New Delhi: The Central government has now notified the rules under all four labour codes, completing one of the biggest labour law reforms in India in many years. These four labour codes replace 29 old labour laws and aim to make rules simpler for both workers and employers. The focus is on wages, social security, working hours, safety, and industrial relations.
The four labour 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. Together, they are designed to create one common system instead of many separate laws that often caused confusion.
One of the most important changes is related to salary structure. Under the new wage rules, basic salary plus dearness allowance must make up at least 50 percent of total salary. Earlier, many companies kept the basic salary low and gave more allowances to reduce PF and gratuity payments. Now, if allowances go above 50 percent, the extra amount will be treated as wages. This means employees may see slightly lower take-home salary, but their provident fund (PF) and gratuity savings will become higher.
Another important change is for gratuity. Fixed-term employees will now be eligible for gratuity after completing just one year of service instead of waiting for five years. This is a major relief for contract workers and employees on short-term projects. Generally, the older five-year rule will continue to apply to permanent employees. The new rules also extend social security benefits to gig and platform workers such as food delivery staff, ride-hailing drivers and app-based workers. For the first time, these workers will be covered under formal social security coverage. This may include health benefits, insurance, maternity support and old-age benefits. Platform companies will be required to contribute to a social security fund for them.
Working hours are also clearly defined. The maximum working time remains 48 hours per week. Companies may offer a four-day work week, but total weekly hours cannot go beyond 48. This means employees may work longer hours for four days and get three days off. Overtime beyond the allowed hours must be paid at double the normal wage rate.
Another major benefit is faster full and final settlement. When an employee leaves a company, the employer will be required to complete salary dues and settlement within 48 hours. Earlier, this process could take several weeks.
The rules also improve workplace safety. Firms with 50 or more employees may have to provide crèche facilities for children and in some sectors such as factories, mines and construction, annual health check-ups may be required. Appointment letters too will become mandatory in many cases. But it may take time to see the full effect as labour is a concurrent subject. This means both the Centre and states must notify their own rules before full implementation happens. Many states are still in the process of doing this.
For employees, the new labour codes may mean better long-term savings, faster settlements, and stronger legal protection. For companies, it means stricter compliance and changes in salary planning. The reforms are large, and their real effect will become clearer as more states begin full implementation.
