The New Labour Codes in India: A Comprehensive Guide for Employers

# The New Labour Codes in India: A Comprehensive Guide for Employers

The government of India is consolidating 29 central labour laws into four comprehensive codes. These changes will significantly impact how businesses manage their workforce and payroll.

The Four New Labour Codes

1. Code on Wages: Standardizes definitions of 'wages' and ensures minimum wages for all employees.

2. Industrial Relations Code: Modernizes rules regarding employee-employer relationships.

3. Social Security Code: Expands social security benefits to unorganized workers and gig workers.

4. Occupational Safety, Health, and Working Conditions Code: Sets standards for workplace safety and welfare.

Key Impacts on Payroll

- Wage Definition: At least 50% of the total remuneration must be considered 'wages' for PF and Gratuity calculations. This may lead to higher retirement contributions and lower take-home pay.

- Working Hours: Potential for a 4-day work week with 12-hour shifts, subject to state rules.

- Full & Final Settlement: Wages must be paid within 2 days of removal/resignation.

Preparation Checklist for SMEs

- Audit your current salary structures.

- Review employment contracts and attendance policies.

- Update payroll software to handle new definitions.

Stay compliant with FinAcco's payroll outsourcing services.