India replaced 29 separate labour laws with four Codes, in force since 21 November 2025. Most advice written before that date is now wrong. This page covers only what changed for a salaried employee, with every rule traced to an official source.
Quick snapshot
- In force since: 21 November 2025, rationalising 29 existing labour laws into four Codes.
- Appointment letter: now mandatory. You are entitled to your terms in writing.
- Working hours: 8 a day and 48 a week; overtime needs your consent and pays twice the normal rate.
- Annual leave: available after 180 days of work in a calendar year.
- Wage definition: if excluded allowances cross 50% of total pay, the excess is added back to wages.
- Fixed-term staff: gratuity after one year, not five.
The four Codes are the Code on Wages 2019, the Industrial Relations Code 2020, the Code on Social Security 2020 and the Occupational Safety, Health and Working Conditions Code 2020. They took effect together on 21 November 2025 and replaced 29 older laws. For a salaried employee the five changes that matter are: a written appointment letter is compulsory, wages have one uniform definition across all benefits, overtime is paid at double rate and needs consent, annual leave starts at 180 days of service, and fixed-term employees earn gratuity after a single year.
The four Codes, and what each one governs
| Code | What it covers | Replaced |
|---|---|---|
| Code on Wages, 2019 | Minimum wages, payment of wages, bonus, equal remuneration, and the uniform definition of "wages" | Payment of Wages Act 1936, Minimum Wages Act 1948, Payment of Bonus Act 1965, Equal Remuneration Act 1976 |
| Industrial Relations Code, 2020 | Appointment letters, standing orders, notice, retrenchment, trade unions, dispute resolution | Industrial Disputes and related Acts |
| Code on Social Security, 2020 | Provident fund, pension, gratuity, maternity benefit, and social security for gig and platform workers | EPF, ESI, Gratuity, Maternity Benefit and related Acts |
| OSH Code, 2020 | Working hours, leave, night work, safety, welfare facilities, contract labour | Factories, Contract Labour, Inter-State Migrant and related Acts |
Together they rationalise 29 central labour laws. The practical effect is that one definition of "wages" and one set of hour and leave rules now run across all of them, instead of each Act carrying its own.
Change 1: your appointment letter is now compulsory
Every worker is entitled to a formal appointment letter. This is the single most useful change for a fresher, because it converts a verbal package figure into a document you can hold the employer to.
If you only have a verbal offer, ask in writing. A company that will not put basic pay, allowances, PF treatment and notice period on paper is telling you something about how it will behave later. Ask before you resign from anything else.
Change 2: one definition of "wages" across every benefit
Under the Code on Wages, "wages" means basic pay, dearness allowance and retaining allowance. If excluded pay-outs — house rent allowance, conveyance, bonus, overtime, commission — together exceed 50% of total remuneration, the excess is added back into wages.
The old practice was to keep basic pay small and inflate allowances, which shrank provident fund, gratuity and leave encashment at the same time. One uniform definition closes that route.
Read this correctly. A larger wage base can make your monthly credit slightly smaller, because your 12% PF is calculated on a bigger number. What you are owed over time — PF balance, gratuity, leave encashment — goes up. It is a shift from present cash to deferred pay, not a loss.
Change 3: working hours and overtime
Normal working hours are capped at 8 hours a day and 48 hours a week. Overtime is allowed only with the worker's consent, and must be paid at twice the normal rate.
The consent requirement is the part most employees do not know. Overtime is not something that can simply be assigned to you as routine.
Change 4: annual leave after 180 days
Annual leave with wages is now available after 180 days of work in a calendar year. Earlier thresholds were longer, so a worker who joined mid-year often could not take paid annual leave at all in their first year.
For a fresher joining in, say, June, this is the difference between earning paid leave inside the first calendar year and waiting for the next one.
Change 5: fixed-term employment and gratuity
Gratuity normally requires five years of continuous service. Under the Code on Social Security, a fixed-term employee earns gratuity after one year of service when the contract period ends.
| Employment type | Gratuity eligibility | Rate |
|---|---|---|
| Permanent | After 5 years of continuous service | 15 days' wages per completed year |
| Fixed-term | After 1 year, on contract completion | 15 days' wages per completed year |
| Death or disablement | No minimum service period | 15 days' wages per completed year |
Gratuity must be paid within 30 days of becoming payable. If a company offers you a fixed-term contract, this clause is a genuine benefit, not a downgrade — it used to be that contract staff got nothing.
