The Centre recently operationalised the four Labour Codes after notifying the final set of rules in the official gazette, completing the implementation process for the consolidated labour law framework.
The new framework replaces 29 labour laws with four codes covering wages, industrial relations, social security, and occupational safety and working conditions.
Central rules to guide implementation
Puneet Gupta, Partner, People Advisory Services-Tax at EY India, said the notification of Central Rules under the Industrial Relations Code and the Code on Wages is an important step in moving the labour reforms towards implementation.
According to Gupta, the Central Rules will largely apply to sectors where the Centre is the “appropriate government”, including telecom, banking, insurance, mines, oil fields, major ports, air transport, and central public sector undertakings.
He added that the notified Central Rules are also expected to act as a reference framework for states as they finalise their own rules under the Labour Codes.
What changes under the wage framework
Gupta said the rules introduce greater clarity around minimum wages, working hours and payroll-related processes.
The framework caps normal working hours at 48 hours per week and lays down procedures relating to deductions, including fines, advances, damages and loans.
The rules also formalise the responsibility of principal employers to pay statutory bonus to contract labour and standardise formats for employee registers, salary records, attendance registers and wage slips.
In addition, the framework introduces a formal nomination mechanism for employees.
Focus on workplace processes
On the Industrial Relations Code, Gupta said the rules place greater emphasis on grievance redressal mechanisms and clearly defined standing orders.
He said the notification of Model Standing Orders provides baseline guidance on worker classification, service conditions, attendance norms, leave rules and disciplinary procedures.
According to Gupta, the overall impact on businesses operating across multiple states will also depend on how closely state-level rules align with the central framework.
Wage restructuring and transition phase
Advocate Mayank Arora, Partner at The Chambers of Bharat Chugh, said the implementation phase is likely to bring operational and legal adjustments for employers and workers.
He said one of the immediate areas of impact could be wage restructuring due to the revised definition of wages under the new framework.
According to Arora, the revised wage definition may increase the base used for gratuity, provident fund and social security contributions. This could affect take-home pay structures for employees or increase payroll-related costs for employers.
He added that implementation would also depend on how businesses adapt their salary structures and workforce models under the new framework.
Social security and industrial relations
Arora said the Industrial Relations Code seeks to streamline processes related to dispute resolution, standing orders, strikes, layoffs and retrenchment permissions.
He also noted that the Code on Social Security formally recognises gig and platform workers within the labour law framework, though the impact would depend on how schemes are notified and implemented over time.
According to Arora, implementation of the new regime may also lead to legal interpretation around areas such as gratuity computation, contractor liability, existing settlements and transition of rights under the previous laws.
