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India’s labour law reforms have introduced comprehensive frameworks to ensure employee safety, welfare, and regulatory compliance. One of the most significant legislations in this regard is the Occupational Safety, Health and Working Conditions Code (OSH Code), which consolidates multiple labour laws into a unified structure.
Definition: Occupational Safety, Health and Working Conditions Code, 2020
The Occupational Safety, Health and Working Conditions Code, 2020 (OSH Code) is a comprehensive labour law enacted by the Government of India to consolidate, simplify, and regulate laws relating to occupational safety, health, and working conditions of workers across various establishments.
It aims to ensure that employees are provided with:
The Occupational Safety, Health and Working Conditions Code, 2020 consolidates and replaces 13 existing labour laws related to safety, health, and working conditions into a single framework.
Acts Included in the OSH Code
The following Acts have been merged into the OSH Code:
1. Mandatory Registration of Establishments
Under the Code, every applicable establishment must be registered before employing workers. Employers are required to:
Failure to register prohibits the employer from engaging any workers.
2. Duties of Employers: Ensuring Workplace Safety
Employers carry primary responsibility for maintaining a safe and healthy work environment. Key obligations include:
These measures aim to reduce workplace injuries and promote employee well-being.
3. Contract Labour: Compliance and Restrictions
The Code introduces stricter provisions governing contract labour:
Applicability:
Key Provisions:
Restrictions:
4. Inter-State Migrant Workers Protection
The Code extends protection to inter-state migrant workers:
Additionally, a centralized portal is introduced for worker registration and tracking.
5. Health, Safety, and Welfare Measures
Employers must implement comprehensive safety systems, including:
The Code also lists notifiable diseases and mandates preventive actions.
6. Special Provisions for Factories and Construction Work
Factories:
Construction Workers:
| The Occupational Safety, Health and Working Conditions Code, 2020 (OSH&WC) | ||
| Sl.No | Query | Reply |
| 1 | Are leave encashment provisions under the OSH & WC Code applicable only to workers, sales promotion employees, and working journalists, or to all employees? Leave-related provisions apply to managerial, supervisory, and corporate office staff? | Leave provisions apply to workers as per the OSH & WC Code, 2020 and only to those supervisors having wage not exceeding Rs 18,000/ per month. The definition of worker includes sales promotion employees and working journalists. |
| 2 | What is the maximum number of days of leave that can be carried forward to the succeeding year under the applicable Labour Codes and Rules? If Employer agrees to carry forward 120 days of Leave to next calendar year, whether he is allowed to do so? |
A worker can carry forward up to 30 days of leave to the succeeding calendar year. Further, a worker who has applied for leave with wages and has not been granted, can carry forward the leave refused without any limit. |
| Sl.No | Query | Reply |
| 3 | Under the Labour Codes, who is eligible for leave encashment—only workers or employee? Whether the Relationship Manager and Sales person working independently (doesn’t supervises anyone) and drawing wage of more than ₹18,000 are entitled for Leave Encashment? | Worker is entitled for leave encashment. The sales promotion employees are included in the definition of Worker under Section-2(1)(zzl) of OSH&WC Code, 2020. |
| 4 | Is the provision of crèche facility dependent on any specific gender composition of the workforce? |
The creche facility is available to employees, irrespective of gender. |
| 5 | At what stage does overtime become payable under the OSH&WC Code, when it exceeds 8 hrs of daily working hours or 48 hrs of weekly limit? If maximum working hours limit is prescribed as 12 Hours by the appropriate government, whether Overtime is applicable for Hours exceeding 8 Hours on a particular day? |
The Code prescribes working hours as 8 hours per day. If, a worker works for more than eight hours in any day as daily wager, or for more than forty-eight hours in any week, as the case may be, a worker shall in respect of such overtime work be entitled to wages at the rate of twice the normal rate of wages and shall be paid at the end of each wage period. |
| 6 | Where the OSH&WC Code permits accumulation of leave up to 30 days, but a State law (e.g., Andhra Pradesh) allows 60 days, which provision will prevail? | The provision of the OSH&WC, 2020 Code will prevail over the State Law for provisions which are inconsistent with the Code. However, an employee is entitled to benefits under State Law if more favourable to him than those under the Code. |
| 7 | What is the maximum number of leave days that can be encashed under the applicable Labour Code(s)? | There is no prescribed maximum limit for leave encashment under the OSH&WC Code, 2020. Leave exceeding 30 days, if applied but not granted by the employer, can be encashed at the end of the calendar year. At the time of separation from service, the worker is entitled to encash the leave to his/ her credit. |
| 8 | Where the age threshold for annual health check-ups differ between Central Rules and State Rules, which provision will apply? | Central rules will be applicable on the establishments where Central Government is Appropriate Government and state rules will be applicable on the establishments where State Government is Appropriate Government. |
Navigating India’s New Labour Codes: What Every Business Must Know About Wage Restructuring & Compliance
India’s labour law landscape is undergoing one of its most significant transformations in decades. With the consolidation of 29 central laws into four comprehensive labour codes, businesses are entering a new era of compliance—one that demands not just awareness, but strategic action.
