February 28, 2026
The Ministry of Labour and Employment, vide its notifications dated 30December 2025, has notified the draft central Rules under the four labour codes[1],marking a step towards the completion of a major legislative reform that became operational on 21 November 2025. These four labour codes and the rules thereunder consolidate 29 existing labour laws into a unified regulatory framework, imposing specific compliance obligations on employers while updating worker entitlements to address modern economic realities such as gig work,technological integration, and workforce mobility. The draft rules require careful examination, not only as legal requirements but as tools for managing risk and improving operations.
Wages
The Code on Wages, 2019 ("Wages Code") along with the draft Code on Wages (Central) Rules, 2025 ("Wages Rules") establish a national floor wage (the minimum wage applicable across India), determined periodically by the Central Government, which cannot be reduced by state-specific minimum wages, thereby creating nationwide uniformity across organised and unorganised sectors.
Importantly, the Wages Code narrows the definition of "wages" to mainly include basic salary, dearness allowance, and retaining allowance. All other payments such as allowances, overtime allowance (twice the ordinary rate under the Wages Code), bonus, or provident fund deductions are excluded, unless the total exclusions exceed 50% of total wages.
Additionally, monthly wages must be paid by the seventh day of the succeeding month, with permitted deductions limited to certain specified categories including cooperative society subscriptions and income tax, subject to employee consent where required and requirement that such deductions shall not exceed 50% of such wages. The Wages Code lays out that gender parity in remuneration is expressly enshrined for "similar work" assessed through four criteria: skill, effort, experience, and responsibility, strengthened by an extended limitation period of three years for resolving claims.
The Wages Rules define key terms including authorities, appellate bodies, forms, and occupational classifications (unskilled, semi-skilled, skilled, highly skilled). The Rules establish the method for calculating minimum wages based on family consumption norms, housing, and essential expenses and considers geographical area, skill level, and experience, with periodic revision of dearness allowance for wage fixation. The Central Government will prescribe and periodically revise the floor wage in consultation with the Central Advisory Board and State Governments, based on minimum living standards and cost of living adjustments, which employers must comply with across all establishments.
The Wages Rules prescribe detailed provisions for wage payment, permissible deductions, recovery of advances, fines, and loans, along with mandatory procedures for approvals and strict limits on deductions. Employers must maintain mandatory registers (employee details, wages, attendance), issue wage slips to all employees, and file applications and appeals as prescribed.
Social Security
The Code on Social Security, 2020 ("Social Security Code") introduces a significant expansion of social security coverage, introducing coverage for gig and platform workers (workers engaged through digital platforms such as ride-sharing or food delivery applications) alongside unorganised labour, implemented through mandatory contributions by aggregators (the platforms that connect service providers with users) at 1 to 2% of annual turnover (capped at 5% of worker payouts). These contributions finance an array of benefits including life and disability insurance, healthcare benefits, maternity support, old age pensions, and crèche facilities, making platforms legally accountable for their contingent workforce.
Employees engaged on fixed-term employment become entitled to gratuity upon completion of one year of service under the contract. Any period of service in excess of six months, but less than one year, is to be treated as a completed year for the purposes of gratuity computation.
The draft Code on Social Security (Central) Rules, 2025 ("Social Security Rules") impose several specific compliance obligations on employers. All establishments must register electronically on the Shram Suvidha Portal and maintain updated details for ongoing compliance. Appeals against Employees' Provident Fund decisions must be filed before the EPF Tribunal within 60 days with a fee of ₹5,000 and supporting documents. Where gratuity is payable to a minor nominee, the amount must be invested in a term deposit until the nominee attains majority. Additionally, employers are required to verify gratuity claims and respond within 15 days, with payment due within 30 days, and any disputes referred to the competent authority.
For maternity benefits, women employees must provide medical certificates in Form X and notice in Form XI. Employers must pay maternity benefits and medical bonus promptly, allow nursing breaks, and provide crèche facilities in establishments employing fifty or more employees.
