Should you expect a new payslip and a new roster? What the new labour codes mean for employees

What the new labour codes mean for you: Wages, overtime, leave, take-home

India’s four labour codes came into force on November 21, 2025, replacing 29 older laws with a single framework on wages, industrial relations, social security, and workplace safety.

For employees, the biggest near-term changes land in two places that hit daily life: how salary is structured and how working hours can be scheduled. Here’s what matters, without the fluff.

Salary reset: the new 'wages' rule rewires benefits

The Code on Wages introduces a uniform definition of wages across labour laws. In practice, this stops companies from parking large chunks of pay in allowances to keep statutory payouts low.

1) Basic pay must be at least 50 percent of CTC

The new wage definition effectively pushes 'wages' (basic + DA + retaining allowance) to minimum 50 percent of total CTC. Anything beyond that has to sit in allowances.

What changes for you:

PF contributions rise because PF is calculated on basic wages.
Gratuity payouts rise for the same reason.
Unless your employer hikes CTC, take-home salary may dip slightly.

2) Gratuity comes early for fixed-term workers

Fixed-term employees, common in IT, manufacturing, media, logistics and services—are now eligible for gratuity after one year, not five. That’s a structural win for contract-heavy sectors where people hop jobs long before the five-year mark.

3) Minimum wages become universal

Minimum wage protection now extends to all sectors, not just “scheduled” industries. The Centre will set a national floor wage that states can’t go below. The floor wage matters especially in low-pay, high-casualisation work, retail, construction, small factories, where state minima often lag.

4) Salary delays are now punishable for everyone

Earlier, strict timely-payment rules applied mainly to lower-income brackets. Now every worker is covered, and employers face penalties for delayed wages. Not glamorous, but for anyone who has chased HR for a salary credit, this is real leverage.

Working hours: same cap, new geometry

The codes keep the old ceiling, 8 hours a day, 48 a week, but loosen how those hours can be arranged.

1) Four-day week is legally possible

States can notify flexible weekly schedules as long as the 48-hour cap holds. That means you can be rostered for:

4 days × up to 12 hours, or
5 days × ~9.5 hours, or
6 days × 8 hours.

Whether you actually see a four-day week depends on your state rules and employer policy. The law now allows it; it doesn’t force it.

2) Overtime stays double-pay, but limits loosen

Overtime must be voluntary and paid at twice the normal wage rate.

What’s new: the earlier hard cap (75 hours/quarter under old factories rules) is no longer uniform. States can set higher overtime limits.

Good for workers who want extra income, risky if employers use overtime to normalise long shifts. Watch the state notifications.

Two under-noticed changes that still affect your paycheck and safety

Commute accidents can count as workplace incidents

If you’re injured commuting under specific conditions, it may be treated as an employment-related accident, opening the door to compensation and ESI benefits.

ESI coverage goes pan-India

ESIC is no longer limited to “notified areas.” Coverage can extend across India, including plantations and smaller/hazardous units if they meet thresholds.

What employees should do next

Check your salary breakup. If basic is <50% of CTC, your structure will change. Ask HR what happens to PF and gratuity deductions.

Look for a formal appointment letter. It’s mandatory now; if you don’t have one, push for it.

Track your state’s rules on overtime and weekly schedules. The flexibility lives in state notifications, not just the central code.

Bottom line: the codes shift India toward a cleaner, more portable labour system. But the lived experience will depend on how employers and states implement the fine print.