The newly introduced labour laws are set to become effective from 21st November 2025. This legislative overhaul aims to rationalize the existing 29 separate labour laws into four comprehensive codes: 

  • The Code on Wages 2019,
  • The Industrial Relations Code 2020,
  • The Social Security Code 2020, and
  • The Occupational Safety, Health and Working Conditions Code 2020.

The primary motivation behind this transition is that many current regulations were established pre-independence and have remained highly fragmented over the decades. Consequently, these changes are essential to ensure that the legal framework is aligned with the modern era and can effectively address the challenges of today’s increasingly complex economic environment.

Major Changes Include

  1. Mandatory issuance of Appointment letters to ensure formal proof of employment and job security, regardless of the wage amount.Mandatory issuance of appointment letters to ensure formal proof of employment and job security, regardless of the wage amount.
  1.  The implementation of universal minimum wages as mandated under the Code on Wages, 2019.
  1. Ensuring the timely payment of wages to all workers under the newly established labour codes.
  1. Standardization of working hours to 8 hours per day and 48 hours per week; any employee working beyond these limits will be eligible for overtime wages.
  1.  Requirement for every employee (including gig workers) to be covered under PF (Provident Fund) and ESIC (Employees’ State Insurance Scheme).
  1. All employees aged 40 and above are now mandatorily eligible for an annual free medical health checkup provided by the company.
  1. Female employees are now guaranteed equal wages compared to men and are permitted to work night shifts, provided their valid consent is obtained.
  1. Fixed-term employees (FTE) are now eligible for gratuity after completing just 1 year of service instead of the previous 5-year requirement; they are also eligible for all other benefits such as PF, maternity leave, paid leaves, and ESIC.
  1. A significant change stipulates that Basic pay plus Dearness Allowance (DA) must constitute 50% of the CTC. However, the Ministry of Labour has clarified that PF deductions for most employees will remain the same, adhering to the maximum salary cap of Rs 15,000 per month (resulting in a Rs 1,800 PF contribution), unless both parties voluntarily choose to contribute based on a higher basic wage.

Companies should adapt to these laws and implement them in their organization for the better well being of the employees. By following these rules, businesses can support their staff while staying up to date with modern standards.

By kundana vedullapalli

TAX CONCEPT

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