By: Business Connect India Team
Finally in impact, India’s new labor laws replace a mishmash of previous regulations with a single, more comprehensive set of guidelines. Everyday necessities like pay, leave, working hours, and workplace security are all impacted by these developments.
Nearly everyone is impacted by the new framework, regardless of whether they work full-time, under contract, or in industry-specific positions like media, plantations, or factories.
Along with a few other significant changes that haven’t gotten enough notice, these are the main upgrades that employees should be aware of.
GRATUITY FOR FIXED-TERM EMPLOYEES AFTER A YEAR
All labor laws now have a common definition of wages, which has changed how benefits are determined. Gratuity is one of the largest changes.
Workers engaged on time-bound contracts, such as those in IT, manufacturing, media, logistics, and services, are now eligible after just one year of employment rather than five.
According to Apna’s Jobs Marketplace CEO Kartik Narayan, this official accreditation “gives employers hiring flexibility while ensuring workers are not left without basic protection.”
It gets easier to qualify for paid time off.
In order to be eligible for yearly paid leave, employees must now work 180 days each year. The previous cutoff was 240 days.Workers in seasonal or shift-heavy positions who were previously unable to satisfy the lengthier qualifying period benefit from the lower threshold.
BETTER OVERTIME PAY AND CLEARER WORKING HOURS
The eight-hour workday and forty-eight-hour workweek are still in place, but governments now have more freedom to designate the weekly timetable as four long days, five medium days, or six regular days.
States can now permit larger overtime limitations than previously, and overtime must be voluntary and paid at double the standard rate.
According to Narayan, this paradigm “balances flexibility for employers with safety and predictability for workers.”
Letters of appointment are now required.
A documented appointment letter outlining pay, responsibilities, working hours, and benefits must be given to each employee. This eliminates the uncertainty that many workers have previously experienced, particularly in the media, crafts, and services industries.
MINIMUM WAGES APPLY TO ALL SECTORS
All industries will now be subject to minimum wages, not only those that are scheduled. No state may set wages below the national floor wage, which will be established by the federal government.
Wage protection becomes ubiquitous as a result.
WILL THE TAKE-HOME PAY BE CUT?
Because a bigger portion of pay now comes within the statutory wage base and is subject to increased PF or gratuity deductions, take-home pay may often decrease significantly unless employers modify the total CTC.
SALARY PAYMENT ON TIME FOR EVERY WORKER
In the past, timely-wage regulations only applied to individuals making less than a specific amount. Every employee is now protected.Basic financial security can be strengthened by fines for salary delays.
WORKPLACE INCIDENTS INCLUDE COMMUTE-RELATED ACCIDENTS
Under certain circumstances, an accident that occurs when a worker is traveling between their home and place of employment will be considered a job-related accident.Access to insurance, ESI benefits, and compensation is improved as a result.
GROWTH OF ESIC COVERAGE IN INDIA
ESI is no longer limited to locations that have been notified. It is now possible to provide coverage for workers in factories, stores, plantations, and even dangerous one-person units.
This increases the availability of maternity benefits, disability insurance, and health insurance.
MEDIA, DIGITAL, AND AUDIO-VISUAL WORKERS’ FORMAL PROTECTION
Formal appointment letters outlining pay, working hours, and benefits must now be sent to journalists, OTT employees, digital producers, dubbing artists, and crew members.
This closes a long-standing regulatory gap in the internet and creative sectors.
FAQ: India’s New Labour Laws
1. What are the new labour laws in India all about?
India’s new labour codes consolidate several older laws into four comprehensive codes. They cover wages, social security, industrial relations, and occupational safety—impacting salaries, leave, working hours, safety, and job contracts for almost every worker.
2. Who will be affected by the new labour codes?
Almost all workers are covered, including full-time employees, contract workers, gig and platform workers, and those employed in specific industries like media, IT, manufacturing, plantations, and factories.
3. How has the definition of “wages” changed?
A uniform wage definition now applies across all labour laws. This impacts how benefits like PF, gratuity, and bonuses are calculated—potentially increasing statutory deductions.
4. What is the major change in gratuity for fixed-term employees?
Fixed-term employees can now receive gratuity after completing just one year, instead of the earlier five-year requirement. This is important for sectors like IT, logistics, media, and manufacturing where short-term contracts are common.
