The four codes
On 21 November 2025 four Labour Codes came into force, consolidating 29 labour laws. They cover wages, industrial relations, social security, and occupational safety, health and working conditions.
Draft central rules under the codes were issued on 30 December 2025. State rules also apply alongside the central rules, so the rules are still settling: check the final central and state rules for each location.
What changed for employers
Appointment letters
Every employee must receive a written appointment letter. For a new entity, this means that standard contracts or letters need to be in place from the first hire.
Fixed-term employment
Fixed-term employees get benefits equal to those of permanent staff, and qualify for gratuity after one year of service. Employers that use fixed-term contracts to staff projects or new centres should price these benefits in from the start.
Gig and platform workers
Gig and platform workers now come under social security. Aggregators contribute to a social security fund, with contributions of 1–2% of annual turnover, capped at 5% of the amounts paid or payable to gig and platform workers. See social security.
Minimum wages
Minimum wages now apply to all workers, and there is a central floor wage.
Single registration, licence and return
A single registration, a PAN-India single licence and a single return replace the multiple registrations and filings under the old laws.
Factories
Factory safety now falls under the Occupational Safety, Health and Working Conditions Code 2020. Existing rules continue to apply during the transition. A factory licence is still obtained from the state factories and labour department.
Registrations for a new entity
At or soon after incorporation, a foreign-owned company typically needs:
- registration under the state shops and establishments law;
- professional tax registration, where the state levies it;
- EPFO and ESIC registrations, as applicable;
- labour-code registrations.
EPFO and ESIC registrations can be requested at incorporation through the AGILE form linked to SPICe+. See the set-up roadmap.
Note: Some states relax operating rules. Tamil Nadu, for example, lets establishments with 10 or more staff open 24×7 for three years from 5 June 2025. Check the state’s shops and establishments rules for opening hours, shifts and leave.
Incentives linked to hiring
The Employment Linked Incentive (PM Viksit Bharat Rozgar Yojana) pays employers up to ₹3,000 a month for each additional employee kept for at least six months, for jobs created by 31 July 2027. Several state policies reimburse EPF contributions or pay a share of payroll. See social security and state incentives.
What to check next
- Review offer letters and employment contracts against the codes, starting with written appointment terms for every employee.
- List fixed-term staff and calculate gratuity exposure after one year of service.
- If the business engages gig or platform workers, confirm whether it is an aggregator and how its contribution is calculated.
- Confirm the state rules where each office or plant is located, as they apply alongside the central codes and draft central rules.
- Confirm with the state labour department how the single registration and return work for each establishment.