New Labour Codes 2026: What Changed for Salary, PF & HR

India's four new Labour Codes replaced 29 central labour laws and came into force on 21 November 2025 (KPMG, BDO). The central rules under all four Codes followed on 8 May 2026, and states are notifying their own rules.

The changes that matter most to employees and HR are:

• one definition of wages, with a 50% rule that affects PF and gratuity;
• mandatory appointment letters;
• gratuity after one year for fixed-term employees;
• a weekly cap of 48 working hours, with overtime at twice the normal rate;
• final dues paid within two working days of exit;
• social security for gig and platform workers.

This guide explains each of the four Codes and what you should do now.

The four Labour Codes at a glance

Implementation timeline and status (October 2026)

• 21 November 2025The four Codes came into force, replacing 29 central laws.
• 16 February 2026The Industrial Relations Code (Amendment) Act, 2026 received assent, with effect from 21 November 2025 (Lexplosion).
• 8 May 2026The central rules under all four Codes were notified and took effect (EY). Forms, deadlines and thresholds are in our Central Rules 2026 guide, and the official PDFs on our Labour Codes PDF page.
• 29 June 2026The EPF, EPS and EDLI Schemes, 2026 were notified under the Code on Social Security.
• 17 September 2026The PF wage ceiling rose from ₹15,000 to ₹25,000 a month.
• 24 September 202610 states had published their rules; the rest had draft rules out for consultation (Business Standard).
• 1 October 2026Central minimum wages were revised through the half-yearly dearness allowance (VDA) update.
• 31 October 2026The Centre's target for all states and union territories to publish their rules.

Some articles still say the Codes are "not yet implemented". That is no longer correct: the Codes and the central rules are both in force.

State rules: where things stand

For most private establishments, the state government is the "appropriate government", so state rules settle many working details, such as working hours and spread-over, leave procedure, registers and returns, and shops-and-establishments matters.

• Published so far: on 24 September 2026, Labour Secretary Chandra Bhushan Kumar said ten states had published their rules and the rest had put out draft rules for consultation (Business Standard).
• Target: the Centre hopes every state and union territory will publish its rules by 31 October 2026. This is an expectation, not a legal deadline.
• No official list: the Ministry has not published which ten states these are, and private trackers disagree about several states (Khanna & Associates, 21 October 2026). Rely on your own state's gazette, not on a list.
• Until your state's rules arrive: the Ministry has said that rules and schemes under the old Acts continue during the transition, read together with the Codes and to the extent they are not contrary to them (Trilegal).

1. 1. Find your appropriate governmentCentral-sphere establishments, such as railways, mines, major ports and banks, follow the central rules. Most other private employers follow their state's rules.
2. 2. Check the state labour department websiteLook for "Rules, 2026" under each of the four Codes. Maharashtra, for example, has a Labour Code page.
3. 3. Confirm in the state gazetteA final rule is published in the official gazette with a notification number and date. A draft invites objections within a stated period.
4. 4. Note the effective date and the gapsWhere only a draft exists, follow the central Code and the existing state rules, and record the open points for review.

What changes for salary, PF and gratuity

The 50% rule. The Code on Wages defines wages as basic pay, DA and retaining allowance. If excluded allowances, such as HRA and special allowance, exceed 50% of total pay, the excess is added back to wages. That wider wage base is used for PF, gratuity and bonus.

• Example: on ₹60,000 a month with ₹20,000 basic, wages become ₹30,000.
• What this does not require: the rule does not force basic pay itself to be 50%. It changes the base that PF, gratuity and bonus are calculated on.

To see what the 50% rule does to your own PF, gratuity and take-home pay, enter your salary in the new labour code salary calculator. It shows the old and new figures side by side.

PF. PF is calculated on the wider wages. The PF wage ceiling is ₹25,000 a month from 17 September 2026, so many employers now contribute on ₹25,000 rather than ₹15,000. See the PF wage ceiling guide.

Gratuity.

• It is calculated on the wider wage base too.
• Fixed-term employees qualify after one year of service.
• For permanent employees, the five-year qualifying period is unchanged.

See gratuity under the new Labour Codes, or work out an amount with the gratuity calculator.

Take-home pay. CTC usually stays the same. If your wages rise under the 50% rule and PF is paid on the higher wages, your monthly in-hand pay falls slightly and your PF and gratuity grow. Check your own structure with the new labour code salary calculator, or see the full component split in the salary breakup calculator.

