India Labour Codes Implementation Status 2026: What's In Force, What's Not, What HR Must Do

The Most Significant Employment Law Change in Three Decades Just Went Live

On November 21, 2025, the Government of India notified all four labour codes as effective law. 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 are now in force nationwide. The 29 central labour laws they replace stand repealed.

This is the most important operational change for HR and compliance teams in India in at least three decades. But — and this caveat matters — “effective” does not mean “fully enforceable.” The codes themselves are law. The detailed central rules are still in draft. State rules are at varying stages. Certain provisions within the codes explicitly require subsequent notification from the Central Government or state governments before they become operational.

If you read our earlier post on India’s New Labour Codes 2025, this is the follow-up focused on implementation status as of April 2026: what is genuinely in force, what is still pending, what states have notified, and exactly what HR must do in the next 60 days.

What Actually Happened on November 21, 2025

The Ministry of Labour and Employment issued gazette notifications bringing all four codes into force. A corrigendum was issued on December 19, 2025, clarifying certain cross-references. The effect:

• All substantive provisions of the four codes that do not require further rule-making are operative
• Certain specific provisions that explicitly require subsequent notification (wage ceilings, threshold figures, sector-specific exemptions, procedural frameworks) remain inoperative until those notifications are issued
• 29 central labour laws stand repealed, including the Payment of Wages Act, 1936; Minimum Wages Act, 1948; Industrial Disputes Act, 1947; Factories Act, 1948; Trade Unions Act, 1926; Payment of Bonus Act, 1965; EPF & MP Act, 1952; ESI Act, 1948; Payment of Gratuity Act, 1972; Maternity Benefit Act, 1961; and 19 others

Draft Central Rules Timeline

On December 30, 2025, the Ministry of Labour and Employment published draft central rules under all four codes. The consultation periods:

• Industrial Relations Code, 2020: 30-day comment window (December 31, 2025 – January 30, 2026)
• Code on Wages, Code on Social Security, OSH Code: 45-day comment window (December 31, 2025 – February 14, 2026)

Government officials have indicated that final central rules are expected to be notified around April 1, 2026, at which point the full operational framework becomes concrete.

State Rules: The Fragmented Reality

Labour is a concurrent subject under the Indian Constitution, meaning both central and state governments legislate. The codes established the national framework, but each state must draft and notify its own rules for the full operational detail — inspection procedures, form formats, sector-specific registers, welfare-fund contributions, and state-specific exemptions.

Notification Progress as of April 2026

This table is a snapshot. State labour departments update their notifications regularly, and we recommend checking the relevant state labour portal before finalizing any compliance action that turns on state-specific rules.

Why the Fragmentation Matters

If your team operates in one state, you track one set of rules. If you have employees across six states — the norm for remote-first foreign employers — you need to track six implementation timelines, each with its own effective date, form numbers, inspector procedures, and labour welfare fund rates.

A remote engineer in Bengaluru (Karnataka, rules notified) and a remote engineer in Chennai (Tamil Nadu, rules in draft) may, for a few months in 2026, be subject to slightly different procedural regimes even though the substantive code provisions are identical.

What Is Definitively In Force Today

The Code on Wages, 2019: Substantive Effect

The most consequential single change is the new definition of “wages.” Under the code, wages include basic pay, dearness allowance, and retaining allowance. Specified exclusions include HRA, conveyance, overtime, gratuity, bonus, and employer PF contributions. But if those exclusions exceed 50% of total remuneration, the excess is deemed wages — and counts toward PF, gratuity, and bonus calculations.

For a CTC structure where basic salary has historically been 30-40% of CTC to minimize statutory contributions, this provision forces restructuring. Our earlier post walked through the modelling: a 10-employee team at ₹20L CTC each sees roughly ₹2.4 lakh in additional annual PF cost when basic moves from 40% to 50%.

The provision is in force from November 21, 2025. Employers who have not restructured are technically non-compliant on contributions, though practical enforcement awaits the rule framework.

