New Labour Codes 2025: Practical Handbook for Payroll Design and Multi-State HR Compliance
1. Background: Why the Labour Codes Matter in 2025
For decades, India’s labour law framework operated through a maze of 29+ central legislations, thousands of state-level amendments, overlapping concepts, and documentation-heavy compliance. Employers, HR teams, and consultants had to deal with:
- Multiple Acts regulating wages, social security, safety, and industrial relations
- Different definitions of “wages” in different statutes
- Fragmented registers, returns, and licences across states
- Inspection regimes heavily dependent on individual officers
To rationalise and modernise this ecosystem, the Central Government consolidated the bulk of central labour legislation into four Labour Codes. Although these Codes were enacted between 2019 and 2020, practical implementation is gaining real momentum from 2025 onwards because:
- Most states have already issued or finalised their rules
- Online portals for registrations, filings and inspections are stabilising
- Courts and tribunals have begun interpreting key provisions
- Authorities are increasingly examining wage structures and payroll constructs under the new definition of “wages”
This guide is intended for employers, HR heads, compliance officers, Chartered Accountants, Company Secretaries and labour law advisors who need an implementation-oriented understanding of the new regime, particularly from a payroll and multi-state compliance standpoint.
2. The Four Labour Codes – Consolidated Framework
2.1 Code on Wages, 2019
Merged legislations
This Code brings together:
- Minimum Wages Act, 1948
- Payment of Wages Act, 1936
- Payment of Bonus Act, 1965
- Equal Remuneration Act, 1976
Core objective
The primary purpose is to:
- Introduce a single, uniform definition of “wages”
- Extend minimum wage protection to all employees, not just scheduled employments
- Ensure timely payment of wages
- Promote gender equality in remuneration for the same or similar work
2.2 Industrial Relations Code, 2020
Legislations replaced
This Code subsumes:
- Industrial Disputes Act, 1947
- Trade Unions Act, 1926
- Industrial Employment (Standing Orders) Act, 1946
Core objective
The Code seeks to:
- Provide greater flexibility to employers in managing workforce and restructuring
- Standardise and streamline the industrial dispute resolution process
- Rationalise retrenchment and closure requirements
- Update and consolidate trade union regulation norms
2.3 Code on Social Security, 2020
Consolidated laws
The following major social security legislations are integrated into this Code:
- Employees’ Provident Funds Act
- Employees’ State Insurance Act
- Payment of Gratuity Act
- Maternity Benefit Act
- Employee Compensation Act
- Unorganised Workers’ Social Security Act
Core objective
The Code aims to:
- Expand social security coverage to gig workers, platform workers, contract labour and unorganised sector workers
- Provide a unified structure for EPF, ESI, gratuity, maternity and other social security schemes
- Enable technology-enabled registration and benefit delivery
2.4 Occupational Safety, Health & Working Conditions Code, 2020
Existing laws replaced
This Code consolidates and rationalises:
- Factories Act
- Contract Labour (Regulation & Abolition) Act
- Inter-State Migrant Workmen Act
- Key central elements of Shops & Establishments regulations
Core objective
Its focus is to:
- Provide uniform standards for health, safety and welfare across establishments
- Simplify licensing, registration, and renewal processes
- Harmonise working condition norms such as hours of work, facilities, and welfare measures across different sectors
3. Coverage Under the New Labour Codes
3.1 Near-Universal Reach
A critical aspect of the new framework is its broad applicability:
- Code on Wages – applies to all employees, with no wage ceiling
- Code on Social Security – covers workers in the organised, unorganised, gig and platform categories, subject to scheme-wise thresholds
- OSH Code – generally threshold-based (number of workers, nature of activity)
- Industrial Relations Code – also threshold-driven for various provisions
Earlier, several protections and obligations were restricted by wage ceilings or limited to specific scheduled employment categories. The Codes push towards a more inclusive and uniform regime.
4. Multi-State Operations: Same Central Law, Different State Rules
Labour falls under the Concurrent List in the Constitution, meaning both Centre and States can legislate. The present structure broadly works as follows:
- Central Government: Enacts the four Codes and issues central or model rules
- State Governments: Frame and notify state-specific rules under each Code