Yet, many organizations are still approaching these changes reactively.
This is where the real risk lies.
Understanding the Shift: The Four Labour Codes
The new framework is built on four pillars:
Together, these reforms aim to simplify compliance while increasing accountability.
The Game Changer: Definition of Wages
At the heart of this reform is a single, powerful rule:
Basic Pay + Dearness Allowance + Retaining allowance must be at least 50% of total remuneration.
This fundamentally changes how companies design salary structures.
Earlier, organizations could reduce statutory liabilities by increasing allowances. Now, if allowances exceed 50% of total pay, the excess is added back to “wages” for statutory calculations.
What this means:
Impact on Salary Structures
Most companies will need to re-engineer their compensation models.
Before:
Now:
This shift leads to:
Financial & Operational Impact on Businesses
The implications go beyond payroll restructuring.
Additionally, organizations must upgrade systems for:
Compliance Isn’t Optional: Penalties Are Severe
The new labour codes come with stringent penalties for non-compliance:
Even restructuring salaries incorrectly—without reducing CTC—can still lead to violations if statutory benefits are impacted.
The Hidden Risk: Improper Salary Restructuring
Many companies attempt to absorb increased statutory costs within existing CTC.
While not illegal in itself, it becomes a compliance issue if:
This is where most audit failures occur—not due to ignorance, but due to improper execution.
What Businesses Should Do Now
To stay compliant and future-ready, organizations must:
Final Thoughts
India’s new labour codes are not just a regulatory update—they represent a structural shift in how businesses manage workforce compliance.
Organizations that act early will not only avoid penalties but also build stronger, more transparent employee frameworks.
Those who delay may find themselves dealing with rising costs, audit failures, and legal exposure.
Compliance is no longer a backend function—it’s a strategic priority.
Introduction
The Industrial Relations Code, 2026 is a landmark reform introduced by the Government of India to consolidate and modernize laws relating to trade unions, employment conditions, and industrial disputes. It replaces and merges key legislations such as the Trade Unions Act, Industrial Employment (Standing Orders) Act, and Industrial Disputes Act into a single framework.
This Code aims to bring simplicity, transparency, and efficiency in managing industrial relations while balancing the interests of employers and workers.
Key Objectives of the Code
Applicability of the Code
The Code applies to all industrial establishments across India, with specific provisions based on employee strength:
| Provision | Applicability |
|---|---|
| Works Committee | 100+ workers |
| Grievance Redressal Committee | 20+ workers |
| Standing Orders | 300+ workers |
Trade Union Provisions
Registration Criteria
Key Highlights
Benefits
Grievance Redressal Mechanism
Every establishment with 20 or more workers must form a Grievance Redressal Committee (GRC).
Features:
If unresolved, the matter can be escalated to:
Conciliation Officer
Industrial Tribunal
Works Committee
Applicable to establishments with 100 or more workers, this committee:
Standing Orders
Applicable to establishments with 300 or more workers.
Key Requirements:
Timeline:
Industrial Dispute Resolution Mechanism
The Code provides a structured approach:
Step-by-Step Process:
Arbitration
| Industrial Relations Code 2026 (FAQ) | ||
| 1 | Is a fixed-term employee engaged for 11 months eligible for gratuity upon contract expiry? Is gratuity payable where a fixed-term employee exits before completion of the contracted tenure? | Fixed Term Employee (FTE) will be eligible for gratuity if he/she renders service under the contract for a period of one year (from start of contract). |
Conclusion: Industrial Relations Code – A Progressive Step Forward by Pragnaa
The Industrial Relations Code marks a significant evolution in India’s labour law framework, aiming to strike a balanced approach between employer flexibility and employee protection. By consolidating existing laws and introducing clarity in areas such as dispute resolution, union recognition, and retrenchment norms, the Code creates a more structured and transparent industrial environment.
From Pragnaa’s perspective, this reform is not just about compliance—it is about building sustainable industrial harmony. Organizations must view the Code as an opportunity to strengthen workplace relationships, improve communication mechanisms, and adopt fair labour practices. Proactive implementation, supported by strong internal policies and awareness, will be key to unlocking its full potential.
As businesses navigate this transition, the focus should remain on compliance readiness, employee engagement, and risk mitigation. With the right approach, the Industrial Relations Code can serve as a foundation for long-term growth, productivity, and a resilient workforce ecosystem.At Pragnaa, we believe that aligning with evolving labour laws is essential not only for legal adherence but also for fostering a future-ready and people-centric organization.
The Code on Wages, 2019 is one of the four labour codes introduced by the Government of India to simplify and consolidate existing wage-related laws.
Definition:
The Code on Wages is a law that regulates wages, bonus payments, and equal remuneration for employees across all sectors, ensuring fair and timely payment to workers in both organized and unorganized sectors.
It applies to all employees and employers in India, without any wage ceiling (unlike earlier laws).
