Hiring Under the Labour Codes: What an Offer Must Now Say
On 21 November 2025 four notifications brought the Labour Codes into force. Two of the four commenced only in part, and the parts left out matter. This guide sets out what actually changed for an employer at the point of hiring, and is explicit about the one repeal that is still genuinely unresolved.
- What commenced, and what did not
- The appointment letter as a statutory obligation
- The redefined meaning of wages, and the 50 per cent proviso
- Registrations a first hire triggers
- Equal remuneration and harassment obligations at the hiring stage
Four notifications, two of them partial
Two of the four Codes commenced only in part, and the carve-outs are where the difficult questions live.
The four Codes were brought into force by four Ministry of Labour and Employment notifications, all dated 21 November 2025.
| Code | Notification | Extent |
|---|---|---|
| Code on Social Security, 2020 | S.O. 5319(E) | Partial |
| Industrial Relations Code, 2020 | S.O. 5320(E) | In full |
| Occupational Safety, Health and Working Conditions Code, 2020 | S.O. 5321(E) | In full |
| Code on Wages, 2019 | S.O. 5322(E) | Partial |
At least one reputable legal publisher swaps the two middle notifications. The recitals are unambiguous: 5320(E) recites the Industrial Relations Code and 5321(E) recites the Occupational Safety Code. Where a source has these the wrong way round, treat the rest of its detail with caution.
The partial commencements are not a technicality. For the Code on Wages, sections 1 to 41 are in force, which is why the definition of wages and the equal remuneration provisions bind. For the Code on Social Security, sections 1 to 141 and most of what follows are in force, but the schedule of repeals at section 164(1) was commenced item by item.
The provident fund repeal, which is the one point on this page we will not state either way
Section 164(1) of the Code on Social Security lists the Acts it repeals. Item 3 is the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. The notification of 21 November 2025 commenced items 1, 2 and 4 to 9 and passed over item 3, which is why it is widely said the 1952 Act survives. But an earlier notification, S.O. 2060(E) of 3 May 2023, had already commenced section 164(1) so as to repeal the provisions of the 1952 Act corresponding to what the Code commenced that day, and a corrigendum of 19 December 2025 then corrected several entries in the November notification to carve out what the 2023 notification had already done. At least one reputable publisher reads the corrigendum as meaning item 3 took effect in May 2023. New provident fund, pension and deposit-linked insurance schemes were then notified on 29 June 2026 under a chapter of the Code that is in force, which means schemes may sit under the Code while the parent Act stands in part. We could not read the corrigendum in full, and we are not going to resolve a question of this kind from secondary sources.
The question is now settled and the answer is that the 1952 Act has gone. The repeal happened in two stages. S.O. 2060(E) of 3 May 2023 commenced section 164(1) so far as it repealed the provisions of the 1952 Act corresponding to the pension provisions then brought into force. S.O. 5319(E) of 21 November 2025 brought the remaining relevant provisions of the Code into force, and the corrigendum S.O. 5936(E) of 19 December 2025 clarified that the November commencement excluded only what S.O. 2060(E) had already done. It did not preserve the balance of the 1952 Act. Read together the instruments produce a complete repeal.
For a hire made today, provident fund liability arises under Chapter III of the Code on Social Security, 2020, particularly sections 15 and 16 read with the First Schedule, and under the Employees Provident Fund Scheme, 2026 notified by G.S.R. 525(E) of 29 June 2026, which expressly superseded the 1952 Scheme. Pension and deposit-linked insurance sit in the schemes of the same date, G.S.R. 527(E) and G.S.R. 526(E).
Section 164(2) preserves accrued rights and liabilities, prior acts and proceedings, and the continuity of schemes until they are superseded. It does not keep the 1952 Act alive as the source of new liability, which is the distinction that matters when drafting an offer today.
The Employees' State Insurance Act, 1948, the Payment of Gratuity Act, 1972, the Maternity Benefit Act, 1961 and the Employees' Compensation Act, 1923 have all been repealed as well.
No longer good practice, now an obligation
Section 6(1) of the Occupational Safety, Health and Working Conditions Code, 2020 requires an employer to issue a letter of appointment to every employee on their appointment in the establishment, with such information and in such form as may be prescribed. An employee who did not have one at commencement was to receive one within three months of commencement.
Three points are worth drawing out. It applies to every employee, not only to workers, so it covers managerial and supervisory staff. The Occupational Safety Code applies to establishments with ten or more employees. And the binding particulars are in the prescribed form rather than in the section, which is where the practical detail sits.
