On November 21, 2025, India implemented one of the most significant overhauls in its labour regulation history by activating four new labour codes — replacing 29 outdated laws. These reforms mark a structural reset designed to simplify compliance, expand worker protections, and modernize India’s workforce governance. For employers, HR teams, and staffing partners alike, this transition brings both opportunity and responsibility. In this blog, Abacus Staffing & Services breaks down what these new codes mean for organizations and employees — and how to prepare for what’s next.
Organizations will need to revise salary structures to comply with the unified wage definition, which mandates that basic wages form at least 50% of total compensation. This may increase PF and gratuity outflows for employers and require reconfiguration of payroll systems and CTC models, especially for roles heavy on allowances or incentives.
Companies can now hire fixed-term employees with clearly defined contract periods without needing to convert them to permanent roles. However, these workers are now legally entitled to benefits such as medical leave, social security, and gratuity. HR departments will need to issue compliant offer letters, track eligibility timelines, and align benefit policies accordingly.
Businesses that rely on freelance or app-based gig talent — either directly or through platforms — must now register these workers and contribute a small percentage (likely 1–2%) of annual turnover or wages towards their social security. This increases the administrative responsibilities and may impact cost structures, requiring renegotiation of service agreements.
Employers in regulated sectors must implement stricter occupational safety protocols and ensure documentation of working hours, leave records, and medical checkups. Regular audits and increased government scrutiny will mean companies must invest in compliance tracking tools and training for line managers.
The Industrial Relations Code introduces clarity in handling disputes and strikes. Strikes in essential services now require a 14-day notice, and new thresholds apply for layoffs and retrenchments. This enables organizations to better manage workforce disruptions legally and provides a framework to resolve conflicts faster through designated tribunals.
The new labour codes standardize what counts as “wages” across different types of compensation. This ensures consistency in how bonuses, overtime, PF contributions, and gratuity are calculated. For employees, this means greater transparency in pay structure and predictable entitlement calculations, especially for those in lower-wage or variable-pay jobs.
Previously, gratuity was payable only after five years of continuous service. Under the new framework, fixed-term employees can become eligible for gratuity after just one year of service. This is a major win for contract workers who often change assignments more frequently, giving them access to long-term benefits sooner.
For the first time, gig workers (like delivery personnel, drivers, freelancers) and platform-based workers (engaged via apps) are included in the social security net. They will be entitled to provident fund contributions, insurance, and retirement benefits through a centralised, portable system — making the informal economy more secure and future-ready.
Under the OSH Code, employees in sectors such as manufacturing, construction, and logistics will now benefit from stricter safety guidelines. This includes annual health check-ups, proper working hour limits, and minimum standards for clean drinking water, ventilation, and sanitation, directly improving day-to-day workplace wellbeing.
Every employee — even those in the informal or unorganised sectors — must now receive formal appointment letters. Combined with stronger provisions for timely wage payment, this helps reduce exploitation and job insecurity for millions of workers.
With India’s new labour codes now in effect, organizations must quickly adapt to a new era of workforce compliance, transparent pay structures, and expanded social protections. At Abacus Staffing & Services, we are well-prepared to support both employers and employees through this transition.
Whether you need help restructuring compensation, updating contract templates, managing social security obligations, or training your internal teams on the new compliance requirements — our team brings the expertise, systems, and agility to guide you every step of the way.
From advisory to implementation, Abacus is your strategic partner for navigating the new labour landscape confidently and compliantly. Let us help you turn regulatory change into a competitive advantage.
Abacus offers expert staffing services, matching businesses with experienced candidates for contingent, contract-to-hire, long/short term contract, direct hire, and project-based deliverables.