Updated in December - 2025Â |Â Subscribe to watch greytHR how-to video
The Code on Wages, 2019 is one of the four major labour codes introduced by the Government of India to simplify, modernize, and standardize labour regulations across the country. It consolidates four existing laws:
Payment of Wages Act
Minimum Wages Act
Payment of Bonus Act
Equal Remuneration Act
By combining these into one unified Code, the government aims to:
Bring uniformity to wage definitions
Ensure timely and fair wage payments
Expand coverage to all categories of employees
Simplify compliance for employers
The Code becomes effective from 21 November 2025, giving organisations a clear timeline to adopt the required structural and process changes.
The Code fundamentally reshapes how employers define wages, structure salaries, compute statutory contributions, manage employment lifecycles, and maintain compliance.
It introduces foundational changes that directly impact:
Salary structures
Payroll processing
Statutory contributions
Minimum wage obligations
Full & Final settlement timelines
Gratuity eligibility
Overtime calculations
Together, these require both policy-level decisions and system-level configurations to stay compliant.
Under the new law, Basic Pay + Dearness Allowance (DA) + Retaining Allowance must form at least 50% of total remuneration.
Previously, organizations often kept Basic Pay at lower percentages and structured the rest as allowances. This helped manage PF/ESI contributions and Gratuity liability while optimizing employee take-home pay.
With the new rule:
Employers must restructure salary components
If allowances exceed 50%, the excess is added back to Wages
This leads to higher statutory obligations like PF and Gratuity
The Code introduces a “Floor Wage” that acts as a baseline for states. No state can set minimum wages below this amount.
Minimum wage compliance now applies to all employees, not just those in scheduled industries.
Organizations with diverse job profiles must re-evaluate wage alignment across roles and locations.
Overtime must now be calculated at twice the employee’s normal wage rate, and importantly, must use the new wage definition rather than the existing Basic Pay.
OT will become more expensive for employers
Policies and system formulas must be updated
Organisations must clarify OT eligibility across employee classes
One of the most operationally significant changes is the mandatory completion of Full and Final (FnF)Â settlement within 2 working days.
Current FnF cycles often span 15–45 days.
Asset return, department clearance, pending loan recoveries, and payroll closures all need acceleration.
Manual processes will not meet the deadline.
Automated resignation workflows
Department-wise clearance
Exit dashboard for HR visibility
Integrated FnF computation
Under the new rule, Fixed-Term Employees (FTEs) become eligible for Gratuity after 1 year of continuous service, instead of the earlier 5-year rule applicable to permanent employees.
Organisations employing FTEs must budget for earlier gratuity payouts.
HRMS must support classification-based Gratuity rules.
greytHR allows configuration for FTE-specific eligibility.
While the Wage Code focuses on wage definitions, salary structure, and payment timelines, it is part of a broader labour reform framework. The remaining three Codes—the Social Security Code, Industrial Relations Code, and Occupational Safety & Health Code—work alongside the Wage Code to redefine compliance expectations for employers.
The Social Security Code consolidates several benefit-related legislations, including PF, ESI, Maternity Benefit, and Gratuity Acts.
Unified compliance: Managing PF, ESI, Gratuity, and maternity benefits becomes more structured under one framework.
Broader workforce categories: Gig and platform workers now fall under social security protections.
Faster Gratuity Eligibility for Fixed-Term Employees: Fixed-Term Employees (FTEs) become eligible for Gratuity after completing 1 year of continuous service, instead of the earlier requirement of 5 years that applied to permanent employees.
The Industrial Relations Code focuses on maintaining stability, fairness, and transparency in employer–employee relations.
Reskilling Fund for retrenched employees
Mandatory 14-day notice for strikes and lockouts
Recognition of fixed-term employment as a formal category
HR teams need structured processes for contract management, especially around FTEs.
Workforce planning and risk management become more predictable.
Retrenchment processes now involve additional financial and compliance steps.
The Occupational Safety & Health Code modernizes workplace safety standards, welfare requirements, and work conditions across industries.
Single licence/registration/return across multiple compliance areas.
Free annual health check-ups for employees.
Night-shift permission for women with adequate safety measures.
Facilities and operations teams must ensure compliance with updated safety norms.
Policies for night-shift work and workplace welfare must be updated.
HR and Admin teams must collaborate on safety audits and compliance documentation.
