--- title: "New Labour Codes: HR Checklist for Small Teams | LekhaHR" description: "The new labour codes, in force 21 Nov 2025: what changed for a small employer, the 50% wages rule, a salary example and a checklist by headcount." canonical: https://lekhahr.in/guides/labour-codes-hr-checklist/ last_updated: 2026-09-30 --- New labour codes · guide · updated 30 Sep 2026, checked by the LekhaHR team # The four Labour Codes have applied since 21 Nov 2025. Here is what a small employer does now. The Code on Wages, the Industrial Relations Code, the Code on Social Security and the OSH Code replaced 29 central laws. For a small team the changes that matter are few: a new definition of wages, a wage slip and 2-day final wages from the first hire, and duties that start at 10, 20 and 50 people. The checklist by headcount The salary structure rule Key facts - The four Labour Codes have been in force since 21 Nov 2025, and the Central Rules under them were notified on 8 May 2026. - Since 21 Nov 2025, excluded allowances above half of total remuneration, employer PF included, count as wages for PF, ESI and gratuity. - Since 21 Nov 2025, monthly wages are due by the 7th of the next month and final wages within 2 working days of an exit, for every employee. - Appointment letters are required once you have 10 or more workers; staff already employed on 21 Nov 2025 were due theirs by 21 Feb 2026. - The EPF wage ceiling is ₹25,000 a month from 17 Sep 2026. because most of the Codes is about large establishments, and a team of eight needs to know which pages are theirs. ### What changed, and when dated statutory log · newest last - **21 Nov 2025**: The four Labour Codes come into force because the Code on Wages, the Industrial Relations Code, the Code on Social Security and the OSH Code replace 29 central labour laws - **21 Feb 2026**: Appointment letters due for existing staff because an establishment with 10 or more workers had three months from the Codes' start to issue a letter to everyone already employed - **1 Apr 2026**: Form 130 (earlier Form 16) replaces Form 16 because the Income-tax Act, 2025 came into force and salary TDS forms were renamed - **8 May 2026**: Central Rules under the Codes notified because the Centre's rules, including the wage slip and appointment letter formats, followed; state rules are notified separately - **1 Jul 2026**: EPF, EPS and EDLI Schemes, 2026 in force because the new EPF, EPS and EDLI schemes under the Code on Social Security took effect - **17 Sep 2026**: EPF wage ceiling rises to ₹25,000 because the ceiling of ₹15,000 in force since 1 Sep 2014 was raised under the Code on Social Security Labour Codes in force 21 Nov 2025 · Central Rules notified 8 May 2026 · reviewed 30 Sep 2026 No. 01 The four Codes --- because the old Acts are history now: the EPF Act, the Payment of Wages Act and the Gratuity Act among them. ## What are the new labour codes? They are four laws that replace 29 central labour Acts: the Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020 and the OSH Code, 2020. All four have been in force since 21 Nov 2025. The Central Rules under them were notified on 8 May 2026, and each state notifies its own rules. No. 02 What changed --- because each change has a date, and a payslip has to know which side of it a month falls. ## What changed for a small employer under the new labour codes? 12 changes reach a small team. The biggest is the definition of wages, the base for PF, ESI and gratuity. From the first employee there is a wage slip every pay period, final wages within 2 working days and a limit on deductions. The rest start at a headcount or change a figure you already use. - **01What counts as wages**: a 50% floor because since 21 Nov 2025, wages are all pay except the listed exclusions (such as HRA, conveyance, overtime, bonus and commission), so basic, DA and special allowance count; exclusions, including the employer's PF, are added back where they pass half of total remuneration. PF, ESI and gratuity are worked out on this figure. - **02Monthly wages paid by**: the 7th of the next month because the Code on Wages, s.17(1) now sets pay days for every employee, not only those under the old wage limit. - **03Minimum wage**: every employee because the Code on Wages, s.5 applies it to every employee, not only the scheduled employments of the old Act; office and shop staff are now covered. Rates are set by each state. - **04Deduction for absence**: days required to work because the Code on Wages, s.20 limits a deduction for absence to the share of the month's wages that the days absent bear to the days the employee was required to work. A fixed divisor can over-deduct in a long month. - **05Wage slip**: from the first employee because the Code on Wages, s.50 makes a wage slip every pay period a legal duty, not good practice. The Central Rules of 8 May 2026 prescribe a form for central-sphere establishments; your state may prescribe its own. - **06Final wages on exit**: 2 working days because the Code on Wages, s.17(2) requires wages due on a resignation, removal, dismissal or retrenchment within 2 working days of the last day. - **07Deductions from wages**: within 50% because only the deductions s.18 lists may be made, all together within 50% of the wages in a period, and a deduction for damage or loss needs the employee to be