Central Rules under the Labour Codes: Operationalizing India’s Labour Law Reform

Pursuant to notifying and bringing the consolidated Labour Codes (“Codes”) into implementation on 21 November 2025, the Ministry of Labour and Employment, Government of India, has now taken the next decisive step. On 8 May 2026, the Ministry formally notified the Central Rules under each of the four Codes i.e., the Code on Wages, 2019; Code on Social Security, 2020; Occupational Safety, Health and Working Conditions Code, 2020; and Industrial Relations Code, 2020[1].

THE ESSENCE OF LABOUR CODES

The significance of these Codes lies not merely in their legislative novelty but in their transformative impact on the employer–employee relationship, corporate compliance frameworks, and India’s positioning in the global investment landscape.

For decades, labour regulation in India was characterized by fragmentation i.e, twenty‑nine separate statutes, each with its own definitions, procedures, and compliance requirements. This multiplicity created uncertainty, duplication, and litigation. The Codes resolve this by consolidating the law into four comprehensive codes as named above. Previously, employers and practitioners had to navigate overlapping provisions across multiple Acts i.e., the Factories Act, Payment of Wages Act, Industrial Disputes Act, Employees’ Provident Fund Act, and many more. The Codes consolidate these into four instruments, reducing duplication and contradictions. This makes compliance more predictable and manageable for corporates.

The Codes are aligned with India’s broader agenda of ease of doing business. By streamlining registration, reporting, and dispute resolution, they reduce transaction costs for businesses. For example, electronic registration under the Occupational Safety, Health and Working Conditions Code, 2020 (“OSHW Code”) and uniform standing orders under the Industrial Relations Code, 2020 eliminate procedural bottlenecks. Further, the Codes are aligned with India’s broader reform agenda. By streamlining registration, reporting, and dispute resolution, they reduce transaction costs for businesses.

The notified Labour Codes are not merely instruments of simplification; they are also designed to strengthen labour welfare and protection in ways that were absent under the earlier fragmented statutes. The Code on Wages, 2019 introduces the concept of a universal minimum wage, ensuring that every worker across sectors is entitled to a statutory floor of remuneration. The Social Security Code, 2020 extends coverage to previously unrecognized categories such as unorganized workers, gig workers, and platform economy participants, thereby acknowledging the realities of India’s evolving labour market. The Industrial Relations Code, 2020 enhances the framework for collective bargaining and dispute resolution, providing trade unions with an improved mechanism for conciliation and adjudication. Meanwhile, the OSHW Code establishes a single registration portal i.e., Shram Suvidha Portal[2], for establishments and codifies welfare facilities for employees and workers, thereby harmonizing safety and welfare standards across industries.

Together, these provisions reflect a deliberate policy choice to modernize India’s labour regime while embedding stronger protections for workers. For corporates, this means that compliance is no longer limited to procedural adherence but extends to substantive obligations in wage transparency, social security, dispute resolution, and workplace safety. The Codes thus recalibrate the balance between ease of doing business and social justice, positioning India’s labour law framework as both investor friendly and worker centric.

For fostering digitalization and transparency, the Codes mandate electronic wage payments, online registrations, and digital verification. This reduces scope for arbitrariness and corruption, while creating audit trails that corporates must maintain.

The notification of the Central Rules (“Rules”) marks a critical milestone in the Government’s labour law reform agenda, which seeks to rationalize and consolidate numerous existing central labour legislations into a streamlined and technology-driven framework aimed at enhancing ease of doing business, ensuring uniformity in compliance standards, and strengthening worker welfare and social security protections. While the Codes themselves laid down the overarching legislative architecture, the operational and procedural aspects governing compliance, registration, reporting obligations, working conditions, social security contributions, dispute resolution mechanisms, and employer responsibilities were contingent upon the formulation and notification of the corresponding Rules.

The newly notified Rules provide substantive clarity on several implementation related aspects, including digitized compliance processes, maintenance of registers and records, licensing mechanisms, wage related compliances, occupational safety obligations, social security administration, and industrial relations procedures. The Rules are also expected to significantly impact employer compliance structures, workforce management practices, contractual arrangements, and governance mechanisms across sectors.

Given the breadth and significance of these reforms, establishments operating in India are now required to undertake a comprehensive review of their existing employment, HR, payroll, operational, and compliance frameworks to ensure alignment with the requirements prescribed under the Codes and the newly notified Rules. The developments are particularly relevant for multinational corporations, manufacturing establishments, Global Capability Centres (“GCCs”), IT/ITES entities, and large workforce driven organisations that may require substantial restructuring of internal policies and compliance systems

Under the Codes, the “appropriate government” determines whether the Central Government Rules or the respective State Government Rules will apply to an establishment.