As the labour codes introduce new compliance requirements, greytHR provides configuration-driven tools that help organisations adapt without relying on manual processes.Â
Lock past payrolls: Protect previous salary data from changes once restructuring begins, ensuring audit integrity.
Snapshot payroll data before updates: Maintain a clean reference point for comparisons, reconciliations, and audit trails.
Automatic 2-day FnF alerts: Send timely notifications to ensure exit processes move quickly enough to meet statutory deadlines.
Configurability for Basic = 50% rule: Adjust salary structures using flexible component definitions that match the organization’s policies.
Gratuity eligibility setup for FTEs: Configure 1-year eligibility rules for Fixed-Term Employees as per the new Code.
Overtime formula updates: Modify OT calculations to use the updated wage definition and 2Ă— rate.
These features help organizations maintain accuracy, avoid compliance errors, and stay prepared for inspections or audits.
It is important to understand that while greytHR supports all statutory requirements, the platform does not automatically enforce wage restructuring. This is because wage policies differ widely across organisations, and salary changes require financial and business decisions that only employers can make.
Basic percentage varies across organisations; some use 30%, others 40% or more.
Allowance structures differ based on role, location, or internal policies.
Cost management decisions (such as adjusting CTC vs. absorbing costs) must be taken by the employer.
Employee classifications (Permanent, FTE, Contract) have different eligibility rules.
OT policies vary significantly depending on industry and operational requirements.
State-level minimum wage rules differ, requiring employer-defined configurations.
greytHR therefore offers powerful configuration options, giving employers full control to implement wage rule changes in a manner best suited to their business needs.
The Code on Wages, 2019 is one of the four major labour codes introduced by the Government of India to simplify, modernise, and standardise labour regulations across the country. Â
It consolidates four labour laws—Payment of Wages Act, Minimum Wages Act, Payment of Bonus Act, and Equal Remuneration Act—into a single, unified legislation. Its objective is to simplify wage definitions, ensure uniformity, and protect employee rights. Â
The government aims to:
Bring uniformity to wage definitions
Ensure timely and fair wage payments
Expand coverage to all categories of employees
Simplify compliance for employers
The Code becomes effective from 21 November 2025, giving organisations time to revise policies, salary structures, and payroll processes.
The Code significantly impacts how organisations:
Define wages
Structure salaries
Calculate statutory contributions
Manage minimum wage obligations
Process Full & Final settlements(FnF)
Determine Gratuity eligibility
Calculate Overtime (OT)
These changes require both policy updates and HRMS-level configuration changes.
Yes, the platform is designed with a flexible, configuration-driven architecture. All statutory changes can be implemented via settings based on organization needs. Â
The major changes include:Â
50% Rule for Wages – Basic Pay + DA Retaining Allowance must be ≥ 50% of total remuneration.
Full & Final Settlement in 2 Days – FnF must be paid within 2 working days from resignation/termination.
Universal Minimum Wages – All employees are now covered, irrespective of industry.
Gratuity for FTEs – Fixed-term employees completing 1 year become eligible.
Overtime at twice the wages – Applicable for all employees, calculated on the new wage definition. Â
Under the Code, Basic Pay + Dearness Allowance + Retaining Allowance must form at least 50% of total remuneration.
Earlier, organisations often kept Basic Pay low and allocated more to allowances to manage PF/ESI and Gratuity costs. Under the new rule:
Salary components must be restructured
Any excess allowance beyond 50% must be moved back to Basic
PF and Gratuity liabilities may increase
The Code introduces a Floor Wage applicable nationwide. States must set minimum wages at or above this level.
Minimum wage compliance now applies to all employees
Organisations must reassess wage levels across all roles and locations
Inconsistencies between roles or departments may need correction
OT must be paid at twice the employee’s normal wage rate, calculated using the new wage definition, not just Basic Pay.
greytHR provides OT formula configuration and policy settings.
Employers must complete FnF within 2 working days of resignation or termination.
Current FnF cycles typically take anywhere from 15 to 45 days, as they involve multiple steps such as asset handover, department clearances, pending loan recoveries, and final payroll processing.Â
greytHR helps organisations overcome these challenges by automating key parts of the FnF workflow. Resignation requests trigger automated processes, department-wise clearances are streamlined, and HR teams gain real-time visibility through an exit dashboard. The platform also integrates FnF calculations directly within payroll, ensuring faster and more accurate settlement.
