India's New Labour Codes: Draft Rules Detail Wage, Working Hour Changes | Quick Digest
India's four new Labour Codes, effective November 21, 2025, now have pre-published draft rules outlining significant changes to wages, working hours, and social security. These rules clarify the wage definition, potentially increasing social security contributions, and mandate a 48-hour workweek, though daily hour flexibility raises exploitation concerns.
Four Labour Codes enacted, effective November 21, 2025.
Draft rules published for public feedback on wages and working conditions.
New wage definition caps allowances at 50%, impacting PF and gratuity.
48-hour workweek maintained, but daily hours flexible, raising exploitation fears.
Gig, platform workers, and fixed-term employees gain social security, gratuity benefits.
Mandatory appointment letters and annual health checks for employees.
India's government has implemented four landmark Labour Codes – the Code on Wages, 2019; the Industrial Relations Code, 2020; the Code on Social Security, 2020; and the Occupational Safety, Health and Working Conditions Code, 2020 – effective November 21, 2025, consolidating 29 existing central labour laws. The Ministry of Labour and Employment subsequently pre-published draft Central Rules under these codes around December 30, 2025, inviting objections and suggestions from stakeholders within a 30 to 45-day window. Until the final rules are formally notified, existing regulations will continue to apply.
Key provisions within these draft rules bring significant changes. The definition of 'wages' has been revised to include basic pay, dearness allowance, and retaining allowance, with a crucial stipulation that allowances (excluding gratuity and retrenchment compensation) cannot exceed 50% of an employee's total remuneration. Any excess amount will be added back to the 'wages' for statutory calculations, potentially leading to increased contributions for provident fund (PF), National Pension System (NPS), and gratuity. Minimum wages are now a statutory entitlement for all workers, with the Central government setting a national floor wage.
Regarding working hours, the Occupational Safety, Health and Working Conditions Code consolidates limits, maintaining a maximum 48-hour workweek, with overtime paid at twice the regular rate for work exceeding this limit. However, a significant concern raised by labour experts is that the draft rules for the Code on Wages do not explicitly specify a daily working hour limit, leaving it to the Central or state governments to notify. This flexibility has sparked fears of potential exploitation, particularly for gig and daily wage earners, as governments could potentially allow daily shifts of 10 to 12 hours. Furthermore, the codes formally recognise gig and platform workers, bringing them under the social security framework. Fixed-term employees will also be eligible for gratuity after one year of service, and mandatory appointment letters are required for all employees.
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