What else the Codes brought in
Statutory right to minimum wages for all workers, and to timely payment of wages.
No discrimination in recruitment, wages or conditions, including against transgender persons, and equal pay for equal work.
Women may work at night and in all sectors, with consent and with employer-provided safety and transport.
Social security extended to gig and platform workers, funded partly by aggregator contributions.
Free annual health check-ups and simplified single registration, single licence and single return for employers.
Social security widened, including for gig and platform work
The Code on Social Security universalises coverage. It extends social security to organised and unorganised workers, and for the first time brings gig and platform workers inside a statutory framework.
Aggregators — the digital marketplaces that connect a customer to a service provider — contribute between 1% and 2% of annual turnover to a Social Security Fund, capped at 5% of what they pay out to gig and platform workers. The schemes funded from it cover life and disability insurance, health, maternity benefit and pension.
Registration happens through e-Shram, which issues an Aadhaar-linked ID. Because the ID belongs to the worker rather than the platform, the entitlement is portable when they move between apps.
Why this matters even if you are salaried. A large share of first jobs now involve delivery, ride-hailing or freelance platform work between studies or while job-hunting. That period used to generate no social security record at all. It now can.
What the Codes do not change
Three things get misreported, so it is worth being precise about the limits.
| Common claim | Actual position |
|---|---|
| "Notice period is now fixed by law" | Your notice period comes from your own contract and the applicable standing orders. The Codes do not set a single national notice period for all employees. |
| "Everything is uniform across India now" | The Codes are central, but they operate through rules that central and state governments frame. Some thresholds and procedures still vary by state and by establishment size. |
| "The four-day week is now law" | The weekly cap is 48 hours. How those hours are distributed across days is a matter for the applicable rules and your employer, not an automatic entitlement. |
How to check your own position in ten minutes
Find your appointment letter or annexure. If you do not have one, request it in writing.
Add up basic plus dearness allowance, then add up everything else. If the allowances exceed half the total, the wage definition applies to you.
Check your payslip for a PF deduction at 12% of that wage figure, and confirm the employer's share is being credited.
Count your days of service this calendar year. Past 180, annual leave with wages applies.
If you are on a fixed-term contract, note the completion date — gratuity accrues from one year, and must be paid within 30 days of becoming due.
When did the four Labour Codes come into force?
21 November 2025. The Code on Wages 2019, the Industrial Relations Code 2020, the Code on Social Security 2020 and the OSH Code 2020 were made effective together, rationalising 29 existing central labour laws.
Do I have a right to an appointment letter?
Yes. The Codes make appointment letters mandatory, so you are entitled to your terms of employment in writing rather than as a verbal package figure. Ask for it before you join.
What is the 50% wage rule?
If excluded pay-outs such as HRA, conveyance, bonus, overtime or commission together exceed 50% of total remuneration, the excess is added back into "wages". That raises the base used for provident fund, gratuity and leave benefits.
How many hours can I be asked to work?
Normal hours are capped at 8 a day and 48 a week. Overtime beyond that requires your consent and must be paid at twice the normal rate.
When do I become eligible for annual leave?
After 180 days of work in a calendar year. This is shorter than the earlier threshold, which matters most for someone who joins part-way through the year.
Do fixed-term employees get gratuity?
Yes. A fixed-term employee is entitled to gratuity on completion of the contract period after one year of service, instead of the five years required for permanent employees. The rate is 15 days' wages for each completed year.
Does the new wage definition reduce my salary?
It can reduce your monthly credit slightly, because provident fund is computed on a larger wage base. The money is not lost: it goes into your PF balance, and it raises gratuity and leave encashment later. It shifts pay from now to later.
Can women be asked to work night shifts?
Women may work at night and in all categories of work, but only with their consent, and the employer must make adequate arrangements for safety, facilities and transport.
Sources: Press Information Bureau, Government makes the four Labour Codes effective · Press Information Bureau, Code on Wages, 2019 and the definition of wages · Press Information Bureau, Code on Social Security, 2020 · Press Information Bureau, new Labour Codes and women at work.
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