FTEs are now eligible for Gratuity after 1 year of continuous service.
Note: For Regular employees, the earlier rule of 5 years remains unchanged.
Increased financial provisioning for FTEs
HRMS must differentiate between employee types
Employers need to configure FTE-specific Gratuity rules
The Social Security Code consolidates PF, ESI, Maternity Benefits, Gratuity, and other social welfare laws into one framework. It also extends coverage to gig and platform workers.
Compliance becomes more unified and structured
New workforce categories (gig, platform) come under formal protection
FTEs gain faster Gratuity eligibility under this unified approach
The IR Code promotes transparency, stability, and fair labour practices. It introduces:
A Reskilling Fund for retrenched employees
Mandatory 14-day notice for strikes and lockouts
Formal recognition of fixed-term employment
These changes influence workforce planning and HR policy updates.
It sets standards for workplace safety, employee welfare, and working conditions. Key provisions include:
Single licence/registration/return
Free annual health check-ups
Night-shift permission for women with safety measures
Together, the four labour codes reshape compliance expectations.
For example:
New wage definitions affect PF, ESI, and Gratuity (Social Security Code)
FTE recognition impacts Gratuity and contract terms (IR Code)
OT and working hours align with wage and safety requirements (OSH Code)
greytHR provides tools to:
Lock past payrolls
Take payroll snapshots before restructuring
Trigger FnF alerts
Configure Basic = 50%
Set FTE Gratuity eligibility
Update OT formulas
Salary and wage restructuring depends on business-specific decisions such as:
Basic percentage allocation
Allowance strategy
Cost absorption choices
Employee classifications
OT eligibility
State-level wage rules
Since these vary across organisations, greytHR provides flexible configuration options, not automatic changes.
Employers must define their wage structure, update contracts and policies, and configure their HRMS to align with the new statutory requirements. greytHR provides the tools, but decision-making rests with the organisation.
No. The rights of workers regarding health, safety, and welfare will continue to be protected, as these provisions apply to establishments employing 10 or more employees.
No. All establishments employing 10 or more employees must comply with safety and welfare measures. The increased licensing threshold is intended for administrative ease and does not affect workers’ entitlements or protections.
No. The Code prescribes 8 hours per day and 48 hours per week as the standard. It provides flexibility to extend daily working hours with the worker’s consent and payment of overtime wages at twice the regular wage rate.
No. The Code grants women the right to work in any establishment, including night shifts, provided adequate safety, transport, and security arrangements are in place. This promotes gender equality while ensuring necessary safeguards. Additionally, a woman worker's consent is mandatory for night work.
No. The new inspection system promotes transparent, technology-based inspections while maintaining accountability and facilitating employer compliance. Improved compliance helps ensure better protection for workers.
No. The Code mandates health and safety provisions for all workers employed in establishments with 10 or more employees.
No. The Code simplifies and harmonizes labour law provisions while protecting workers’ rights. This removes ambiguities and brings consistency in worker protection.
No. The Code requires the establishment of a toll-free helpline for Inter-State Migrant Workers (ISMWs). Workers can use this helpline to contact the government and seek assistance if they face any difficulties.
No. Labour is a subject in the Concurrent List of the Constitution. States are empowered to frame rules within their designated areas while considering local conditions and regional requirements.
No. The Code does not distinguish between regular workers, contract workers, and ISMWs. Benefits under the Code extend to all workers, including contract and inter-state migrant workers.
No. The Code ensures women’s right to work in any occupation while requiring adequate safety measures and safeguards, thereby promoting gender equality.
No. The Code covers all employees, including fixed-term employment workers. They are entitled to benefits such as appointment letters, annual health check-ups, and other applicable provisions.
No. Penalties have been rationalized. Only minor offences are compoundable, while serious safety violations attract stringent penalties, including imprisonment.
Yes. The Code recognizes transgender workers and mandates separate facilities such as bathing areas, toilets, and restrooms to ensure dignity, privacy, and equal access in the workplace.
Yes. Motor Transport Workers, including drivers, are covered under the Code. The provisions related to safety, health, welfare, working hours, and rest intervals apply to them.
Yes. Contract workers are entitled to welfare facilities, which are to be provided by the principal employer.
No. Under the definition of "audio-visual worker" in the Code, stuntmen and dubbing artists are included and are entitled to the safety, health, and welfare benefits available to audio-visual workers.
