What Hasn’t Changed Yet, What Has, and What HR Must Prepare For

India’s four Labour Codes were passed by Parliament in 2019 and 2020. They consolidate 44 central labour laws into four statutes. As of 2026, they have not yet been brought into effect nationally. Central rules have been notified, but implementation is contingent on states notifying their own rules — and most states have not done so.

This creates an unusual situation for HR: the law exists on paper, the rules have been drafted, but the compliance obligations you follow today are still mostly under the old legislation. Knowing exactly what is pending, what has changed, and what to build into your HR infrastructure now — before the codes go live — is the difference between a smooth transition and a scramble.

Part 1: The Four Labour Codes — What Each Consolidates

All four codes have received Presidential assent and central rules have been notified. However, labour is a Concurrent List subject — states must also notify their own rules before the codes become operative. As of 2026, no state has fully notified rules for all four codes. The codes exist but are not yet enforceable.

Part 2: Current Implementation Status by State

States progress at different speeds. The table below reflects the position as of early 2026 — verify against the latest state gazette for your specific hiring locations.

Even states that have notified rules have not issued a commencement date. “Rules notified” does not mean “in effect.” The practical position as of 2026: continue operating under existing legislation until a formal central commencement notification is issued. Track the Ministry of Labour & Employment gazette.

Part 3: What Will Change When the Codes Take Effect

These are the changes most significant for payroll and HR operations. Plan for them now even if the effective date is uncertain.

Code on Wages: The “Wages” Definition Change — Most Impactful for Payroll

• The new definition of “wages” under the Code on Wages includes all remuneration except specific exclusions. Exclusions are capped at 50% of the total remuneration.
• The practical effect: if allowances (HRA, conveyance, special allowance, etc.) together exceed 50% of CTC, the excess is reclassified as “wages” for the purpose of minimum wages, overtime, and statutory contributions.
• This will increase the base for PF calculation for many employers who currently structure salary packages with high allowances and low basic. The PF contribution increase could be significant for large workforces.
• Gratuity, bonus, and leave encashment calculations will also be affected — all three are linked to the “wages” or “basic” definition.

Social Security Code: PF and Gratuity Changes

• PF coverage extended to fixed-term employees, gig workers (under a new social security scheme), and platform workers.
• Gratuity becomes payable to fixed-term contract employees on a pro-rata basis from day one of employment — no 5-year minimum service requirement for fixed-term contracts.
• ESI coverage extended to include hazardous industry workers and some unorganised sector workers through new schemes.
• The maternity benefit provisions of the existing Maternity Benefit Act (26 weeks paid leave) are absorbed into the Social Security Code without changes to the core entitlement.

Industrial Relations Code: Notice Period and Retrenchment

• Standing orders (rules of conduct for workers) extended to establishments with 300+ employees, up from the current 100.
• Prior government permission for retrenchment and closure required only for establishments with 300+ workers, relaxed from the current 100.
• Fixed-term employment formally recognised at the national level — employers can hire on fixed-term contracts without it being treated as disguised permanent employment.
• Notice period for retrenchment increased from 30 to 60 days for establishments with 100–299 workers.

OSH Code: Working Hours and Leave

• National daily working hours cap: 8 hours (currently varies by state and sector).
• Overtime ceiling: 50 hours per quarter (some states currently allow significantly higher).
• Annual leave entitlement calculation simplified — 1 day per 20 days worked, replacing the current variable formula across sector-specific laws.
• Carry-forward and encashment rules standardised nationally, replacing a patchwork of state-specific leave legislation.

Part 4: What HR Must Do Now, Before Commencement

The uncertainty about timing is not a reason to wait. The preparation can be done in parallel with current operations — and it reduces the scramble when commencement happens.