Labour Codes Brief + Redlined Policy
What the four Labour Codes change for an HR team, plus a before-and-after redline of a sample leave and overtime policy.
Changes to labour law need to be translated into practical HR and payroll actions.
I compiled a plain-language brief and drafted an educational redline for Vantara Global Services (fictional).
I separated the legal context, HR changes, related shifts and action list, then explained each policy change.
The brief
What happened
Four Labour Codes (Wages, Industrial Relations, Social Security, Occupational Safety, Health and Working Conditions) consolidate 29 central labour laws. All four were brought into force on 21 November 2025. Draft Central Rules were published on 30 December 2025, and final Central Rules were notified on 8–9 May 2026. They apply directly where the Central Government is the appropriate authority. For most private employers, State Rules apply, and many are still being finalised.
What changes for HR and payroll
- Wage definition and the 50% rule
- Gratuity eligibility including fixed-term employees
- Appointment letters before joining
- Working hours (8 per day, 48 per week) and overtime at twice the ordinary rate
- Final settlement within two working days
- Social security for gig and platform workers
- Stronger oversight of contract labour by principal employers
Related shifts
EPFO wage ceiling raised to ₹25,000 from 17 September 2026; DPDP Rules notified 13 November 2025, with main obligations due by 13 May 2027.
HR action list
- Review CTC structures against the 50% rule
- Update appointment letter templates
- Revise leave and overtime policy
- Reconfigure payroll and PF ceiling
- Redesign F&F to run clearances in parallel
- Review contract labour oversight
- Train HR and managers
Sources
Compiled October 2026.
Redlined policy
Vantara Global Services (fictional)
1. Working hours
Standard working hours are 9 hours per day, Monday to Saturday.
Standard working hours are 8 hours per day and 48 hours per week, with a rest interval after no more than five continuous hours.
Why: Central Rules reaffirm an 8-hour day and 48-hour week.
2. Overtime
Overtime is compensated with compensatory off at the manager's discretion.
Non-exempt employees who work beyond daily or weekly limits are paid overtime at twice the ordinary rate, with prior written or digital consent. Managerial and supervisory roles follow the role classification.
Why: Overtime must be paid at the prescribed rate. Check state caps.
3. Appointment letters
Appointment letters are issued within 15 days of joining.
Appointment letters, with the prescribed particulars, are issued on or before the date of joining.
Why: Statutory precondition for employment.
4. Earned leave
Earned leave accrues at 1 day for every 24 days worked.
Earned leave accrues at 1 day for every 20 days worked after 180 days of work in a year.
Why: Reflects the typical rule. Verify against the applicable state rules.
5. Final settlement
Dues are cleared within 45 days of the last working day.
Wage dues (salary, leave encashment, bonus, commissions) are paid within two working days of the last working day. Gratuity is paid within 30 days when payable.
Why: Code on Wages Section 17(2) and the Gratuity Act timelines.
6. Salary structure
Basic is 30% of CTC and allowances are 70%.
Allowances excluded from wages shall not exceed 50% of total remuneration. Structures are reviewed annually.
Why: The 50% wage rule.
Draft for educational discussion. Not legal advice. Check state rules and get legal review before adopting.
State Rules Tracker
Labour is a concurrent subject, so states issue their own rules under each Code. Sources I checked in October 2026 disagree on the status of several states, so I do not publish a status table. This worksheet shows my method: for every state where people work, check the state labour department’s gazette for each Code, record the source and date, and re-check monthly. As I read the sources, the substantive obligations apply even where state rules are pending, and state rules fill in procedure.
Central Rules were notified on 8 May 2026.
No states or union territories selected.
Draft for educational discussion. Not legal advice. Check state rules and get legal review before adopting.
In a live setting I would map the state rules for every work location, update templates when rules change, and have counsel review policies before adoption.