A worker must have worked for 180 or more days in a calendar year to be eligible for annual leave with wages.
Yes. A contract worker can request the concerned contractor to issue an experience certificate.
No. The concern is incorrect. Provisions related to the registration of trade unions have been retained under Chapter III of the Industrial Relations (IR) Code, 2020.
No. The IR Code, 2020 does not ban strikes. The right to strike remains intact, subject to a mandatory 14-day notice period before going on strike.
No. Government permission is not required under the IR Code. However, workers must provide a 14-day prior strike notice. This facilitates timely conciliation and helps employers and unions resolve disputes before they escalate.
No. The provisions for mandatory one-month notice and retrenchment compensation continue to apply. In addition, establishments employing 300 or more workers must obtain prior government permission before retrenchment.
No. The IR Code strengthens the role of trade unions by providing statutory recognition to negotiating unions and negotiating councils. It also establishes bipartite forums such as Works Committees and Grievance Redressal Committees with equal representation to facilitate timely grievance resolution.
No. Workers’ rights and job security remain protected through provisions such as mandatory one-month notice and retrenchment compensation. Prior government permission is also required for retrenchment in establishments employing 300 or more workers.
No. Fixed-term employees are entitled to benefits equal to those of permanent employees, including EPF, ESI, flexible working hours, and minimum wages. They are also eligible for gratuity upon completing one year of service. Additionally, fixed-term employees receive appointment letters directly from employers, which can enhance employability and skill development.
No. Employers must continue to provide a mandatory one-month notice and retrenchment compensation for every completed year of service. The Code also introduces a re-skilling fund for retrenched workers to improve their future employment opportunities.
No. The conciliation mechanism has been streamlined. Conciliation is now mandatory in all cases involving strike notices, and proceedings commence from the first conciliation meeting. Fixed timelines, digital processes, and clear jurisdiction help ensure faster dispute resolution.
The Labour Courts and Industrial Tribunals are being replaced by a simplified two-tier tribunal system designed to reduce delays and avoid multiple forums. The IR Code introduces two-member tribunals to facilitate quicker delivery of justice.
No. The mandatory recognition of a sole negotiating union or negotiating council strengthens structured collective bargaining between workers and employers.
No. Lay-off, retrenchment, and closure continue to be regulated under the IR Code. Industries employing 300 or more workers on any day in the preceding year must obtain prior government permission. Existing benefits such as retrenchment compensation and priority in re-employment remain available.
No. Workers’ participation continues through bipartite forums such as Works Committees and Grievance Redressal Committees established under the IR Code.
No. Penalty provisions have not been weakened. In fact, penalties have been significantly increased and aligned with the seriousness of the offences.
No. Labour is a subject in the Concurrent List of the Constitution of India. The powers and responsibilities of both the Central and State Governments are clearly defined in the labour codes, and State Governments continue to exercise their authority as appropriate governments.
No. The introduction of two-member Industrial Tribunals is intended to ensure faster and more efficient delivery of justice.
No. The Code protects workers’ interests through provisions relating to negotiating unions and councils, Works Committees, Grievance Redressal Committees, safeguards before retrenchment, lay-off and closure, and an effective dispute resolution mechanism.
No. Sales promotion employees are recognized under the definition of “worker” in the IR Code and are therefore entitled to labour protections.
No. Working journalists employed by newspapers or news agencies are included under the definition of “worker” in the IR Code.
Yes. The concept of scheduled employment has been removed under the Code on Wages. The Code applies universally to all employees, regardless of their sector or category.
No. Bonus is payable to every employee who has worked for at least 30 days in an accounting year, subject to the wage ceiling prescribed by the appropriate government.
No. The floor wage serves as a baseline. If the minimum wages already fixed by a State Government are higher than the floor wage, the State Government cannot reduce them below the previously fixed rates.
No. The revised definition promotes transparency and uniformity. Allowances exceeding the prescribed percentage notified by the Central Government are added back to wages, increasing the wage base for benefits such as provident fund, gratuity, and bonus. This strengthens employees’ social security benefits.
No. The Code limits total deductions to 50% of wages, providing a uniform and protective framework. Deductions cannot exceed this prescribed limit.
No. Both the Central and State Governments are responsible for fixing minimum wages within their respective jurisdictions. These wages must be set above the floor wage and after consulting representatives of workers and employers, ensuring a fair and balanced process.
