New Indian labour codes consolidate 29 laws into a unified framework, simplifying compliance for employers with single registrations and electronic filings. Employees gain expanded protections, including gratuity for fixed-term workers and schemes for gig workers, enhancing transparency and formalizing employment.
India's new labor codes mandate a 2% annual salary increment for regular contractual workers employed by contractors in central government establishments, effective May 8, 2026. This rule, outlined in Rule 185 of the OSHWC Central Rules, does not apply to direct employees or those in state government establishments.
New labour codes have capped weekly working hours at 48, with overtime paid at double the hourly wage. Final rules for wages and industrial relations codes are out, paving the way for implementation. A National Reskilling Fund will support retrenched workers with new skills, financed by employers.
For employers and employees, understanding how leave works today is not always straightforward. This is because two legal systems operate side by side: the new central labour codes and the older State-level Shops and Establishments (S&E) laws.
Salaried employees in India face uncertainty as companies await final government notifications on new labour codes and tax rules. While organizations have run simulations, widespread implementation remains delayed. The shift towards higher basic pay (50% of CTC) will increase EPF and gratuity contributions, potentially reducing monthly take-home salary but strengthening long-term retirement benefits. New income tax rules effective April 1 have raised tax-exempt limits on children's education and hostel fees, available only under the old regime.