Objectives of the Code on Wages
Acts Included in the Code on Wages
The Code on Wages, 2019 has merged and replaced the following four Acts:
| Sl.No | Query | Reply |
| Code on Wages, 2019 | ||
| 1 | a. Does overtime payment form part of the 50 percent wage calculation rule? | Overtime allowance payment forms a part of the 50 percent wage calculation. |
| What constitutes “total remuneration” for applying the 50% wage floor? | Please refer to FAQ No-3 dated 30.12.2025 available on MoLE website. Weblink: de4758d5bfeffc456d7de97a801891b0.pdf | |
| 1. Is actual gratuity paid included? 2. Is gratuity included where shown as part of CTC? 3. Are employer contributions to PF and other social security benefits included? | Only statutory components such as employer PF and pension contributions and statutory bonus are included for arriving at 50% of wages to form part of remuneration. Gratuity, ESI and other retirement benefits are not included. | |
b. With reference to FAQ Question No. 7 of the MoLE FAQs under the Code on Wages, 2019, clarification is sought on: whether statutory components such as employer / employee PF contribution,statutory bonus,ESI,or other retirement benefits are included within “Other Allowances” or whether the illustration is based only on gross monthly salary excluding statutory contributions. | No. Statutory components such as employer share of PF/Pension contribution, are prescribed under Section 2(y)(c) of the Code on Wages and difference amount of back to the wages/remuneration in case it exceeds 50% of remuneration/wages (First proviso to the Section 2(y) of the Code on Wages). | |
| 2 | Are there any specific legal provisions in place for the wage protection of white-collar employees? | The Code on Wages, 2019 has provisions for timely payment of wages. These provisions are applicable to all employees. |
| total of (a) to (i) of Section 2(y) of the Code will be added | ||
| Sl. No | Query | Reply |
| 3 | Can wages and minimum wages be treated as the same? | No, minimum wages are the statutory wages fixed by the appropriate government. An employer is legally prohibited from paying an employee less than the prescribed minimum wage. The Wages are defined in Section 2(y) of the Code on Wages, 2019 and can also be referred to in FAQ No- 2, 3 and 4 dated 30.12.2026 available on MoLE website. Weblink: 9fb60321f0028fc2fe08d3b3d8626dd7.pdf |
| 4 | Do annual performance- based incentives form a part of “wages” for computation under the Labour Codes? | No. Annual performance-based incentives do not form a part of “wages” for computation under the Labour Codes. Pl. refer to Sl. No. 3 of FAQs dated 30.12.2025 available on the MoLE website. Weblink: de4758d5bfeffc456d7de97a801891b0.pdf |
| 5 | Who is eligible for overtime wages—only workers or it is applicable for Employees also? If so does the entitlement also extend to supervisory and managerial staff? | Yes. Employee, including worker, whose minimum rate of wages is fixed under the Code on Wages, 2019 is eligible for overtime. |
| 6 | Is the revised definition of “wages” under the Code on Wages, 2019 applicable for gratuity calculation from the date of enforcement of the Code, i.e., 21.11. 2025? | Yes. Gratuity, based on revised definition of wages will be applicable w.e.f. 21.11.2025 i.e. date of implementation of the Codes. |
| 7 | From which date does the definition of “wages” under the Labour Codes come into effect? | The definition of “wages” has come into effect from 21.11.2025. |
| SI.NO | Query | Reply |
| 8 | Whether variable components of wages such as overtime (OT) allowance are included while calculating the “wages” under the Codes? | Yes. Overtime allowance payment forms a part of components Section 2(a) to 2(i). If such allowance, exceed 50 percent of remuneration then excess over 50 percent is added to the wage calculation. |
| 9 | What is the distinction between “minimum wages” and “wages” under the Labour Codes? | Minimum wages are fixed by the Appropriate Government for the employees, whereas wages are fixed as per Terms of Employment between employee and employer, employed in any establishment as per the definition of Wages as mentioned in Section 2(y) on the Code of Wages, 2019 |
Conclusion:
The Code on Wages, 2019 is a transformative reform that brings clarity, uniformity, and accountability to wage-related practices across India. By standardizing the definition of wages, enforcing the 50% rule, and extending coverage to all employees, it compels organizations to rethink and realign their salary structures while ensuring fair and timely compensation.
However, with these changes comes increased compliance responsibility. Businesses must carefully review payroll structures, statutory components, and documentation processes to avoid risks and ensure adherence to the law.
Pragnaa plays a crucial role in this transition by acting as a trusted compliance partner. With expertise in labour law advisory, payroll structuring, compliance audits, and end-to-end implementation support, Pragnaa helps organizations seamlessly align with the Code on Wages. From interpreting complex provisions to executing practical solutions, Pragnaa enables businesses to stay compliant while focusing on operational growth.
In a regulatory environment that is becoming more structured and scrutinized, partnering with experts like Pragnaa ensures not just compliance, but confidence and sustainability in workforce management.
