & gratuity
After:
Basic 50%, Allowances 30%, Bonus 20% → Higher PF & gratuity
Working Hours:
Overtime:
Leave:
Pros: Flexibility, safety, fixed-term clarity
Cons: Higher PF, gratuity, overtime cost
Pros: More women in workforce, transparency
Cons: Salary restructuring required
Pros: Legal recognition, insurance & pensions
Cons: Higher operational cost for platforms
Pros: Flexible shifts, stability
Cons: Higher OT/weekend costs
Pros: Simplified compliance & single licence
Cons: Increased cost of wages & welfare
Pros: Strong safety rules
Cons: Contractor compliance challenges
PF underpayment penalties
Backdated compliance liabilities
Fines for missing appointment letters
Litigation from workers
Business closure in extreme cases
Compliance is mandatory, not optional.
Increase variable pay
Use reimbursements
Optimize workforce planning
Digitize attendance
Improve contractor compliance
11-month contracts
PF exclusion tactics
Allowance-heavy salary structures
Step 1: Salary Structure Audit
Step 2: Workforce Classification Audit
Step 3: Document Review
Step 4: HR Policy Updates
Step 5: Align Payroll & HRMS
Step 6: Contractor Compliance Check
Step 7: Training HR & Supervisors
The New Labour Codes represent a major transformation.
Companies that adapt early will:
Reduce risk
Improve employee loyalty
Strengthen culture
Stay audit-ready
Those who delay risk penalties, disputes, and disruption.
Learn more from our collection of Blogs Here.
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