The Social Security Rules establish a compounding mechanism for offences: the Compounding Officer issues an electronic notice, and payment must be made within 15 days, failing which prosecution proceedings will be initiated. Compounding remains available post-prosecution under Section 138(6) of the Social Security Code.
Industrial Relations
Under the Industrial Relations Code, 2020 ("IR Code"), establishments employing 300 or more workers are required to obtain prior government approval for layoffs, retrenchments, and closures, a threshold increased from the earlier limit of 100 workers. The Code also mandates the creation of a reskilling fund, requiring employers to contribute an amount equivalent to fifteen days' wages for each retrenched worker, aimed at supporting workforce transition. Fixed-term employees are entitled to benefits equivalent to those of permanent workers, proportionate to the period of service.
The draft Industrial Relations Code (Central) Rules, 2020 ("IR Rules") streamline dispute resolution and communication procedures through electronic means, including email, designated portals, and digital payments. Further, they stipulate that settlements of industrial disputes must be recorded in Form I, signed by authorised representatives, and submitted electronically or by post to the Deputy Chief Labour Commissioner and conciliation officer.
Industrial establishments employing 20 or more workers must form a Grievance Redressal Committee with equal employer-worker representation to resolve disputes internally, with unresolved matters escalated to conciliation. The Rules establish a framework for recognition of negotiating unions or councils for three years, covering matters such as wages, working hours, leave, and safety, with trade union disputes referred to the Tribunal in Form II within one year.
The IR Rules prescribe Model Standing Orders for mines, manufacturing, and service sectors, outlining the adoption, certification, and deemed certification process. Employers intending to change service conditions must serve prior notice electronically or by post and display it prominently at the workplace. Disputes may be referred to arbitration through mutual agreement in Form V with the consent of arbitrators. Conciliation officers handle strike and lockout notices, with tribunals deciding monetary claims within three months. Aggrieved employees may file complaints in Form XVI electronically or by post.
Occupational Safety, Health and Working Conditions
Establishing uniform safety and welfare standards across India, the Occupational Safety, Health and Working Conditions Code, 2020 (the "OSHWC Code") and the draft Occupational Safety, Health and Working Conditions (Central) Rules, 2025 (the "OSHWC Rules") place primary responsibility on principal employers for ensuring statutory welfare facilities for contract labour, including canteens, restrooms, drinking water, and crèche facilities.
Under the OSHWC Code, women employees may work night shifts with their express consent, subject to compliance with prescribed safety, transportation, and security measures. The OSHWC Code extends specific protections to interstate migrant workers, including journey allowances and access to welfare schemes, and mandates the issuance of appointment letters specifying the terms of employment.
The OSHWC Rules require employers to submit electronic notice of commencement or cessation of operations in Form IV within 30 days, certifying payment of all dues and clearance of hazardous substances. Employers must conduct free annual health check-ups for employees aged 40 and above within 120 days of the calendar year, documented in Form V. Appointment letters containing complete details (name, date of birth, wages, social security information) must be issued before employment commences or within three months of the Rules' enforcement.
Accidents causing death must be reported immediately, and serious injuries causing 48 hours or more of incapacity must be reported within 12 hours. Dangerous occurrences and notifiable diseases must also be reported electronically.
As per the OSHWC Rules, working hours are capped at 48 hours per week, with daily work periods and intervals as notified by the Central Government. Contractors must meet eligibility criteria and obtain licenses valid for five years through the Shram Suvidha Portal, ensuring timely wage payments and compliance with EPFO and ESIC requirements. Authorized officers are required to issue electronic notices for compounding offences under Section 114, with payment due within 15 days, failing which prosecution will proceed.
Conclusion
The draft central rules represent a critical bridge between legislative intent and operational reality, translating the four labour codes into actionable compliance frameworks. Employers must now move beyond passive awareness to active preparation, ensuring their policies, systems, and practices align with these emerging regulatory requirements before the final notification.
[1] Code on Wages, 2019, Occupational Safety, Health and Working Conditions Code, 2020, Industrial Relations Code, 2020, Code on Social Security, 2020