5. Will the new labour codes affect take-home salary?
Yes, in many cases take-home pay may reduce slightly because a higher portion of salary falls under “statutory wages,” increasing PF and gratuity deductions—unless employers restructure the CTC.
6. What are the changes in paid leave eligibility?
Employees now need 180 working days to qualify for annual paid leave, compared to 240 days earlier. This helps workers in seasonal, shift-driven, or contractual roles.
7. Have working hours or overtime rules changed?
The standard 8-hour day and 48-hour week remain.
However, states can now allow flexible weekly structures such as 4-day, 5-day, or 6-day workweeks.
Overtime is voluntary and must be paid at twice the regular wage, with higher permissible overtime limits.
8. Are appointment letters mandatory now?
Yes. Employers must provide a written appointment letter clearly mentioning pay, role, working hours, and benefits. This improves job transparency, especially in sectors like services, crafts, and media.
9. Will minimum wages apply to all industries?
Yes, minimum wages now cover every sector, not just scheduled industries. States cannot set wages below the national floor wage set by the central government.
10. What is the rule for timely salary payments?
All workers—regardless of salary level—must be paid on time. Delays can attract penalties, ensuring improved financial security for employees.
11. Are commute-related accidents covered under workplace laws?
Yes. Accidents occurring while travelling between home and the workplace may be considered work-related under certain conditions. This enhances eligibility for ESI benefits and compensation.
12. How has ESIC coverage expanded?
ESI coverage is no longer limited to notified areas. It can now be extended to workers in shops, factories, plantations, and even micro-units, improving access to health, maternity, disability, and medical benefits.
13. Do the new laws cover workers in media and digital sectors?
Yes. Journalists, OTT staff, digital creators, dubbing artists, and audio-visual crew will now receive formal appointment letters and defined working conditions—closing a long-standing regulation gap.
14. When will the new labour codes come into full effect?
The implementation timeline depends on when individual states notify the rules. Many states are still finalizing their frameworks, and full nationwide rollout may be phased.
15. Will the new labour codes impact contract and gig workers?
Yes. Contract workers get clearer terms on wages, safety, and job duration through mandatory appointment letters. Gig and platform workers gain access to certain social security benefits under the Social Security Code.
16. Do the new laws change rules for women workers?
Yes. Women can now work in all establishments and at any time of the day, provided employers ensure safety, transport, and working conditions. This expands job opportunities in night shifts and digital sectors.
17. How will the new codes affect work-from-home or remote employees?
Remote workers will also be covered under wage, leave, payment timelines, and social security provisions. Employers may need to clearly define roles and timings in appointment letters.
18. Are there changes to maternity benefits under the new codes?
Maternity benefits such as paid leave, job protection, and medical coverage remain intact. ESIC expansion also allows more women workers to receive maternity benefits.
19. What happens to unused paid leave under the new rules?
Leave encashment terms remain largely the same, but the reduced 180-day qualification period makes it easier for seasonal and contract workers to accumulate leave.
20. Do the new labour laws impact bonus eligibility?
Yes. Since the definition of wages has changed, the calculation of bonuses may differ. Employees whose statutory wage falls within the eligibility threshold will receive bonuses accordingly.
21. What does “national floor wage” mean?
The national floor wage is a minimum wage below which no state can set its own minimum wage. It ensures fair pay across states with different cost-of-living patterns.
22. How do the new rules impact small businesses and startups?
Startups must issue appointment letters, ensure timely salary payment, follow minimum wage rules, and comply with working-hour norms. However, digital filing and simplified processes ease compliance.
23. Will overtime now be mandatory for employees?
No. Overtime is voluntary. Employees cannot be forced to work extra hours, and if they agree, they must be paid at double the regular wage.
24. How will safety standards improve?
The Occupational Safety, Health and Working Conditions Code mandates better workplace safety, mandatory reporting of accidents, improved hygiene conditions, and safety training in hazardous industries.
25. Are apprentices or trainees covered under the new laws?
Apprentices have their own laws but may receive clarity on leave, safety, and accident benefits under the broader framework. Trainees employed directly by companies may fall under certain provisions.
26. Are wage deductions allowed under the new laws?
Yes, but only in specific cases such as absence, damage, advances, or legal deductions (PF/ESI). The new wage definition limits excessive structuring or arbitrary deductions.
