INDIA'S NEW LABOUR CODE

A Complete Compliance Guide for Employers

Based on India's Four Labour Codes (2019–2020)

KEY TAKEAWAY

Applicable to all Establishment, Organization, Firm, Employer. Even with just 1 employee, you have real legal obligations — centered around fair wages, timely payment, a safe workplace, a written appointment letter, and injury compensation. Bigger obligations like EPF, ESIC, and Bonus phase in as your team grows. Put Day 1 compliances in place immediately and maintain a compliance calendar as you scale.

PART A — Day 1 Obligations

Obligations from Your Very First Employee

The following requirements apply the moment you hire your first employee — no threshold, no delay.

1. Salary Structure

   Basic + DA + Retaining Allowance must constitute at least 50% of your total Cost to Company (CTC); HRA, Conveyance & other allowances cannot exceed 50%

2. Appointment Letter (IR CODE + OSHWC)

Write a letter to every employee specifying role, wages, and employment terms. Required by law from Day 1.

Sample of Appointment Letter: - Click

3. Minimum Wage (CODE ON WAGES)

Pay at or above State-notified minimum wage. Must meet the national floor wage — whichever is higher.

Central Notification as on 30/03/2026: - Click

4. Timely Payment of Wages (CODE ON WAGES)

   
   

   Daily Basis: Wages must be paid to the employee at the end of the shift on which they worked.

   Weekly Basis: Wages must be disbursed on the last working day of the week, which is strictly before the designated weekly holiday.

   Fortnightly Basis: Wages for a fortnightly period must be paid before the end of the second day following the completion of that fortnightly period  

   Monthly Basis: Salaries must be paid before the expiry of the 7th day of the succeeding month.

5. Overtime Pay (CODE ON WAGES)

Work beyond 48 hrs/week must be paid at double the normal wage rate. No exceptions.

Formula:

Overtime Pay= At least 2× normal wage; OHR = (Basic + DA) ÷ (26×8); 15–30 min = 30 min; >30 min = 1 hour [Section 14]

6. No Gender Wage Bias (CODE ON WAGES)

Cannot pay different wages for the same work based on gender. Equal pay for equal work is mandatory.

7. Wage Slip (CODE ON WAGES)

Issue a wage slip to every employee every pay period. Provides transparency and is legally required.

Sample of Wage Slip: - Click

8. Employee Compensation - Injury (SS CODE)

Liable to compensate for injury at the workplace or during commute to/from work.

9. Safe Working Environment (OSHWC CODE)

Basic legal duty to provide a safe, healthy, hazard-free workplace for all employees.

10. Working Hours Cap (OSHWC CODE)

Maximum 48 hours/week with mandatory rest intervals.

• 5-Hour Limit: No employee can be forced or allowed to work continuously for more than five hours without a break, and the minimum break duration after five hours of work must be a minimum of 30 minutes.

• Night Shift Rest: Workers deployed on night shifts must be given a minimum of 11 hours of rest between the end of one shift and the start of the next

Overwork is both illegal and harmful.

11. Annual Health Check-up (OSHWC CODE)

Free annual health check-up for employees above 40 years of age, paid by the employer.

12. Women's Night Work Consent(OSHWC CODE)

Written consent + adequate safety measures required for female employees on night shifts.

13. Hazardous Establishments(SS CODE + OSHWC)

ESIC coverage and all OSHWC provisions apply from Day 1 if work is hazardous or life-threatening.

PART B — Threshold-Based Obligations

Obligations Triggered by Employee Count

These kick in automatically when your headcount crosses certain limits.

10+ Employees — Threshold Triggered
Compliance	Code	What is Required / Contribution
ESIC	SS Code	Mandatory health insurance for employees earning below ₹21,000/month (₹25,000 for PWD). And Contribution - Employer: 3.25% | Employee: 0.75% of wages.
Gratuity	SS Code	When the employee completes 5 years’ service or 1-year fixed term Service (Contract Base). 15 days wages/year; capped at ₹20 lakh total. No salary cap.
Maternity Benefit	SS Code	Full paid maternity leave and all related benefits must be provided to eligible female employees.
OSHWC Registration	OSHWC	Formal registration under the Occupational Safety, Health & Working Conditions Code becomes mandatory.
POSH Act, 2013	OSHWC	Company have to maintain Internal Committee (IC), and Maintain Annual POSH Report (Jan. to Dec.) with Signature of District Officer.

20+ Employees — Threshold Triggered
Compliance	Code	What is Required / Contribution
EPF (Provident Fund)	SS Code	Mandatory for basic wage below ₹15,000/month. Both employer and employee contribute 12% of basic wages. Voluntary above the limit.
Statutory Bonus	Code on Wages	For employees earning ₹21,000/month or less. Bonus calculated on ₹7,000/month or applicable minimum wage, whichever is higher.
Grievance Redressal Committee	IR Code	A formal committee for workplace grievance resolution must be constituted. Gives employees a structured legal channel.

50+ Employees — Threshold Triggered
Compliance	Code	What is Required / Contribution
Creche Facility	SS Code	Under the Maternity Benefit (Amendment) Act, 2017, the mandatory employee limit to set up a crèche facility is 50 or more employees.

100+ Employees — Threshold Triggered
Compliance	Code	What is Required / Contribution
Canteen Facility	OSHWC Code	Mandatory canteen to be maintained at or be near the establishment.

300+ Employees — Threshold Triggered
Compliance	Code	What is Required / Contribution
Standing Orders	IR Code	Certified standing orders governing conduct, discipline, and service conditions are mandatory and must be formally certified.
Prior Permission — Layoff / Retrenchment / Closure	IR Code	Prior government approval required before any layoff, retrenchment, or establishment closure. You cannot act unilaterally.

PART C —  Quick Reference Summary

All Obligations at a Glance

A complete lookup for every compliance requirement and when it applies.

Obligation	From 1st Employee?	Applies When
Minimum wage	YES	Day 1
Timely payment of wages	YES	Day 1
Overtime at double rate	YES	Day 1
No gender wage discrimination	YES	Day 1
Wage slip every pay period	YES	Day 1
Appointment letter	YES	Day 1
Employee compensation (injury)	YES	Day 1
Safe working environment	YES	Day 1
Health check-up (employee 40+)	YES	Day 1
Working hours cap (48 hrs/week)	YES	Day 1
Women's night work consent	YES	Day 1 — if applicable
ESIC (hazardous work)	YES	Day 1 — if hazardous
ESIC (non-hazardous)	No	10+ employees
Gratuity	No	10+ employees
Maternity benefit	No	10+ employees
POSH Act, 2013	No	10+ employees
EPF / Provident Fund	No	20+ employees
Statutory bonus	No	20+ employees
Grievance redressal committee	No	20+ employees
Creche Facility	No	50+ employees
Canteen Facility	No	100+ employees
Certified standing orders	No	300+ employees
Prior retrenchment permission	No	300+ employees