The Press Information Bureau describes the content as covering details of the employee, designation, category, details of the wages and details of social security. There is no numbered form. Rule 6 of the Occupational Safety, Health and Working Conditions (Central) Rules, 2026, notified as G.S.R. 345(E) of 8 May 2026 and effective on publication, sets the format out in the body of the rule itself. It is not one of Forms I to XXVII in Annexure VII, which is where most people look for it.
| The appointment letter must contain | |
|---|---|
| 1. Name of the employee | 9. Date of joining |
| 2. Date of birth | 10. Wages or basic pay and dearness allowance |
| 3. Father or mother name | 11. Other applicable allowances, including accommodation |
| 4. Aadhaar number, with the employee consent | 12. Applicability of provident fund and state insurance benefits |
| 5. Labour Identification Number of the establishment | 13. Broad nature of duties |
| 6. Universal Account Number or insurance number, if available | 14. Maternity benefit entitlement under the Code on Social Security, where the employee is a woman |
| 7. Designation | 15. Any other information |
| 8. Type of employment: regular, fixed term or contractual, and skill category | 16. The employer signature or digital signature |
Rule 6, Occupational Safety, Health and Working Conditions (Central) Rules, 2026.
These Central Rules apply only where the Central Government is the appropriate government. Every other establishment follows the final rules made by the state that is the appropriate government for it, ordinarily the state it sits in, and those rules carry their own format and particulars. A multi-state employer has to test each establishment separately; a single group-wide template is unlikely to be correct everywhere. Establishments in centrally administered sectors stay under the Central Rules even though they sit physically inside a state.
Where a state has not yet brought final rules into force, the central rule 6 format is a sensible compliance template, but it should not be described as that state prescribed form unless the state has adopted it.
The definition that reshapes a salary structure
Section 2(y) of the Code on Wages defines wages as all remuneration expressed in terms of money, and then excludes a list: bonus not forming part of the terms of employment, the value of house accommodation, employer contributions to a pension or provident fund, conveyance allowance, reimbursement of special expenses, house rent allowance, remuneration under an award or settlement, overtime, commission, gratuity and retrenchment compensation.
Then comes the proviso that changes everything. Where the excluded payments exceed fifty per cent of total remuneration, the excess is deemed to be remuneration and is added back into wages. A structure built as a small basic salary plus a large stack of allowances therefore has a floor under it: at least half of total remuneration will count as wages whatever the payslip says, and every statutory calculation that runs off wages follows.
A second proviso works the other way. For the purposes of equal wages and payment of wages, conveyance allowance, house rent allowance, remuneration under an award and overtime are counted. And an explanation treats payment in kind as wages up to fifteen per cent of total wages.
The Ministry's own frequently asked questions, as at 16 March 2026, resolve several of the practical questions: overtime allowance forms part of the fifty per cent calculation; employer provident fund and pension contributions and statutory bonus are included in arriving at the fifty per cent; gratuity, employees' state insurance and other retirement benefits are not; and an annual performance-based incentive does not form part of wages. A ministry answer to a frequently asked question is guidance, not law. It does not bind a court or an inspector, and where a salary structure depends heavily on one of these answers it is worth taking advice rather than relying on the document alone.
What a first hire, and a twentieth, actually triggers
| Trigger | The position | Confidence |
|---|---|---|
| Establishment registration under the Occupational Safety Code | A uniform registration threshold of ten or more employees | Stated by the Press Information Bureau |
| Provident fund | Coverage extends to all establishments with twenty or more employees, regardless of the type of industry | Stated by the Press Information Bureau |
| Employees' state insurance | Coverage extended across India, with the earlier restriction to notified areas removed. Voluntary for establishments with fewer than ten employees, and mandatory for an establishment with even one employee engaged in a hazardous process | Stated by the Press Information Bureau |
| Employees' state insurance wage ceiling | 21,000 rupees a month, per the Ministry's own frequently asked questions | Ministry guidance |
| Provident fund contribution | Twelve per cent each from employer and employee under the 2026 scheme, on a wage ceiling of ₹25,000 a month from 17 September 2026: see below | Ceiling re-checked 18 September 2026 |
Confirmed by our subject matter expert on 17 September 2026. The provident fund wage ceiling was re-checked on 18 September 2026 and had changed; the current position is set out below.
State insurance contributions are 3.25 per cent of wages from the employer and 0.75 per cent from the employee, each rounded up to the next rupee. Those rates are now prescribed by rule 19(1) of the Social Security (Central) Rules, 2026 rather than by the state insurance regulations, which is where most references still point. The draft Employees State Insurance (General) Regulations, 2026 modernise registration, digital records, contribution returns, payment and benefit administration. They do not propose a rate change, and a change would in any case need an amendment to the Central Rules rather than to the regulations.