Working hours, overtime and leave

• Hours: the OSH Code limits work to 8 hours a day (Section 25) and six days a week (Section 26), which is 48 hours a week. Any flexibility for longer days, such as 12-hour days in a four-day week, depends on the applicable rules, and the 48-hour weekly limit still applies.
• Overtime: paid at twice the ordinary rate of wages, with the worker's consent (Section 27). See the overtime calculation guide or the overtime calculator.
• Annual leave: available after 180 days of work in a year, at one day for every 20 days worked (Section 32). The earlier threshold was 240 days.
• Night shifts: women can work night shifts with their consent and with the safety measures the rules require.

The "12-hour day" myth. A 12-hour day does not mean longer weeks. Where 12-hour days are allowed, the 48-hour weekly limit still applies, which in practice means four working days. Any work beyond the limits counts as overtime.

Hiring, exits and contract staff

• Appointment letters: every worker must receive one, stating designation, wages and category of employment.
• Fixed-term employment: recognised for all sectors. Fixed-term staff get the same wages and benefits as permanent staff doing similar work, and gratuity after one year.
• Layoff, retrenchment and closure: prior government permission is needed only in establishments with 300 or more workers (earlier 100). States can raise this threshold.
• Exit dues: wages on resignation, removal or retrenchment must be paid within two working days. See full and final settlement and the F&F calculator.
• Contract labour: contractors can work across states with a single licence, and contract labour in core activities is restricted, with specified exceptions.

The Industrial Relations Code (Amendment) Act, 2026

Parliament amended the Industrial Relations Code soon after it took effect. The Bill was introduced in the Lok Sabha on 11 February 2026 and passed by both Houses on 12 February 2026 (PRS Legislative Research). It received the President's assent on 16 February 2026, with retrospective effect from 21 November 2025 (Lexplosion).

The amendment does two things:

• Confirms the repeal date. It replaces Section 104(1) of the Code to make clear that the Trade Unions Act, 1926, the Industrial Employment (Standing Orders) Act, 1946 and the Industrial Disputes Act, 1947 stand repealed from 21 November 2025.
• Keeps existing tribunals and authorities working. Labour courts, tribunals and authorities set up under the repealed Acts continue to function until the corresponding bodies under the Code are in place.

What it means for HR: pending disputes and cases before labour courts and tribunals continue rather than lapsing, and the Code's own rules on layoffs, retrenchment, standing orders and strikes apply from 21 November 2025. For details, see the Industrial Relations Code guide.

Gig and platform workers

• Defined in law for the first time: gig work, platform work and aggregators.
• Aggregators' contribution: 1% to 2% of annual turnover to a social security fund, capped at 5% of what they pay gig and platform workers.
• Eligibility: under the central rules of 8 May 2026, workers qualify after 90 days with one aggregator, or 120 days across aggregators, in a year.
• Registration: on the e-Shram portal.

Safety and welfare

• Health check-ups: free annual check-ups for workers aged 40 and above.
• Coverage: broader across establishments, with standard welfare facilities such as drinking water, restrooms and crèches where applicable.
• Paperwork: fewer registers and returns, with more electronic filing.

Minimum wage in 2026: is there a "minimum salary increase"?

There is no single national minimum salary. The Code on Wages extends minimum wages to every employee, organised or unorganised, but the rates are still fixed by the Centre and each state for different skill levels and areas.

• Floor wage: the Code lets the Centre fix a national floor wage, below which no state can set its minimum wage. As of 28 October 2026, no floor wage amount has been notified (Taxmann).
• Twice-yearly revisions: minimum wages rise mainly through the variable dearness allowance (VDA), which is revised in April and October in line with the consumer price index.
• Latest central revision: from 1 October 2026, the central minimum wage for unskilled construction work in Area A cities is ₹840 a day, made up of ₹523 basic and ₹317 VDA (SGCMS, quoting the Chief Labour Commissioner's order).

For 26 working days, ₹840 a day comes to ₹21,840 a month. These central rates apply only where the Centre is the appropriate government. Most private employers must follow their state's notified rates, which differ by state, zone and skill. Check your state labour department's latest notification before fixing or revising pay, and see the Code on Wages guide for how the floor wage and minimum wages work together.