heard first. - **08Appointment letters**: at 10 or more workers because the OSH Code, s.6(1)(f) requires a letter for each employee once you have 10 or more workers; people already employed were due theirs by 21 Feb 2026. Below 10 it is good practice. - **09ESI coverage**: Code wages up to ₹21,000 because since 21 Nov 2025 ESI coverage and contributions are tested on wages as the Code defines them, not on gross pay. - **10EPF wage ceiling**: ₹25,000 from 17 Sep 2026 because it was ₹15,000 until 16 Sep 2026. September 2026 is split on calendar days between the two. - **11Gratuity for fixed-term staff**: pro rata after one year because under the Code on Social Security, s.53 a fixed-term employee qualifies after one year of continuous service; others still need 5 years. - **12Annual leave**: after 180 days worked because under the OSH Code, s.32 a worker who has worked 180 days or more in a calendar year earns 1 day of annual leave for every 20 days worked, and holidays falling between, just before or just after annual leave days are not counted as leave. No. 03 Salary structure --- because a structure built to keep PF low under the old rules can now cost more than it saves. ## How does the new labour code change salary structure? Wages are all pay except the listed exclusions, so basic, DA and special allowance count, and exclusions such as HRA, conveyance and the employer's own PF contribution count back in where they pass half of total remuneration, which includes that employer PF. Three ways to split the same ₹50,000 a month show it. **Three structures, ₹50,000 a month each before employer PF (illustrative)** | Line | Allowance-heavy | Half and half | Basic-heavy | | --- | --- | --- | --- | | Basic + DA | ₹12,000 | ₹18,000 | ₹22,000 | | Special allowance | ₹3,000 | ₹7,000 | ₹8,000 | | HRA | ₹25,000 | ₹20,000 | ₹15,000 | | Conveyance | ₹10,000 | ₹5,000 | ₹5,000 | | Employer PF (in total remuneration) | ₹3,000 | ₹3,000 | ₹3,000 | | Total remuneration | ₹53,000 | ₹53,000 | ₹53,000 | | Excluded items, with employer PF | ₹38,000 · 72% | ₹28,000 · 53% | ₹23,000 · 43% | | Added back (above half) | ₹11,500 | ₹1,500 | ₹0 | | Code wages | ₹26,500 | ₹26,500 | ₹30,000 | | Employee PF, 12% | ₹3,000 (on ₹25,000) | ₹3,000 (on ₹25,000) | ₹3,000 (on ₹25,000) | | ESI | not covered (above ₹21,000) | not covered (above ₹21,000) | not covered (above ₹21,000) | | Gratuity per year of service | ₹15,288 | ₹15,288 | ₹17,308 | because in the allowance-heavy structure, exclusions with the employer's PF of ₹3,000 come to ₹38,000, which is ₹11,500 more than half of the ₹53,000 total remuneration, so ₹11,500 counts back in and Code wages reach ₹26,500. because gratuity is last drawn wages × 15 × completed years ÷ 26, on the same Code wages, once 5 years of continuous service are done. because PF wages stop at the ceiling of ₹25,000 from 17 Sep 2026, unless employer and employee contribute on higher wages by joint option. Try a structure of your own in the [PF calculator](https://lekhahr.in/tools/pf-calculator/) or the [ESI calculator](https://lekhahr.in/tools/esi-calculator/); both apply the Code wages add-back. Wages · Code on Social Security, 2020, s.2(88) "wages"; ESIC circular dated 10 Dec 2025 · in force 21 Nov 2025 · illustrative figures, standard 12% PF rate · reviewed 30 Sep 2026 No. 04 Checklist --- because a duty starts at a headcount, not at the day someone remembers it. ## What does a small employer need to do at 1, 10, 20 and 50 people? From the first employee: wage slips, pay by the 7th, the minimum wage, final wages within 2 working days and lawful deductions. At 10: ESI, gratuity, maternity benefit, appointment letters and a PoSH committee. At 20: EPF and statutory bonus. At 50: a crèche. Print the list and tick it off. labour-codes-hr-checklist · printable Labour Codes: HR checklist for a small employer Codes in force 21 Nov 2025 · Central Rules 8 May 2026 · checked 30 Sep 2026 ### From your first employee - A wage slip every pay period (Code on Wages, s.50, in force 21 Nov 2025) - Final wages within 2 working days of an exit (Code on Wages, s.17(2)) - Deductions only of the kinds s.18 lists, within 50% of wages - Monthly wages paid by the 7th of the next month (Code on Wages, s.17(1)) - The minimum wage your state sets, for every employee (Code on Wages, s.5) - When PF, ESI or gratuity apply, work them out on Code wages: special allowance counts, and exclusions above half of total remuneration are added back - Loss of pay limited to the share of wages that days absent bear to the days required to work (s.20) - Professional tax where your state levies it, capped at ₹2,500 a person a year - Shops and Establishments registration, when your state's law requires it - An appointment letter: good practice now, required by law at 10 or more workers, and asked for by some state Shops and Establishments laws below 10 - A plain privacy notice for employee data (DPDP Act main duties from 13 May 2027) ### At 10 people - ESI, where the scheme is implemented, for employees on Code wages up to ₹21,000 a month - Gratuity, which keeps applying even if the team later gets smaller - Maternity benefit, up to 26 weeks, under the Code on Social Security, Chapter VI (factories whatever their size) - Appointment letters for every employee (OSH Code, s.6(1)(f)); existing staff were due theirs by 21 