The Central Government is the “appropriate government” for the following categories of establishments:

1. Railways;
2. Mines;
3. Oilfields;
4. Major ports;
5. Air transport services;
6. Telecommunication establishments;
7. Banking companies;
8. Insurance companies;
9. Central Public Sector Undertakings (“PSUs”);
10. Corporations or authorities established under a Central Act;
11. Establishments operating in more than one State (in certain cases);
12. Any establishment owned, controlled, or managed by the Central Government; and
13. Other establishments specifically notified by the Central Government.

Accordingly, such establishments are required to comply with the Central Rules framed under the Labour Codes.

It is pertinent to note that several States have already advanced their rule‑making process. States like Arunachal Pradesh and Gujarat have notified their respective State Rules in full. Uttar Pradesh and Punjab have taken a partial approach, notifying certain rules while keeping others open for public consultation. West Bengal by contrast, remains in the drafting stage, having published draft rules for stakeholder comments but not yet finalized the framework.

SUMMARY OF THE RULES

1. Code on Wages (Central) Rules, 2026

The Code on Wages (Central) Rules, 2026[3] operationalize the provisions of the Code on Wages, 2019 and establish a uniform framework governing wages, payment mechanisms, bonus entitlements, and related compliance obligations for establishments falling under the Central Government’s jurisdiction.

Key Highlights

(a) Definition and Components of Wages

The Rules provide detailed guidance regarding the calculation of “wages” and prescribe the treatment of exclusions such as bonuses, overtime, conveyance allowance, house rent allowance, and statutory contributions. A cap has been introduced whereby excluded components exceeding the prescribed percentage threshold are required to be added back into wages for statutory calculations.

(b) Minimum Wage Framework

The Rules prescribe the methodology for fixation and revision of minimum wages, including categorization based on:

a. Geographical areas;

b. Skill levels;

c. Nature of work; and

d. Occupational categories.

The Central Government may revise minimum wages periodically based on inflation and cost-of-living indices.

(c) Payment of Wages

Employers are required to:

a. Ensure timely payment of wages within prescribed timelines;

b. Make wage payments through electronic mode, bank transfer, or other approved methods; and

c. Issue wage slips and maintain prescribed wage records.

(d) Bonus Provisions

The Rules clarify procedural aspects relating to:

a. Calculation of allocable surplus;

b. Payment of annual bonus;

c. Set-on and set-off mechanisms; and

d. Maintenance of registers relating to bonus payments.

(e) Gender Equality and Non-Discrimination

The Rules reinforce the principle of equal remuneration and prohibit gender-based discrimination in matters relating to wages and recruitment for the same or similar work.

(f) Digital Compliance

Employers are required to maintain electronic registers, records, and returns in prescribed formats, thereby promoting digitization and ease of compliance.

2. Code on Social Security (Central) Rules, 2026

The Code on Social Security (Central) Rules, 2026[4] provide the procedural framework for implementation of social security benefits under the Code on Social Security, 2020, consolidating multiple existing social welfare legislations relating to provident fund, employee state insurance, gratuity, maternity benefits, gig workers, and unorganized workers.

Key Highlights

(a) Registration of Establishments and Employees

The Rules prescribe:

a. Mandatory electronic registration of establishments;

b. Aadhaar-linked registration mechanisms for employees and workers; and

c. Maintenance of digital records for social security administration.

(b) Provident Fund and Pension Compliance

The Rules continue the framework relating to:

a. Employer and employee contributions;

b. Electronic filing and remittance;

c. Maintenance of contribution records; and

d. Inspections and audits.

(c) Employee State Insurance (ESI)

Detailed provisions have been prescribed concerning:

a. Registration of insured persons;

b. Contributions;

c. Benefits administration;

d. Medical coverage; and

e. Compliance obligations for covered establishments.

(d) Gratuity and Fixed-Term Employees

The Rules clarify gratuity eligibility, including provisions extending proportional gratuity benefits to fixed-term employees without requiring completion of five years of continuous service.

(e) Gig Workers and Platform Workers

A significant feature of the Rules is the inclusion of:

a. Registration mechanisms for gig and platform workers;

b. Social security schemes for non-traditional workforce categories; and

c. Contribution and funding structures for welfare schemes.

(f) Maternity and Other Benefits

Procedural provisions relating to maternity benefits, employee compensation, and welfare-related claims have been streamlined under a common framework.

(g) Inspector-cum-Facilitator Framework

The Rules introduce a compliance-oriented inspection mechanism emphasizing:

a. Web-based inspections;

b. Electronic reporting;

c. Risk-based inspections; and

d. Reduced physical interface with authorities.

3. Occupational, Safety, Health and Working Conditions (Central) Rules , 2026

The Occupational Safety, Health and Working Conditions (Central) Rules, 2026[5] operationalize the OSHWC Code, 2020 and establish a comprehensive framework regulating health, safety, welfare, and working conditions across factories, establishments, contract labour engagements, migrant workers, and other covered sectors.