27. Will the new codes simplify employer compliance?
Yes. The codes merge multiple overlapping laws into four unified regulations, reducing duplication, paperwork, and compliance complexity.
28. What happens if a company does not comply with the new labour codes?
Companies may face penalties, fines, and legal action for non-compliance, including for delayed wages, unsafe workplaces, or failure to issue appointment letters.
29. How do the new rules treat night shifts and overtime for women?
Women can work night shifts with their consent. Employers must ensure transportation, safety, and adequate work conditions during late hours.
30. Are employees allowed to work four-day weeks under the new labour codes?
Yes. A four-day workweek is possible if the total weekly hours (48 hours) are met. Daily shifts will be longer, possibly up to 12 hours including breaks, depending on state rules.
31. How will the new labour codes impact salary restructuring?
Many companies may restructure CTC packages to balance statutory deductions and take-home salary. The “wage” component must now constitute at least 50% of total compensation.
32. Will allowances like HRA, conveyance, and special allowances change?
Yes. Since allowances cannot exceed 50% of total salary, companies may reduce excessive allowances and shift amounts to basic wages to comply with the rule.
33. Are probationers and interns covered under the new rules?
Probationers fall under the definition of workers and are covered. Interns hired through colleges may not fall under the labour code unless they receive wages or a formal appointment letter.
34. Will companies offering flexible or hybrid work models need to make changes?
Yes. They must define working hours, break schedules, and pay structure clearly in appointment letters, even for remote or hybrid employees.
35. Does the labour code change termination or layoff rules?
The Industrial Relations Code includes provisions for notice periods, compensation, and retrenchment, especially for large establishments. Some thresholds have been eased for employer flexibility.
36. Will there be changes in PF contributions?
PF contributions remain the same (12% employer + 12% employee), but because the wage base increases for many employees, actual PF amounts deducted may rise.
37. How will gratuity be calculated under the new wage definition?
Gratuity is calculated as 15 days of wages for each completed year. With wages now standardized, gratuity amounts may increase for many employees.
38. What happens to employees working multiple gigs or freelance jobs?
Gig and platform workers may receive social security benefits through government schemes, though these rules will be implemented gradually across states.
39. Does the new code affect bonus payment frequency?
Bonus frequency remains the same (yearly), but eligibility and calculation may shift due to revised wage definitions.
40. Will small businesses face higher compliance costs?
While some costs may rise due to benefits and statutory requirements, digital compliance and simplified filings are designed to reduce administrative burden.
41. How will employee attendance and working hour tracking change?
Employers may need to adopt more accurate attendance systems—biometric, digital logs, or software platforms—to ensure compliance with daily and weekly hour limits.
42. Are there any changes for workers in hazardous industries?
Yes. Stricter safety standards, mandatory medical checks, training, and incident reporting are introduced to protect workers in factories, chemical plants, and other risky environments.
43. Will migrant workers benefit from the new labour codes?
Yes. Portability of benefits, standardized minimum wages, and easier access to social security help migrant workers receive equal protection across states.
44. What happens to unused weekly offs under the new rules?
Weekly offs remain mandatory. In flexible workweek models (4-day, 5-day, 6-day), weekly rest cannot be compromised. However, off-day structures may vary by state.
45. Are there special protections for young workers or apprentices?
Yes. Young workers must be assigned safe tasks and limited working hours. Hazardous work is restricted unless proper training and safeguards are provided.
46. Does the law mandate breaks during long workdays?
Yes. For long shifts (up to 12 hours in some states), adequate rest breaks must be given, though specifics depend on state notifications.
47. Are night shifts mandatory under flexible weekly models?
No. Night shifts remain optional. Employers must secure worker consent and provide safety measures, especially for women.
48. Will the new labour laws impact employee promotions or increments?
While promotions are not directly regulated, clearer wage definitions and structured working hours may influence internal HR policies and compensation planning.
49. Can employees refuse overtime without penalty?
Yes. Overtime cannot be forced. Employees have the right to decline additional hours without fear of disciplinary action.
50. Are digital creators, YouTubers, and OTT workers formally covered?
Yes. The codes extend formal protection—appointment letters, working conditions, and wage transparency—to media, digital, audio-visual, and OTT professionals for the first time.