No. The duties and powers of inspectors remain unchanged. Inspectors are responsible for enforcing the provisions of the Code, creating awareness among workers about their rights, and guiding employers on compliance requirements.
No. Flexibility in working hours does not affect entitlement to minimum wages. Employees who work beyond normal working hours are entitled to overtime wages, which must be at least twice the normal rate of wages.
No. Employers are prohibited from discriminating on the basis of gender, including transgender status, in matters relating to wages, recruitment for the same or similar work, and conditions of employment.
No. The Code provides for enhanced and deterrent penalties. While employers may be given an opportunity to rectify certain irregularities, compounding is permitted only for a first offence. A repeat offence within five years may result in imprisonment of up to three months, a fine, or both. This approach reduces unnecessary litigation while ensuring accountability.
No. The Code covers all categories of employees, including full-time, part-time, temporary, casual, and contractual workers.
No. The Code applies to all employees in both the organized and unorganized sectors. It ensures minimum wages and timely payment of wages, extending these protections to all categories of employees.
No. While the Rules prioritize digital processes to ensure transparency and ease of access, physical submission is also permitted in specified cases. For example, claims relating to gratuity and maternity benefits may be submitted physically in addition to electronic modes.
No. Registration is only an entry point that enables workers to access various social security schemes. Benefits are payable only under schemes that are available on the relevant portal and subject to fulfillment of scheme-specific eligibility conditions.
No. The Rules are a form of subordinate legislation. They can be modified, revised, or updated through government notifications without requiring Parliamentary approval.
No. The Rules require Social Security Funds to be maintained as separate accounts. They also provide for periodic reporting, audit by the Comptroller and Auditor General (CAG), and restricted utilization exclusively for worker welfare.
No. The Rules clearly state that procedural lapses do not override substantive rights. Applications may be submitted physically on plain paper or electronically, and claims cannot be rejected solely because prescribed forms were not used.
No. The Rules allow multiple forms of acceptable proof, including certificates issued by ASHAs, Auxiliary Nurse Midwives (ANMs), local authorities, and other prescribed village or municipal officials, in addition to registered medical practitioners.
No. While the Rules prescribe minimum nursing breaks, they also permit additional time, including travel time, depending on the distance to the crèche or childcare facility.
No. The Rules permit common crèches, shared or pooled arrangements, and negotiated facilities, particularly for smaller establishments. Where crèche facilities are not provided, payment of a crèche allowance is required.
No. The Rules permit advance submission of gratuity applications when the date of retirement or cessation of employment is known in advance.
No. The Rules explicitly provide that delay alone cannot invalidate a gratuity claim.
The Rules require gratuity amounts payable to minor nominees to be invested in term deposits with specified nationalized banks, ensuring the safety of the funds and future benefit to the nominee.
No. The Rules prescribe mandatory notices, reasoned orders, defined timelines, and appeal mechanisms to ensure transparency and prevent arbitrary decisions.
No. The Rules permit advance payment of cess based on self-assessment, with final adjustment upon completion and assessment of the project.
No. Instalment payments are permitted only when accompanied by disclosures regarding work progress and cost assessment. Such payments are subject to verification and scrutiny.
Yes. The Rules provide a time-bound refund mechanism for excess cess deposited, following assessment or appellate orders.
Responsibility is clearly assigned among employers, contractors, government departments, and public sector undertakings, depending on the nature and execution of the construction work.
No. The Rules provide inter-State portability of registration and benefits, subject to updating migrant worker information on the destination State portal.
No. The Rules also cover gig and platform workers engaged through subsidiaries, associate companies, holding companies, LLPs, and third-party arrangements.
No. Failure to update information results only in temporary ineligibility. Eligibility can be restored once the required information is updated on the designated portal.
No. The Rules emphasize risk-based inspections, corrective directions, and compliance notices with defined timelines before any penal action is initiated.
No. The Rules provide for notice, an opportunity to comply, a hearing, reasoned orders, and compounding of offences before prosecution is considered.
Yes. The Rules prescribe specific limitation periods, standardized appeal formats, and timelines for disposal of appeals.
No. Exempted establishments must continue to meet eligibility criteria, comply with audit and reporting requirements, and may lose their exemptions if structural changes affect compliance.
No. The Rules require the establishment of Boards of Trustees with equal employer-employee representation, periodic meetings, and governance practices that ensure independence and accountability.