Industrial Relations Code, 2020: Key Effects

Now in force:

• Fixed-term employment formally recognized with identical benefits to permanent employees and pro-rata gratuity regardless of tenure
• Retrenchment threshold raised from 100 to 300 workers for government approval requirements
• Strike notice of 14 days mandatory for all establishments (previously public utilities only)
• Standing orders required for establishments with 300+ workers (raised from 100)

Code on Social Security, 2020: Key Effects

Now in force:

• 26-week maternity leave consolidated and codified
• Gig worker framework recognized (scheme-level detail pending)
• Pro-rata gratuity for fixed-term workers — no 5-year service requirement
• Aadhaar-based registration for social security schemes

OSH Code, 2020: Key Effects

Now in force:

• Single registration for establishments employing 10 or more workers (replacing separate Factories Act, CLRA, ISMW registrations)
• Working hours capped at 8 per day; overtime at 2x wages
• Annual health check-ups mandated for workers above a prescribed age (age to be notified)
• Contract labour threshold raised to 50+ workers for CLRA-type obligations

What Is Not Yet Operational

Specific provisions remain inoperative pending further notifications:

The distinction matters because compliance questions now require two checks: does the code provision apply, and is the procedural framework for compliance in place? For most employers, the answer is “yes” on substantive obligations (contributions, wage structure, leave, gratuity) and “partial” on procedural matters (inspections, dispute resolution, specific form formats).

The 60-Day HR Action Plan

For HR and compliance teams operating in India, the window between now and mid-2026 is critical. Use it to complete structural work rather than wait for inspector notices.

Week 1-2: Inventory and Assessment

1. Pull the current CTC structure for every employee and calculate basic as a percentage of total remuneration
2. Identify employees where basic is below 50% — list CTC, basic amount, and the monthly shortfall
3. Map state coverage — list every state where employees work and note the current rule-notification status for each
4. Identify fixed-term contracts expiring in the next 12 months — calculate pro-rata gratuity liability for each

Week 3-6: Restructuring

5. Model the cost impact of moving basic to 50% of CTC for every affected employee — track increases in employer PF, gratuity provisioning, and the decrease in take-home
6. Communicate to affected employees before implementation — the take-home impact is immediate and hires will notice
7. Update employment contracts to reflect new wage structures, fixed-term gratuity entitlements, and revised leave definitions
8. Recalibrate payroll systems — most India payroll platforms have update paths; confirm timing with your provider

Week 7-8: Process and Documentation

9. Update the attendance and overtime policy to enforce the 8-hour daily cap and quarterly overtime limits
10. Refresh the appointment letter template to include fixed-term gratuity, revised leave entitlements, and standing-orders references where applicable
11. Brief payroll vendors and EOR providers on the changes if you haven’t already — a competent provider has already initiated the conversation
12. Document the transition — maintain a compliance log showing when each change took effect and why

Common Mistakes We’re Already Seeing

Based on consultations with foreign employers operating in India since the November 2025 notification:

• Waiting for state rules before restructuring CTC — substantive obligations are in force regardless of state rule status
• Ignoring fixed-term gratuity — contracts written before November 2025 that assumed no gratuity liability are now facing pro-rata exposure
• Treating the 50% rule as aspirational — enforcement may be phased, but the liability accrues now; arrears calculations will look backward to November 21, 2025
• Overlooking the Aadhaar-based registration path — it simplifies onboarding but requires system updates that most HR systems have not configured
• Assuming foreign nationals are out of scope — the codes apply to all employees working in India regardless of citizenship

How Omnivoo Handles the Labour Codes Transition

Omnivoo has been tracking the labour codes since the central rules drafts were released. For clients on our EOR platform, the transition is handled end-to-end:

• Automatic CTC restructuring for employees below the 50% wage threshold, with client approval
• Model-first communication — every client sees the cost impact of the new wage definition before we execute any change
• Contract updates across the entire employee base to reflect new fixed-term gratuity, leave, and overtime provisions
• State-level tracking — our compliance team monitors every state’s notification status and applies procedural changes as each state’s rules go live
• PF and gratuity recalibration — contributions and provisions are updated in line with the revised wage base starting from the applicable effective date

Foreign employers running payroll through their own Indian entity should be doing this work themselves, right now. The cost of delayed restructuring compounds with every payroll cycle.

Key Takeaways

• All four labour codes are effective from November 21, 2025 — the 29 central laws they replace stand repealed
• Central rules are in draft — final notification expected around April 1, 2026
• State rules vary — several states have notified finals, many are in draft, a few are still pending
• The 50% wages rule is the single most impactful change — restructure CTC now, not later
• Fixed-term employees get pro-rata gratuity regardless of tenure — budget accordingly
• Gig-worker scheme is recognized but not yet operational
• Use the next 60 days for inventory, restructuring, and contract updates — don’t wait for the first inspector notice

The labour codes transition is not a 2027 problem. The substantive provisions are live today. Omnivoo handles every aspect of the compliance change for clients on our EOR, from CTC restructuring to state-level notification tracking to automated full and final settlement calculations that reflect the new wage definition. Talk to our team to see how we operationalize the new codes for your India employees.