Provident fund contributions are twelve per cent of statutory wages from each side. Of the employer twelve, 8.33 per cent is ordinarily allocated to pension subject to the pensionable wage ceiling and the balance, normally 3.67 per cent, to provident fund; the employer also bears 0.50 per cent for deposit-linked insurance. The ten per cent rate survives only for an establishment specifically covered by a reduced-rate notification. An employee may contribute more than the compulsory amount voluntarily, and the employer is not obliged to match the excess.
The wage ceiling rose to ₹25,000 on 17 September 2026
The wage ceiling for Chapter III of the Code on Social Security is ₹25,000 a month with effect from 17 September 2026, notified by S.O. 5109(E) of that date, which supersedes S.O. 2702(E) of 29 May 2026 and the ₹15,000 ceiling it carried. The Union Cabinet approved the increase on 16 September 2026 and the notification followed the next day, taking effect on publication rather than on a later appointed date. At ₹25,000 the usual monthly split is ₹3,000 employee provident fund, about ₹2,083 employer pension and about ₹917 employer provident fund. At the former ₹15,000 it was ₹1,800, ₹1,250 and ₹550. One thing is settled and one is not. The ceiling itself is notified. The consequential amendments to the provident fund, pension and deposit-linked insurance schemes, and the operational circular that carries the mechanics, had not been located as at 18 September 2026. Confirm those before running a September or October payroll on the new figure. Note also that S.O. 2701(E) of 29 May 2026 is a different notification, on inspection charges for exempted establishments. It is often cited for the wage ceiling by mistake.
The rates matter less than the base they apply to. Wages now takes its meaning from section 2(88) of the Code on Social Security. It starts with all monetary remuneration and expressly includes basic pay, dearness allowance and retaining allowance. Specified components are excluded, but where the excluded components exceed half of total remuneration the excess is added back, and remuneration in kind counts up to the statutory limit. A structure built on allowances can therefore carry a higher statutory provident fund wage even though the twelve per cent has not moved. Describing the base as basic plus dearness allowance is no longer safe.
There is also a date on the horizon that these pages will outlast. Rules, regulations and schemes made under the repealed Employees State Insurance Act 1948 are saved for one year from commencement, expiring 20 November 2026, per S.O. 5936(E) of 19 December 2025. No extension had been notified as at 17 September 2026 and the replacement draft regulations only went out for comment on 10 August 2026. A review of this page is scheduled for 3 November 2026, before that date, rather than left to be noticed.
Equal remuneration and harassment, both of which attach before the first day
The Equal Remuneration Act, 1976 is repealed. Section 69 of the Code on Wages repeals it along with the Payment of Wages Act, 1936, the Minimum Wages Act, 1948 and the Payment of Bonus Act, 1965. Any guidance still citing the 1976 Act is describing repealed law, and a good deal of published Indian guidance still does.
The live provision is section 3 of the Code on Wages. Section 3(1) prohibits discrimination among employees on the ground of gender in matters relating to wages by the same employer, in respect of the same work or work of a similar nature. Section 3(2) prohibits reducing anyone's wage rate to comply, and prohibits discrimination on the ground of sex in recruitment for the same or similar work, except where the employment of women in that work is restricted by law. Section 4 sends a dispute about whether work is of the same or similar nature to an authority notified by the appropriate Government.
The prevention of sexual harassment legislation survives the Codes; it appears in none of the four repeal schedules. Two things about it are commonly stated wrongly. Section 4(1) says every employer shall constitute an Internal Committee, and it contains no employee-count threshold at all. The familiar figure of ten comes from section 6(1), which routes a complaint from a workplace with fewer than ten workers, or a complaint against the employer, to the District Officer Local Committee. Reading that as an exemption from constituting a committee is reading something the section does not say. And the penalty under section 26 is a fine of up to fifty thousand rupees for a first contravention, including failure to constitute a committee, with double the punishment on a subsequent conviction and possible cancellation or non-renewal of a licence or registration.
In August 2025 the Supreme Court, in Aureliano Fernandes v. State of Goa, directed a district-wise survey of public and private organisations that have constituted internal committees, and directed States to ensure that data already collected is on-boarded onto the She-Box platform. That does not make She-Box registration a legal obligation on every private employer, and commentary saying it does overstates the orders. Neither the Act nor the rules impose a general registration duty. The orders of 3 December 2024, 12 August 2025 and 6 January 2026 direct States and Union Territories to survey public and private organisations district by district, verify whether internal committees have been constituted, do it with the assistance of Labour Commissioners, and on-board what they collect. As at 27 March 2026 the Ministry reported more than 161,000 workplaces on-boarded. The obligation to collect and upload sits on the state machinery.