No. The Rules permit electronic maintenance of records or storage at a notified nearby location, provided the records are readily accessible during inspections.
No. The Rules allow revision of limits, forms, contribution rates, and procedures through government notifications, enabling them to adapt to changing requirements and emerging needs.
As per the provisions of Section 6 of the General Clauses Act, 1897, the existing rules will continue to remain in force until the new rules under the Labour Codes are finally notified, to the extent that they are consistent with the Codes.
The definition of wages includes all remuneration payable to a person employed, whether by way of salary, allowances, or otherwise. It covers:
Basic Pay
Dearness Allowance (DA)
Retaining Allowance, if any
If payments or allowances other than Basic Pay, DA, and Retaining Allowance exceed 50% (or such percentage as may be notified) of total remuneration, the excess amount will be added back to wages.
The definition of wages includes:
Basic Pay
Dearness Allowance
Retaining Allowance, if any
If allowances (excluding gratuity and retrenchment compensation) exceed 50% of total remuneration, the excess amount will be added back to wages.
Performance-based incentives, Employee Stock Option Plans (ESOPs), variable pay components, and reimbursement-based payments are not considered part of wages.
If allowances and benefits (excluding gratuity and retrenchment compensation) exceed 50% of total remuneration, the excess amount must be added back to wages.
The added amount will be treated as wages for statutory compliance purposes.
No. As specified under Section 2(y) of the Code on Wages, 2019, leave encashment is not considered part of allowances.
Yes. A single definition of wages applies uniformly across all four Labour Codes and is used for all statutory calculations.
Example:
Total remuneration: â‚ą76,000 per month
Basic Pay + Dearness Allowance: â‚ą20,000
Allowances: â‚ą40,000
Other components (Gratuity and Retrenchment Compensation): â‚ą16,000
Total allowance paid: â‚ą56,000
Since the maximum allowance permitted for wage calculation is 50% of total remuneration (â‚ą38,000), the excess allowance of â‚ą2,000 will be added back to wages.
Therefore:
Revised wages = â‚ą22,000
Statutory calculations will be based on â‚ą22,000.
Gratuity provisions will apply prospectively from 21 November 2025, which is the date of enforcement of the Code.
Gratuity provisions are applicable from 21 November 2025, the date on which the Code came into force. Establishments may make accounting provisions in accordance with applicable accounting standards and practices.
Gratuity is payable in the following situations:
Termination of employment
Superannuation (retirement due to age)
Resignation
Death
Disablement due to accident or disease
Expiry of a fixed-term employment contract
Any other event notified by the Central Government
Yes. Completion of five years of continuous service is not required in the following cases:
Death of the employee
Disablement
Expiry of a fixed-term employment contract
Any other event notified by the Central Government
Where the nominee or legal heir is a minor, the gratuity amount must be deposited with a competent authority and invested in a bank or financial institution until the minor attains majority.
For every completed year of service, or part thereof exceeding six months, gratuity is payable at the rate of 15 days' wages based on the last drawn wages, or such rate as may be notified by the Central Government.
Special cases include:
Piece-rated employees: Daily wages are calculated based on the average wages earned during the three months preceding termination, excluding overtime.
Seasonal employees: Eligible for seven days' wages for each season worked.
Fixed-term employees and deceased employees: Gratuity is payable on a pro-rata basis.
The maximum gratuity payable is currently â‚ą20 lakhs, or such amount as may be notified by the Central Government.
For employees re-employed after disablement:
Wages earned before disablement are considered for the period before disablement.
Reduced wages earned after disablement are considered for the period after disablement.
No. Employees continue to be entitled to receive better gratuity benefits available under any award, agreement, or contract entered into with the employer.
A person employed in a supervisory capacity and drawing wages exceeding â‚ą18,000 per month, or such amount as may be notified by the Central Government, is not included within the definition of a worker under the OSH & WC Code.
Core and non-core activities are defined under Section 57 of the OSH & WC Code, 2020.
A principal employer may engage contract labour for core activities when:
The activity is ordinarily performed through a contractor.
The work is intermittent in nature.
There is a sudden increase in workload requiring completion within a specified time.
As per the OSH & WC Code, 2020, employers are required to provide to-and-fro journey allowance once every year to an Inter-State Migrant Worker from the worker's native place to the place of employment.
