New labour laws in India 2026: a practical guide for employers and employees

India has spent the better part of seven decades building employment law on a thicket of about 29 central statutes — the Industrial Disputes Act, the Factories Act, the Payment of Wages Act, the Minimum Wages Act, the Contract Labour Act, the Employees' Provident Funds and Miscellaneous Provisions Act, and a long tail of others. The four labour codes passed by Parliament between 2019 and 2020 are intended to consolidate this thicket into a single, modern framework. As of 2026, the codes are being implemented in phases, and the practical impact on employers and employees is finally beginning to crystallise.

This guide is written for two audiences: employers (founders, HR teams, small-business owners) trying to understand their obligations under the new regime, and employees trying to understand what they can still claim and what is changing. It does not attempt comprehensive coverage. It focuses on the points that come up most often in disputes.

The four codes at a glance

The new framework consists of four codes, each consolidating between four and fourteen earlier statutes. They are:

• Code on Wages, 2019 — consolidates the Payment of Wages Act, the Minimum Wages Act, the Payment of Bonus Act, and the Equal Remuneration Act. Establishes a national floor wage and standardises the definition of "wages."
• Industrial Relations Code, 2020 — consolidates the Industrial Disputes Act, the Trade Unions Act, and the Industrial Employment (Standing Orders) Act. Restructures dispute resolution, retrenchment thresholds, fixed-term employment, and standing orders.
• Code on Social Security, 2020 — consolidates the EPF Act, the ESI Act, the Maternity Benefit Act, the Payment of Gratuity Act, the Building and Other Construction Workers Act, and several others. Extends social security to gig and platform workers for the first time.
• Occupational Safety, Health and Working Conditions Code, 2020 (OSH Code) — consolidates the Factories Act, the Contract Labour Act, the Inter-State Migrant Workmen Act, and around ten others. Standardises working hours, leave, safety obligations, and contractor regulation.

Why this matters even if you have never read a labour statute

The change that will affect almost every salaried Indian is the new definition of wages in the Code on Wages. Under the old framework, "basic salary" was often kept artificially low so that PF, gratuity, and bonus calculations would also be low — with the balance paid as allowances. The new definition requires that "wages" include at least 50% of the total remuneration. The practical consequences are immediate:

• Provident fund and gratuity contributions will go up for many employees, because they are calculated on the higher "wages" base.
• Take-home pay may marginally fall, because more of the salary is being routed into statutory contributions.
• Long-term retirement benefits will improve.
• Employers will face compliance audits for any salary structure designed to keep "basic" artificially low.

This is a structural change. It is not optional and not phaseable.

Industrial Relations Code: the changes employers and employees both need to understand

This is the code where most disputes will arise. The headline changes are:

Retrenchment threshold raised from 100 to 300

Earlier, an industrial establishment with 100 or more workers needed prior government permission to lay off, retrench, or close. The Industrial Relations Code raises that threshold to 300. The practical effect is that many medium-sized firms can now retrench workers without prior government approval, subject to notice and compensation requirements. State governments retain the power to set higher thresholds.

For employees, this means the procedural shield against retrenchment that used to apply at 100 workers will, in many establishments, no longer apply. The remedy is not lost — but it shifts from administrative permission to challenge after the fact, which is procedurally a worse position.

Fixed-term employment is now formally recognised

The Code legitimises fixed-term contracts and entitles fixed-term employees to the same wages, benefits, and pro-rata gratuity as permanent employees. This is a significant change. Employers who used contract labour to avoid permanent-employee obligations will now find that fixed-term employees have substantially the same protections.

Strikes and lockouts: new notice and "negotiation" requirements

The Code requires 14 days' notice for any strike or lockout in an industrial establishment, and prohibits strikes during conciliation proceedings. Spontaneous "wildcat" strikes are now illegal across a much wider class of establishments than before.

Standing orders threshold raised to 300

Earlier, every establishment with 100 or more workers had to have certified standing orders covering classification of workers, work hours, leave, holidays, and disciplinary action. The threshold is now 300. Employers below 300 workers may use a model standing order.

Social Security Code: the gig and platform-worker breakthrough

For the first time, Indian law explicitly recognises gig workers and platform workers as a distinct category and creates a framework for extending social security to them. The Code empowers the Central Government to frame schemes covering life and disability cover, accident insurance, health and maternity benefits, and old-age protection for these workers. Implementation is being rolled out State by State, but the legislative shift is significant.

The Code also makes ESI applicable to all establishments employing 10 or more workers (earlier this varied by State and sector), and permits voluntary coverage for smaller employers.