A private employer does become obliged where it is asked. Where the state, the District Officer or the Labour Department issues a direction as part of that survey, where a state circular requires self-registration, or where the employer receives an individual survey or information notice, it must comply. The legal basis is then that state instrument, not a portal provision in the Act. Portal guidance describing registration as mandatory is not, by itself, legislation.
What is mandatory for every employer, and is what an inspector will actually ask for, is the internal committee under section 4, the section 19 facilities and training, and the annual report under sections 21 and 22 read with rule 14.
One Act survived and one did not, and the second is widely thought to have
The Apprentices Act, 1961 survived
It is in none of the four repeal schedules, and the Occupational Safety Code expressly refers to it in defining employee, which only makes sense if it is live. Apprenticeship obligations continue, and they are covered in guide 5.
The Employment Exchanges Act, 1959 did not
It was repealed with effect from 21 November 2025 by section 164 of the Code on Social Security, so its section 4 is no longer the operative provision for a vacancy. The successor is section 139 of the Code, read with rules 55 and 56 of the Social Security (Central) Rules, 2026.
The threshold is twenty employees, not twenty-five. Rule 56(1) defines a private-sector establishment as a non-public-sector establishment employing twenty or more employees, unless the Central Government notifies another number. The commonly quoted twenty-five should not be used for the Central Rules. Vacancies carrying total remuneration below ₹11,000 a month are outside section 139 altogether, as are specified short-duration work, domestic service and certain legislative employment.
Headcount alone does not tell you whether you have to report. For a public sector establishment reporting operates directly from commencement of the Code. For a private establishment rule 56(1)(b) makes it operative from the date specified in a notification by the appropriate Government, so the twenty-employee definition identifies the population that could be covered without activating reporting in every state. The notification and portal arrangements of the state the establishment sits in are what settle it.
Where it is activated, the employer reports each covered vacancy in Form XXV before filling it, gives at least fifteen days notice before the last date for applications for a regional vacancy and forty days for specified central, technical or scientific vacancies, and reports the selection result within thirty days. Existing employment exchanges are treated as regional career centres under rule 55 until replaced.
The obligation is to notify, not to recruit through the career centre. An employer remains free to select through its own process.
Questions about hiring under the Codes
Do we have to reissue appointment letters to existing staff?
The Occupational Safety Code required an employee without a letter of appointment at commencement to be issued one within three months of commencement. Where existing letters do not carry the prescribed particulars, reissuing is the straightforward course.
Does the fifty per cent rule mean basic salary must be half of the package?
Not exactly, and the distinction matters. The rule is that where the excluded components exceed half of total remuneration, the excess is added back into wages. The effect is a floor on the wages figure used for statutory calculations, not a prescription about how the payslip is laid out.
Can we still keep the old salary structure?
You can lay it out the same way. What you cannot do is get the old statutory outcome from it, because the wages base for those calculations now has a floor under it.
Which rules apply to us, central or state?
It depends on whether the establishment is in the central sphere. It is worth settling early, because the prescribed forms and several operational requirements differ, and a group operating in several states may be under more than one set.
Where to go next
Talent Acquisition
Back to the main page: how we recruit, what we take on, and how to reach us.
Executive Search and Senior Appointments
Leadership hiring where the appointment is also a corporate act: key managerial personnel, director appointments and the checks that precede them, and the independent director databank and proficiency test.
Contract Staffing, Fixed Term Employment and Gig Workers
The three non-permanent routes and when each is lawful: fixed term employment and its one-year gratuity, contract labour at the raised threshold with the core activity prohibition, and the aggregator obligations now live for platform work.
Screening, Background Verification and Candidate Data
What may be checked and what may not, the data protection regime that is commencing in phases rather than all at once, and the difference between an applicant and an employee that the statute does not clearly resolve.
Campus Hiring, Internships and Apprenticeships
The employer side of campus recruitment, the legal difference between an intern, an apprentice and an employee, apprenticeship obligations and stipends, and the incentive schemes currently running.
Send an enquiry
If you are reviewing offer letters or a salary structure against the Codes, tell us how many employees, in which states, and whether you are in the central sphere. Those three answers determine most of the rest.
Position as at 17 September 2026. Reviewed every six months.
This page is general information, not professional advice. Indian employment law is in the middle of the largest transition it has had in seventy years. The four Labour Codes commenced on 21 November 2025, two of them only in part, repealing twenty-nine central Acts. New central rules under two of the Codes were notified in May 2026 and new provident fund and pension schemes in June 2026, one of which was corrected in August 2026. The Digital Personal Data Protection Act is commencing in phases that run to 2027. Several positions on these pages are marked as unresolved because the primary source could not be read, and a page that pretended otherwise would be worth less than one that says so. Take professional advice before acting on anything on this page. We are happy to be that adviser, but we do not act on a web page, ours or anyone else's, without one.