Labour Ministry publishes draft rules on Labour Codes, seeks response within 45 days

Taking forward the implementation work of the Labour Codes, the government has issued the draft rules for the four laws that clarify a variety of provisions including the calculation of minimum rate of wages, setting up of a National Social Security Board for gig workers and provisions on retrenchment.

The draft rules on the four Codes – Code on Wages, 2019, Code on Occupational Safety, Health and Working Conditions Code, 2019, the Industrial Relations Code, 2020 and the Code on Social Security, 2020, have been put up on the website of the Labour Ministry and comments have been sought from stakeholders within a period of 30 to 45 days.

The draft rules are the next step in the implementation of the Labour Codes that were brought into effect from November 21, 2025. Once the labour ministry gets feedback from stakeholders, it will finalise and notify the rules, making all provisions of the Codes fully effective. While the labour ministry has not given any timeline, it is expected that this will be completed over the next two to three months.

Labour Secretary Vandana Gurnani has said that some sections of the Codes need rules, some do not and these are already enforced. But a large number of sections do need rules. “There would be 45 days for all the stakeholders to give their comments. We will go through these comments and finally finalise the rules,” she had told BT in a recent interview.

The ministry has also been holding consultations with industry and other groups to understand and assess their concerns.

An FAQ released by the ministry on the Codes has clarified that the old rules will remain in force till final notification of new rules under the Code, to the extent these are in line with Codes.

It has also elaborated on the definition of wages, which would cover all remuneration whether by way of salaries, allowances or otherwise payable to a person employed. “This includes: Basic pay, Dearness allowance, Retaining allowance, if any. If the payments/allowances other than Basic pay, Dearness allowance and Retaining allowance exceed 50% or such percentage as notified of all remuneration, then amount exceeding 50% or such percentage as notified shall be added in the wages,” the FAQ said.

It also clarified that gratuity will be applicable with effect from November 21, 2025 date of enforcement of the Code. Establishments may make provision as per accounting norms.

“Gratuity shall be payable on events including termination, superannuation (retirement due to age), resignation, death or disablement due to accident or disease, expiration of a fixed-term employment contract and any other event notified by the Central Government,” it said.

The draft rules on the Code on Wages has stipulated certain criteria for calculating the minimum rate of wages. This will be based on a standard working class family which includes a spouse and two children apart from the earning employee; an equivalent of three adult consumption units; a net intake of 2,700 calories per day per consumption unit; 66 meters cloth per year per standard working class family; housing rent expenditure to constitute 10% of food and clothing expenditure; fuel, electricity and other miscellaneous items of expenditure to constitute 20% of minimum wage; and expenditure for children education, medical requirement, recreation and expenditure on contingencies to constitute 25% of minimum wage. The floor wage will be recommended by the Central Advisory Board constituted by the Centre.

On retrenchments, the draft rules on Industrial Relations Code, 2020 has said that any industrial unit that has retrenched workers will give them preference if they are filling up a vacancy within one year of the retrenchments. It has also specified the process of the Workers Reskilling Fund and has said that every employer who has retrenched a worker or workers in his industrial establishment will within 10 days from the date of retrenchment, electronically transfer an amount equal to 15 days of last drawn wages of such retrenched worker or workers into the accounts.