OSH Code: working hours, leave, and contractor regulation

The OSH Code consolidates the safety and welfare statutes. The points that come up most often in practice are:

• Working hours. A standard ceiling of 48 hours per week is retained. Daily working hours and overtime limits are now uniform across sectors, with State-level rules permitting flexibility.
• Leave entitlement. Earned leave accrues at one day for every 20 days worked (previously 240 days qualifying threshold for many statutes). The qualifying threshold has been reduced.
• Contractor regulation. Contractors employing 50 or more workers (raised from 20) must be licensed. The principal employer remains liable for wages and welfare in the event of contractor default — this exposure has not been diluted.
• Women in night shifts. Women may now be employed in all establishments, including in night shifts, subject to safety, consent, and welfare conditions.

What stays unchanged: the protections employees still have

Despite the consolidation, the substantive employee-side protections remain. An employee who is wrongfully terminated, denied wages, denied gratuity, sexually harassed at the workplace, or retaliated against for union activity has the same fundamental rights — they are now exercised under different statutory chapters but the cause of action survives.

Critically, the protection against discrimination in remuneration, the prohibition on bonded labour, the maternity benefit framework, the gratuity entitlement after five years of continuous service, and the POSH Act framework (which is separate from the four codes) all continue.

What this means in practice — typical disputes under the new regime

From a litigation standpoint, the disputes that will dominate the next few years are:

• Wrongful termination and retrenchment challenges — particularly in establishments between 100 and 300 workers, where the procedural shield has been removed.
• Salary restructuring disputes — where employers attempt to restructure salaries to absorb the higher PF and gratuity costs by reducing other allowances. Employees often have a contractual claim against unilateral reduction.
• Fixed-term contract disputes — particularly around non-renewal, pro-rata gratuity, and parity of benefits.
• Gig-worker disputes — early test cases on whether platform workers qualify for the new social-security framework, and how employers frame the relationship.
• Standing orders compliance — for employers crossing the 300-worker threshold for the first time, certification of standing orders becomes a fresh compliance burden.
• POSH and workplace investigations — unaffected by the codes but increasingly intersecting with termination litigation, where dismissal is alleged to be retaliatory.

What employers should be doing now

• Audit the salary structure against the new "wages" definition. Identify the gap and budget for the higher PF and gratuity outflow.
• Review fixed-term and contractor arrangements for parity of benefits and licensing exposure.
• Update standing orders or adopt the model standing order, as applicable.
• Map establishment headcount against the 100/300 thresholds for retrenchment and standing orders.
• Review the gig and platform worker framework if your business model uses such workers — early structural decisions will matter when the schemes are notified.
• Refresh the POSH policy and Internal Complaints Committee composition. Termination disputes increasingly intersect with POSH.

What employees should be doing now

• Read your salary slip carefully against the new wages definition — if the structure changes, understand the new "basic" component and the contribution to PF and gratuity.
• Keep records of your appointment letter, salary slips, increment letters, and any communications around termination, demotion, or transfer. These documents are the foundation of any subsequent dispute.
• If you are on a fixed-term contract, understand your pro-rata gratuity entitlement and the parity-of-benefits rule.
• If you are a gig or platform worker, monitor State notifications on the social-security framework — registration on the e-Shram portal will be the gateway to most schemes.
• If you are facing termination, retrenchment, or non-renewal, do not sign a "full and final" release before reviewing it. Once signed, most claims become harder to pursue.

Where the codes meet the courtroom

The Industrial Relations Code creates a two-tier dispute-resolution structure: an Industrial Tribunal at first instance (with conciliation as a preliminary step), and the High Court for writ-jurisdiction challenges. The earlier scheme of Labour Courts and Industrial Tribunals as separate forums has been merged. The procedural rules will be fleshed out by the Central and State governments as the Code is implemented in each State.

For wage disputes, the Code on Wages provides for an Authority appointed by the Government, with appeal to a designated appellate authority. Writ jurisdiction remains available where there is a question of law or where the statutory machinery fails.

For social-security claims (PF, ESI, gratuity, maternity benefit), the existing tribunal architecture continues, with the substantive provisions now drawn from the Social Security Code rather than the predecessor statutes.

The honest summary

The labour codes are not a deregulation. They are a reorganisation. Some employer-side flexibilities have been added (the 300-worker threshold for retrenchment, the 300-worker threshold for standing orders, fixed-term employment, contractor licence threshold raised). Some employee-side protections have been added (gig and platform worker recognition, parity for fixed-term employees, higher floor for "wages"). The procedural architecture has been consolidated. The substantive rights of employees against wrongful termination, denial of statutory dues, and workplace harassment remain.

For employers, the work is in compliance restructuring. For employees, the work is in record-keeping and timely escalation. For both, the new regime rewards advance preparation and punishes after-the-fact attempts to "fix" structural decisions.

In employment and labour matters, Vikram Singh Kushwaha advises both employer-side clients on compliance restructuring and employee-side clients on wrongful termination, ESOP disputes, and claims under the new wages and social-security framework. The starting point in either case is usually a careful review of the contract, the salary structure, and the establishment-size classification — those three documents shape almost every downstream argument.