10 months of new labour codes: What has changed for employees and employers?

Ten months after India’s four new labour codes came into force, companies are moving from understanding the legislation to redesigning payroll, workforce structures, HR policies and compliance systems. The transition has also brought greater clarity on wages, overtime, social security and contract labour, while several implementation questions remain.

According to Grant Thornton Bharat’s September 2026 report, “India’s new labour codes: From reform to readiness”, the four codes have consolidated 29 central labour laws and are increasingly shaping day-to-day employment practices. The report is based on the position available as of September 23, 2026.

The four codes—the Code on Wages, Industrial Relations Code, Code on Social Security, and Occupational Safety, Health and Working Conditions Code—came into force together on November 21, 2025. Their stated objectives include simplifying compliance, harmonising definitions, expanding social protection, encouraging formal employment and increasing digitisation.

What has changed for employers?

One of the biggest changes is the simplified compliance architecture. The report says the number of rules has come down from 1,436 under the repealed laws to 351 under the codes. Returns have been reduced from 31 to a single consolidated return, forms from 181 to 73 and registers from 84 to eight. The framework also provides for a single registration and single licence.

The common definition of “wages” has emerged as another major implementation issue. The codes provide for 11 specified exclusions, but these cannot collectively exceed 50% of total remuneration. Any amount above the threshold is added back to wages. The change has implications for provident fund contributions, gratuity, bonus, overtime and other statutory calculations.

Employers are also reassessing how they classify workers. The report says classification should be based primarily on actual and predominant duties, decision-making authority and supervisory responsibilities rather than designation, grade or salary alone.

What has changed for employees?

Workers get clearer statutory provisions on overtime, leave and weekly rest. Overtime is payable at twice the rate of wages when prescribed working hours are exceeded, subject to applicable conditions and worker consent. Eligible workers are also entitled to one day of leave for every 20 days worked, with carry-forward provisions.

The codes also expand the social-security framework to newer forms of employment. Fixed-term employees receive the same wages and benefits as comparable permanent employees performing similar work, while fixed-term employees qualify for gratuity after one year of service. Gig and platform workers are brought into a structured social-security framework, with aggregators required to register such workers through prescribed mechanisms.

Another significant change concerns separation. Wages due in specified cases such as resignation, dismissal, removal and retrenchment must be paid within two working days, requiring companies to overhaul their full-and-final settlement processes.

The report says the next phase will be less about interpreting the law and more about embedding the requirements into payroll, technology, governance and workplace processes.