New labour code expands who counts as family, boosting social security for more dependants
Debjani Aich, Partner at CMS INDUSLAW, says the shift reflects a deeper recognition of India’s evolving household structures and the rising number of workers—particularly women—who shoulder the primary financial burden for their extended family.
- Nov 29, 2025,
- Updated Nov 29, 2025 1:58 PM IST
India’s revised Labour Code has introduced one of the most far-reaching updates to employee social security in years by expanding the definition of “family” to include a much wider group of dependents. Workers can now nominate in-laws, maternal grandparents, and dependent siblings for statutory benefits, including ESIC insurance, EPF-linked entitlements, and gratuity. The change addresses a long-running gap in the system where claims were frequently rejected because relatives who were financially dependent on an employee did not fall under the earlier narrow definition.
Debjani Aich, Partner at CMS INDUSLAW, says the shift reflects a deeper recognition of India’s evolving household structures and the rising number of workers—particularly women—who shoulder the primary financial burden for their extended family. “The Code on Social Security has introduced an expanded scope of the terms ‘family’ and ‘dependant’, and this directly influences who is covered under the ESIC and other statutory benefit frameworks,” she notes.
Who is now covered
Under the revised framework, “family” has been broadened significantly. According to Aich, the new definition now includes a woman employee’s father-in-law and mother-in-law, subject to income limits, marking a major change from the earlier regime where only her own parents could be included. The definition also covers a minor unmarried brother or sister who is wholly dependent on the employee when the parents are not alive.
The term “dependant” has also been widened to cover relatives such as widowers and grandparents. This expansion positions the legal framework to better reflect real caregiving relationships, especially in cases where a woman is the sole or primary earner.
On November 28, 2025, the ESIC issued a notification confirming that all benefit processing must incorporate these expanded definitions, formally bringing the reforms into operation.
Statutory vs employer-run schemes
While the expanded definition applies fully to statutory benefits under ESIC, EPF and gratuity, Aich stresses that this does not automatically extend to employer-run benefits like corporate group mediclaim, wellness programmes or medical reimbursements. These remain voluntary schemes, and each organisation will continue to decide eligibility based on its own policy unless it independently chooses to align with the new statutory definitions.
Aich recommends that employers consider aligning their internal policies for consistency, fairness and clarity. Doing so would also reduce disparities between statutory coverage and company-provided benefits.
Operational challenges
The revised definitions introduce substantial administrative responsibilities for employers and HR teams. Historically, nomination records have been poorly updated across industries, with employees rarely revising their dependants after marriage or major life events. This gap caused extensive payout issues during the pandemic, when conflicting or outdated nominations resulted in delays and disputes.
Aich warns that similar challenges are likely to arise under the new framework, particularly because the procedural forms and registers required under the Labour Code have not yet been issued by central or state authorities. She advises employers to take early action by:
> Notifying employees of the expanded eligibility
> Collecting updated nominations and dependency declarations immediately
> Maintaining provisional internal records until statutory formats are released
> These steps, she says, will help avoid compliance lapses and mitigate disputes over benefits.
Caveats and timely updates
There are exceptions within the new structure. In cases of divorce or legal separation, the relationship with parents-in-law usually ceases, meaning their dependency status typically ends. Employees must therefore update nominations promptly. Employers must ensure accurate record-keeping to avoid legal complications and ensure the right beneficiaries receive statutory payouts.
Overall, Aich emphasises that the expanded definitions bring India’s social security laws closer to modern family realities—and ensure statutory benefits reach those who genuinely depend on the country’s workforce.
India’s revised Labour Code has introduced one of the most far-reaching updates to employee social security in years by expanding the definition of “family” to include a much wider group of dependents. Workers can now nominate in-laws, maternal grandparents, and dependent siblings for statutory benefits, including ESIC insurance, EPF-linked entitlements, and gratuity. The change addresses a long-running gap in the system where claims were frequently rejected because relatives who were financially dependent on an employee did not fall under the earlier narrow definition.
Debjani Aich, Partner at CMS INDUSLAW, says the shift reflects a deeper recognition of India’s evolving household structures and the rising number of workers—particularly women—who shoulder the primary financial burden for their extended family. “The Code on Social Security has introduced an expanded scope of the terms ‘family’ and ‘dependant’, and this directly influences who is covered under the ESIC and other statutory benefit frameworks,” she notes.
Who is now covered
Under the revised framework, “family” has been broadened significantly. According to Aich, the new definition now includes a woman employee’s father-in-law and mother-in-law, subject to income limits, marking a major change from the earlier regime where only her own parents could be included. The definition also covers a minor unmarried brother or sister who is wholly dependent on the employee when the parents are not alive.
The term “dependant” has also been widened to cover relatives such as widowers and grandparents. This expansion positions the legal framework to better reflect real caregiving relationships, especially in cases where a woman is the sole or primary earner.
On November 28, 2025, the ESIC issued a notification confirming that all benefit processing must incorporate these expanded definitions, formally bringing the reforms into operation.
Statutory vs employer-run schemes
While the expanded definition applies fully to statutory benefits under ESIC, EPF and gratuity, Aich stresses that this does not automatically extend to employer-run benefits like corporate group mediclaim, wellness programmes or medical reimbursements. These remain voluntary schemes, and each organisation will continue to decide eligibility based on its own policy unless it independently chooses to align with the new statutory definitions.
Aich recommends that employers consider aligning their internal policies for consistency, fairness and clarity. Doing so would also reduce disparities between statutory coverage and company-provided benefits.
Operational challenges
The revised definitions introduce substantial administrative responsibilities for employers and HR teams. Historically, nomination records have been poorly updated across industries, with employees rarely revising their dependants after marriage or major life events. This gap caused extensive payout issues during the pandemic, when conflicting or outdated nominations resulted in delays and disputes.
Aich warns that similar challenges are likely to arise under the new framework, particularly because the procedural forms and registers required under the Labour Code have not yet been issued by central or state authorities. She advises employers to take early action by:
> Notifying employees of the expanded eligibility
> Collecting updated nominations and dependency declarations immediately
> Maintaining provisional internal records until statutory formats are released
> These steps, she says, will help avoid compliance lapses and mitigate disputes over benefits.
Caveats and timely updates
There are exceptions within the new structure. In cases of divorce or legal separation, the relationship with parents-in-law usually ceases, meaning their dependency status typically ends. Employees must therefore update nominations promptly. Employers must ensure accurate record-keeping to avoid legal complications and ensure the right beneficiaries receive statutory payouts.
Overall, Aich emphasises that the expanded definitions bring India’s social security laws closer to modern family realities—and ensure statutory benefits reach those who genuinely depend on the country’s workforce.