Feb 2026 - A PoSH Internal Committee, and its annual report ### At 20 people - EPF for employees on PF wages up to ₹25,000 (from 17 Sep 2026) - Statutory bonus, for employees within the Code's bonus wage limit ### At 50 people - A crèche facility, on your own or shared within the prescribed distance Each law counts heads its own way: some count anyone employed on any day of a set period, some include staff engaged through a contractor, and some keep applying once reached even if the team shrinks. Count the way each law says. State rules can add duties; check the state where each office sits. Not legal advice. Free templates cover the first-employee duties: the [salary slip format](https://lekhahr.in/resources/salary-slip-format/), the [appointment letter format](https://lekhahr.in/resources/appointment-letter-format/) and the [leave tracker in Excel](https://lekhahr.in/resources/leave-tracker-excel/). Thresholds from the Code on Social Security, the Code on Wages, the OSH Code and the PoSH Act, 2013 · the same stops as the growth ruler on HR software for small business · reviewed 30 Sep 2026 No. 05 Questions --- because the questions arrive with the first payslip after a restructure. ## Questions about the new labour codes ### When did the new labour codes come into force? All four Labour Codes came into force on 21 Nov 2025: the Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020 and the OSH Code, 2020. They replace 29 central labour laws. The Central Rules followed on 8 May 2026, and each state notifies its own rules separately. ### What is the new labour code salary structure rule? Wages are all pay except the listed exclusions, so basic, DA and special allowance count. Exclusions such as HRA, conveyance and the employer's PF are added back where they pass half of total remuneration, so PF, ESI and gratuity are worked out on at least half. On the allowance-heavy ₹50,000 structure on this page, ₹11,500 is added back. ### Does basic salary have to be 50% of CTC under the new labour code? No. The Code does not set a minimum basic. Excluded allowances count back into wages where they pass half of total remuneration, whatever basic is. The half is measured on total remuneration, which the Ministry's FAQs of 16 Mar 2026 say includes the employer's PF contribution and statutory bonus, so it sits closer to CTC than to gross. ### Will take-home pay fall under the new labour codes? For some people. Where excluded allowances were more than half of pay, the add-back raises PF wages, so the employee's 12% share rises and take-home falls, but only until PF wages reach the ₹25,000 ceiling from 17 Sep 2026. If CTC is held flat, the employer's higher share comes out of it too. Gratuity rises. Talk to people before you restructure. ### What does the Code on Wages change for a small employer? Three things apply from the first employee: a wage slip every pay period (s.50), final wages within 2 working days of an exit (s.17(2)), and deductions only of the listed kinds within 50% of wages (s.18). Its definition of wages also sets the base for PF, ESI and gratuity. ### Is ESI worked out on gross pay under the new labour codes? No. Since 21 Nov 2025, ESI coverage and contributions use wages as the Code on Social Security defines them: all pay except the listed exclusions, with exclusions added back where they pass half of total remuneration. The ₹21,000 coverage ceiling is tested on that figure, and the employee's share is 0.75% of it. ### Do state rules matter under the new labour codes? Yes. The Codes are central law, but each state notifies its own rules for most private employers, including forms such as the wage slip and the appointment letter. The Central Rules of 8 May 2026 bind central-sphere establishments and are the model where a state's rules are still in draft. No. 06 Sources --- because a rule you cannot trace is a rumour with a number in it. ## Where each rule comes from Each change on this page cites the Code section it rests on and the date it took effect. State rules add detail and forms, so check the state where each office sits. 1. Code on Wages, 2019 (s.17(2) wages on exit, s.18 deductions, s.50 wage slip)Government of India, in force 21 Nov 2025 · read 30 Sep 2026 primary 2. Code on Social Security, 2020 (s.2(88) wages, s.53 gratuity, Chapters III–VI)Government of India, in force 21 Nov 2025 · read 30 Sep 2026 primary 3. Occupational Safety, Health and Working Conditions Code, 2020 (s.6(1)(f) appointment letters, s.32 annual leave)Government of India, in force 21 Nov 2025 · read 30 Sep 2026 primary 4. ESIC circular on wages under the Code on Social SecurityESIC, dated 10 Dec 2025 · read 30 Sep 2026 primary 5. Central Rules under the four Labour CodesMinistry of Labour & Employment, notified 8 May 2026 · read 30 Sep 2026 primary 6. EPF wage ceiling notification (S.O. 5109(E))in force 17 Sep 2026 · read 30 Sep 2026 primary Checked by the LekhaHR team · reviewed 30 Sep 2026 · next review by 31 Dec 2026. This guide explains the rules; it is not legal advice for your establishment. Invitation ## By invitation. LekhaHR is HR and payroll software for small teams. It works out PF, ESI and gratuity on Code wages, with the rule and its date on every payslip line. [Request an invite](https://lekhahr.in/request-invite/) [See payroll](https://lekhahr.in/payroll-software/)