Common myths

• "Basic pay must be 50% of CTC." Not exactly. Allowances above 50% are added back to wages, but basic pay itself doesn't have to change.
• "Gratuity is now after one year for everyone." Only for fixed-term employees. Permanent staff still need five years, except on death or disablement.
• "Everyone must work 12 hours a day." No. The weekly cap of 48 hours remains, and extra hours are overtime.
• "The Codes are not in force yet." They have been in force since 21 November 2025, and the central rules since 8 May 2026.
• "The Labour Codes start from 1 April 2026." No. In March 2026, some reports cited April 2026 as a tentative date for notifying the rules (Outlook Money). In fact the Codes took effect on 21 November 2025 and the central rules on 8 May 2026. The date 1 April 2026 belongs to a different law: the Income-tax Act, 2025.
• "My CTC will change." The Codes change how pay is split for PF, gratuity and bonus, not your total CTC (Business Today). Your employer can restructure your salary, but the Codes do not raise or cut CTC by themselves.
• "The EPF Scheme, 2026 changed PF rates." No. The 12% employee and employer contributions continue. The scheme of 29 June 2026 mainly changed procedures, such as withdrawals. The ₹25,000 ceiling came separately, on 17 September 2026 (S.O. 5109(E)).

More Labour Code resources

• Central Rules 2026: the forms, deadlines and thresholds under each Code
• State rules tracker: which states have notified final rules
• Latest news: every update since November 2025, with dates
• Official PDFs: the Codes, Central Rules and Ministry FAQs
• Pros and cons: what the Codes mean for employees and employers
• For IT employees: salary, PF, gratuity and how IT firms responded
• UPSC notes: key facts, laws replaced and practice MCQs

HR Calcy calculators for the Labour Codes

What HR and employers should do now

1. 1. Run the 50% wage testOn every salary structure, then recalculate PF, gratuity, bonus and overtime. The new labour code salary calculator does this for one employee at a time.
2. 2. Issue appointment lettersTo every worker, including existing staff who do not have one.
3. 3. Review fixed-term contractsCheck equal benefits and gratuity after one year.
4. 4. Fix exit processesSo final wages are paid within two working days.
5. 5. Update hours, leave and overtime policiesTo the 48-hour limit and your state's rules.
6. 6. Update payroll softwareFor the wage definition and the ₹25,000 PF ceiling.
7. 7. Track your state's rulesFor working hours, leave and shops-and-establishments matters, using the four checks above.
8. 8. Revise minimum wages twice a yearApply your state's April and October VDA revisions, and recheck the 50% test after any pay change.

What employees should check

• That you have an appointment letter showing your designation and wages.
• Your payslip's basic, DA and allowances, and whether PF is on the wider wage base. The new labour code salary calculator shows what it should be.
• For fixed-term contracts, your gratuity after one year.
• That your final dues on leaving are paid within two working days.

Our salary slip guide explains each line of your payslip.

Frequently asked questions

When did the new Labour Codes come into force?

On 21 November 2025. The central rules under all four Codes took effect on 8 May 2026.

Did the Labour Codes start on 1 April 2026?

No. The Codes took effect on 21 November 2025 and the central rules on 8 May 2026. 1 April 2026 is when the Income-tax Act, 2025 took effect, which is a separate law.

Have all states notified their Labour Code rules?

Not yet confirmed. On 24 September 2026, ten states had published their rules and the rest had drafts out for consultation. The Centre expects all states and union territories to publish rules by 31 October 2026. Check your state's gazette for the current position.

How many laws did the Labour Codes replace?

29 central labour laws, consolidated into four Codes.

Will my salary reduce under the new Labour Codes?

CTC usually stays the same. If your wages rise under the 50% rule and PF is paid on the higher wages, take-home pay may fall slightly while PF and gratuity rise.

Is gratuity payable after one year now?

For fixed-term employees, yes. For permanent employees, the five-year qualifying period continues.

What are the working hours under the new Labour Codes?

Up to 8 hours a day and 48 hours a week under the OSH Code. Any flexibility for longer days depends on the applicable rules, the weekly limit still applies, and overtime is paid at twice the ordinary rate.

Are gig workers covered?

Yes. Gig and platform workers are covered under the Code on Social Security, funded partly by aggregators' contributions of 1% to 2% of annual turnover, capped at 5% of payouts to these workers.

Is there a minimum salary increase in 2026?

There is no single national minimum salary. Minimum wages are set by the Centre and each state and rise mainly through the April and October VDA revisions. From 1 October 2026, the central rate for unskilled construction work in Area A is ₹840 a day. The national floor wage has not been notified.

What did the Industrial Relations Code (Amendment) Act, 2026 change?

It confirmed that the Trade Unions Act, the Standing Orders Act and the Industrial Disputes Act stand repealed from 21 November 2025, and kept existing labour courts, tribunals and authorities working until the Code's new bodies are in place.

Position as of 28 October 2026; official texts are on the Ministry of Labour and Employment's Labour Codes page. State rules vary and are still being notified in some states. This is general information, not legal advice.