Key takeaways
- The four Labour Codes took effect on 21 November 2025, repealing 29 central labour laws.
- The Centre notified its rules in May 2026; most states are still notifying theirs.
- Employers should act now on wages, policies, appointment letters and contract labour, not wait for every state.
Are the Labour Codes in force?
Yes. 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 took effect on 21 November 2025. Together they repealed 29 central labour laws, the oldest dating back to 1923.
The Central Government notified its rules under the Codes in May 2026. Because labour is a Concurrent List subject, states must notify their own rules for the establishments they regulate. Many states have published drafts and some have notified final rules; the Union Labour Secretary has indicated that all states and UTs may notify their rules by 31 October 2026.
Why does the state position matter?
For most private employers, the "appropriate government" is the state. Until your state notifies its rules, many registers, returns and licences continue in the legacy formats under savings provisions, even though the substantive rights under the Codes already apply. In practice, employers need to run legacy procedures and Code-based obligations side by side for a while.
What changes for employers?
The most significant change for most employers is the uniform definition of wages. Basic pay, dearness allowance and retaining allowance must make up at least 50% of total remuneration; if excluded allowances exceed 50%, the excess is added back to wages. This affects gratuity and other statutory calculations.
Other important changes include appointment letters for employees, gratuity for fixed-term employees after one year, a higher factory threshold (20 workers with power, 40 without), a contract labour threshold of 50 workers, standing orders at 300 workers, and higher penalties with provisions for compounding.
What should employers do now?
- Map applicability: list every establishment, its state and headcount, and which Code provisions apply.
- Test salary structures against the new definition of wages and model the cost.
- Update HR policies, appointment letters and, where required, standing orders.
- Review contract labour arrangements against the new thresholds and core-activity restrictions.
- Track state notifications and plan migration to single registration and consolidated returns as each state goes live.
Frequently asked questions
When did the Labour Codes come into force?
On 21 November 2025.
Have all states notified their Labour Code rules?
Not yet. States are notifying rules on staggered dates; the Labour Secretary has indicated completion by 31 October 2026 is expected.
What is the 50% wage rule?
If excluded allowances exceed 50% of total remuneration, the excess is treated as wages for statutory calculations.
- Business Standard, states may notify labour code rules by Oct 31
- Ministry of Labour & Employment, FAQs on the OSH Code
This article is for general information and is not legal advice. Rules change through notifications, confirm the current position for your establishment.
