What Every Employer Must know about New Labour Codes 2025
A Complete Compliance Guide by Kashyaps HR Solutions (KHS)
The Government of India has officially implemented the New Labour Codes 2025 Four New Labour Codes effective from 21 November 2025, marking one of the biggest reforms in India’s labour ecosystem. These Codes replace multiple old laws and bring all wage, social security, working condition, and industrial relation requirements under one simplified framework.
At Kashyaps HR Solutions (KHS), we support employers, HR teams, MSMEs, factories, and contract-labour units across India in aligning with these new rules for smooth operations and zero compliance risk.
This blog explains the key changes, practical examples, and implementation actions every employer must take today.
🔵 1. Universal Minimum Wage & Floor Wage Compliance New Labour Codes 2025
Under the new Wage Code, all employees—permanent, temporary, trainee, contract, casual, or unorganised—must receive at least:
✔ The State Minimum Wage, and
✔ The upcoming Central Floor Wage, whichever is higher
What this means for employers:
- No worker can be paid below the legally notified minimum wage.
- Companies must revise wages for helpers, loaders, office staff, housekeeping, dispatch staff, and trainees.
Example:
If UP’s minimum wage is ₹10,500, and the floor wage is ₹11,000, then the worker must be paid ₹11,000 minimum.
🔵 2. Timely Payment of Wages & Zero Unauthorised Deductions New Labour Codes 2025
The Wage Code mandates strict timelines for salary payments. No employee should face delayed or irregular payments.
✔ Salaries must be paid within 7–10 days of the wage month.
✔ Wages must be paid during authorised leave and weekly offs.
✔ No deduction allowed unless permitted by law.
Example:
No deduction can be made for breakage or absent days without a clear policy, inquiry & employee acknowledgement.
🔵 3. Mandatory Appointment Letters for All Workers
Every employer must issue a formal Appointment Letter to every employee—permanent or temporary.
The letter must include:
- Job title & role
- Working hours & weekly offs
- Wage structure
- Probation terms
- Compliance policies
Why this matters:
It prevents disputes related to salary, overtime, leaves, or termination.
🔵 4. Salary Structure Compliance (50% Basic Rule + New Gratuity Benefit)
✔ Basic Salary = Minimum 50% of Total CTC
Under the Wage Code, the “Wage” definition is now uniform, and Basic Salary (including DA) must be at least 50% of total CTC.
Allowances cannot exceed 50%.
This rule impacts:
- PF Contribution
- Gratuity Value
- Bonus Calculation
- Overtime Rate
- Compensation on Resignation/Retrenchment
✔ New Gratuity Applicability
The Social Security Code introduces a landmark change:
- Fixed-Term Employees: Gratuity payable after 1 year of continuous service.
- Permanent Employees: 5-year requirement continues until further notification.
Example:
If CTC = ₹30,000 → Basic must be approx. ₹15,000 (not ₹5,000).
🔵 5. Working Hours, Overtime & Night Shift Compliance
The OSHWC Code standardises working hours and overtime rules:
✔ Maximum 48 hours per week
✔ Overtime must be paid at 2x the normal wage rate
✔ Women can work night shifts with written consent + safety + transport
Example:
If hourly wage is ₹120, overtime wage becomes ₹240 per hour.
🔵 6. Contract Labour, Fixed-Term, Gig & Platform Workers
The Codes clearly define different worker categories:
- Contract Labour
- Fixed-Term Employees
- Gig Workers
- Platform Workers (delivery boys, e-commerce partners)
Employers must ensure correct classification and benefits as applicable.
Example:
A 6-month fixed-term machine operator must receive proportionate leave, gratuity (if 1 year), PF, and bonus eligibility.
🔵 7. Lay-off, Retrenchment & Industrial Relations Rules
The threshold for requiring government permission for lay-offs or closure has increased:
✔ Old Limit – 100 workers
✔ New Limit – 300 workers
Meaning:
Factories employing up to 300 workers can undertake restructuring without prior government approval—subject to proper compensation rules.
Additionally, companies must establish:
- Standing Orders
- Grievance Redressal Committee
- Internal Dispute System
🔵 8. Health, Safety & Welfare Standards Under OSHWC Code
Companies must ensure mandatory welfare and safety facilities, including:
✔ Clean drinking water
✔ Separate restrooms
✔ Ventilation & lighting
✔ First-aid kits
✔ Fire safety compliance
✔ Medical checkups (for hazardous roles)
✔ Digitally maintained registers
This is especially crucial for:
- Manufacturing units
- Printing & packaging factories
- Warehouses
- Labour contractors
🔵 9. State Rule Notifications & Transitional Compliance
While the Codes are effective, individual states (UP, Delhi, WB, Haryana, Rajasthan, etc.) will issue their detailed rules.
Therefore, employers must:
✔ Maintain a state-wise compliance tracker
✔ Follow old laws where state rules are pending
✔ Prepare for transition to new registers, forms & wage formats
🟣 Why Employers Must Act NOW
Non-compliance under the New Labour Codes carries significantly higher penalties, including:
- Fines
- Legal actions
- Factory closure orders
- PF/ESI liabilities
- Employee claims
KHS strongly advises employers to complete compliance alignment by January 2026.
🟢 How Kashyaps HR Solutions (KHS) Can Support You
We offer complete compliance services:
✔ Salary Restructuring as per New Wage Code
✔ Gratuity Calculation Support (1-year rule for fixed-term staff)
✔ Appointment Letter Upgrade
✔ HR Policy Revision
✔ Factory Compliance Audit
✔ Contract Labour Documentation
✔ PF, ESIC, Bonus, Overtime Correction
✔ Labour Law Advisory for MSMEs & Factories