Key Highlights

(a) Common Registration and Licensing

The Rules introduce:

a. A unified registration system for establishments;

b. Common licensing mechanisms for factories, contract labour, and inter-state migrant workers; and

c. Online application and renewal processes.

(b) Health and Safety Standards

Detailed standards have been prescribed regarding:

a. Workplace safety measures;

b. Ventilation, lighting, cleanliness, and sanitation;

c. Hazard management;

d. Safety committees;

e. Occupational health monitoring; and

f. Emergency response procedures.

(c) Working Hours and Leave

The Rules prescribe:

a. Maximum daily and weekly working hours;

b. Overtime conditions and compensation;

c. Weekly holidays;

d. Leave entitlements; and

e. Record maintenance obligations.

(d) Women Employment in All Shifts

Women employees may now be employed in all establishments and across all shifts, including night shifts, subject to:

a. Consent requirements;

b. Safety safeguards, including transportation; and

c. Adequate welfare measures.

(e) Contract Labour Compliance

The Rules rationalize contract labour compliances by:

a. Introducing common licensing;

b. Prescribing contractor obligations;

c. Requiring digital maintenance of records; and

d. Clarifying principal employer responsibilities.

(f) Inter-State Migrant Workers

Special provisions have been included for:

a. Registration of migrant workers;

b. Journey allowance;

c. Welfare facilities; and

d. Portability of benefits.

(g) Digitization and Inspections

The Rules mandate:

a. Electronic filing of returns;

b. Maintenance of digital registers;

c. Web-based inspections; and

d. Randomized inspection schemes. 

4. Industrial Relations (Central) Rules, 2026

The Industrial Relations (Central) Rules, 2026[6] operationalize the Industrial Relations Code, 2020 and consolidate the legal framework governing trade unions, industrial disputes, standing orders, layoffs, retrenchment, closures, and dispute resolution mechanisms.

Key Highlights

(a) Recognition of Trade Unions

The Rules prescribe procedures for:

a. Recognition of negotiating unions and negotiating councils;

b. Verification of trade union membership; and

c. Representation mechanisms in industrial establishments.

(b) Standing Orders

The Rules streamline the process relating to:

a. Certification of standing orders;

b. Model standing orders;

c. Electronic submission and approval procedures; and

d. Service conditions applicable to workers.

(c) Fixed-Term Employment

The Rules formally recognize fixed-term employment arrangements and provide that fixed-term employees are entitled to:

a. Statutory benefits on par with permanent employees; and

b. Pro-rata gratuity and other applicable benefits.

(d) Retrenchment, Layoff, and Closure

The Rules prescribe procedural requirements concerning:

a. Prior notice obligations;

b. Government approvals (where applicable);

c. Compensation requirements; and

d. Timelines for layoffs, retrenchment, and closure of establishments.

(e) Dispute Resolution Mechanisms

The Rules establish streamlined procedures for:

a. Conciliation;

b. Industrial tribunals;

c. Voluntary arbitration;

d. Strike and lockout notices; and

e. Electronic filing of disputes and applications.

(f) Reskilling Fund

A reskilling framework has been introduced requiring employers to contribute towards worker reskilling in cases of retrenchment, aimed at facilitating workforce transition and employability.

(g) Digital Compliance and Inspection

The Rules promote:

a. Electronic maintenance of records;

b. Online filings;

c. Randomized inspections; and

d. Technology-enabled compliance monitoring.

THE NEED OF HOUR

With the Central Rules now in place, employers may prioritize the following key areas:

• Assessing who would be the “appropriate government” under the Labour Codes;
• Reviewing HR policies, Standing Orders, appointment letters and employment documentation for alignment with the Labour Codes and Central Rules;
• Reassessing wage structures, overtime practices, gratuity provisioning and payroll systems;
• Reviewing workplace safety, welfare, working-hour and women night-shift compliance frameworks;
• Assessing whether there is a requirement to constitute GRCs and Safety Committees; and if required, ensure compliance of those provisions; and
• Ensuring statutory registers, records and compliance systems are digitized and maintained in the prescribed format

Authored by Mr. Ketan Joshi, Associate Partner and Ms. Navya Saxena, Associate.

[1] https://www.labour.gov.in/offerings/schemes-and-services/details/labour-codes-gzNzQzMtQWa

[2] https://shramsuvidha.gov.in/login

[3] https://www.labour.gov.in/static/uploads/2026/05/6eb0c35ba63b776487a025e5123b6b12.pdf

[4] https://www.labour.gov.in/static/uploads/2026/05/49aa9b62c2125499c37399b90e969d67.pdf

[5] https://www.labour.gov.in/static/uploads/2026/05/ee246f790cad0b8e99c3828f34fa09a6.pdf

[6] https://www.labour.gov.in/static/uploads/2026/05/f05a2c220dcdec0ea9c55e84d9ff791f.pdf