The definition of wages has already come into force with the notification of the Code, effective from 21 November 2025. ESI coverage will be governed based on the provisions currently in force until the final Rules are finalized.
Yes. Overtime allowance payments form part of the 50% wage calculation under the Code on Wages, 2019.
Only statutory components such as employer PF and pension contributions and statutory bonus are included for arriving at 50% of wages as part of remuneration. Gratuity, ESI, and other retirement benefits are not included.
No. Statutory components such as the employer's share of PF and pension contributions are covered under Section 2(y)(c) of the Code on Wages. If the total of specified components exceeds 50% of remuneration, the excess amount is added back to wages.
Yes. The Code on Wages, 2019 contains provisions relating to timely payment of wages, and these provisions apply to all employees.
No. Minimum wages are statutory wages fixed by the appropriate government, and employers cannot pay employees less than the prescribed minimum wage. Wages are defined under Section 2(y) of the Code on Wages, 2019.
No. Annual performance-based incentives do not form part of wages for computation under the Labour Codes.
Any employee, including a worker, whose minimum rate of wages is fixed under the Code on Wages, 2019 is eligible for overtime wages.
Yes. Gratuity based on the revised definition of wages is applicable from 21 November 2025, the date on which the Labour Codes came into effect.
The definition of wages came into effect on 21 November 2025.
Yes. Overtime allowance forms part of the wage components. If such allowances exceed 50% of total remuneration, the excess amount is added back to wages for calculation purposes.
Minimum wages are fixed by the appropriate government for employees. Wages, on the other hand, are determined by the terms of employment agreed between the employer and employee and are governed by the definition provided under Section 2(y) of the Code on Wages, 2019.
Fixed-term employment covers employees who are directly engaged by the employer.
Gratuity calculation will apply prospectively from 21 November 2025, the date on which the Labour Codes came into effect.
From 21 November 2025, the definition of wages under the Code on Social Security, 2020 applies. The existing ESI wage threshold of â‚ą21,000 per month will continue to apply until further notification.
No. Any payment that is not part of the components specified under Section 2(88) of the Code on Social Security, 2020 will not be considered for gratuity calculation.
Yes. A Fixed-Term Employee becomes eligible for gratuity upon rendering service under the contract for a period of one year from the commencement of the contract.
As per Section 114(4) of the Code on Social Security, 2020, contributions payable by aggregators towards social security schemes for gig and platform workers will be notified by the Central Government. These contributions will be credited to the Social Security Fund established by the Central Government.
Under Section 53 of the Code on Social Security, 2020, the employer, that is, the contractor, is responsible for payment of gratuity upon completion of the prescribed continuous service period.
The employee will be paid gratuity based on the last drawn wages at the time of retirement, resignation, death, superannuation, or other qualifying event occurring on or after 21 November 2025, in accordance with the Code on Social Security, 2020.
Benefits provided under the terms of employment, such as food coupons, ration items, and mobile recharge facilities, are considered remuneration in kind.
A Fixed-Term Employee becomes eligible for gratuity only after rendering service under the contract for a period of one year from the commencement of the contract.
No. Leave provisions apply to workers under the OSH & WC Code, 2020 and to supervisors whose wages do not exceed â‚ą18,000 per month. The definition of worker also includes sales promotion employees and working journalists.
A worker may carry forward up to 30 days of leave to the next calendar year. However, leave that was applied for but not granted by the employer may be carried forward without any limit.
Workers are eligible for leave encashment. Sales promotion employees are also covered, as they are included within the definition of worker under Section 2(1)(zzl) of the OSH & WC Code, 2020.
No. Crèche facilities are available to employees irrespective of gender.
The Code prescribes eight working hours per day. A worker who works more than eight hours in a day or more than 48 hours in a week is entitled to overtime wages at twice the normal rate of wages, payable at the end of the wage period.
The provisions of the OSH & WC Code, 2020 prevail over inconsistent State laws. However, if a State law provides more favourable benefits to an employee, the employee is entitled to receive those more favourable benefits.
There is no prescribed maximum limit for leave encashment under the OSH & WC Code, 2020. Leave exceeding 30 days that was applied for but not granted may be encashed at the end of the calendar year. Upon separation from service, a worker is entitled to encash all leave standing to their credit.
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.
▶ Video - Watch our how-to videos to learn more about greytHR.
📢 Product Update - Read about the product updates.