The New Labour Codes: Complete Guide for Employers and HR Professionals
The Government of India has introduced four consolidated labour codes to simplify compliance, enhance worker protection, and modernize labour laws. These codes replace 29 existing legislations, creating a unified framework for wages, industrial relations, social security, and occupational safety.
Overview of the Four Labour Codes
- Code on Wages, 2019 – Consolidates Payment of Wages Act, Minimum Wages Act, Equal Remuneration Act, and Payment of Bonus Act.
- Industrial Relations Code, 2020 – Governs trade unions, standing orders, and dispute resolution.
- Social Security Code, 2020 – Brings EPF, ESI, gratuity, maternity benefits, and other social security provisions under one umbrella.
- Occupational Safety, Health and Working Conditions Code, 2020 – Consolidates 13 laws related to workplace safety and welfare.
Key Highlights from the Codes
- Simplified definition of wages – Basic pay, DA, retaining allowance; exclusions capped at 50%.
- National Floor Wage – Central government sets floor rate; states cannot go below this.
- Equal remuneration – No gender-based discrimination.
- Recognition of gig & platform workers under social security.
- Fixed-term employment with benefits at par with permanent employees.
- Single registration for establishments for ease of doing business.
- Mandatory appointment letters under OSH Code.
- Women allowed night shifts with consent and safety measures.
- 14-day prior notice mandatory for strikes and lock-outs.
- Gratuity eligibility for fixed-term employees after one year; journalists after three years.
Offences and Penalties Under Labour Codes
Code on Wages
- Paying less than due wages: Fine up to ₹50,000.
- Repeat offence: Imprisonment up to 3 months or fine up to ₹1,00,000 or both.
- Non-maintenance of records: Fine up to ₹10,000.
Industrial Relations Code
- Illegal strike or lock-out: Fine ₹50,000–₹1,00,000 or imprisonment up to 1 month.
- Breach of settlement or award: Fine ₹20,000–₹2,00,000 or imprisonment up to 3 months.
- Lay-off/retrenchment without permission: Fine ₹1,00,000–₹10,00,000; repeat offence up to ₹20,00,000 and imprisonment up to 6 months.
Social Security Code
- Failure to deposit employee contributions: Imprisonment up to 3 years and fine up to ₹3,00,000.
- Non-payment of gratuity: Imprisonment up to 1 year or fine up to ₹50,000 or both.
- Obstructing inspectors: Imprisonment up to 6 months or fine up to ₹50,000.
Occupational Safety Code
- Offence causing death: Imprisonment up to 2 years or fine up to ₹5,00,000; 50% of fine to victim’s heirs.
- Hazardous process violations: Imprisonment up to 2 years and fine up to ₹5,00,000; continuing offence ₹25,000 per day.
- Safety violations causing serious injury: Fine ₹2,00,000–₹4,00,000 or imprisonment up to 1 year.
Quick Reference Table
| Code | Key Focus | Major Penalty |
|---|---|---|
| Code on Wages | Wage payment, bonus, equal pay | Fine up to ₹1,00,000 or 3 months imprisonment |
| Industrial Relations | Strikes, lock-outs, retrenchment | Fine up to ₹20,00,000 or 6 months imprisonment |
| Social Security | EPF, ESI, gratuity, maternity | Fine up to ₹3,00,000 or 3 years imprisonment |
| OSH & Working Conditions | Safety, health, welfare | Fine up to ₹5,00,000 or 2 years imprisonment |
Action Points for Employers
- Conduct a compliance audit immediately.
- Update HR policies and payroll systems as per new definitions.
- Issue statutory appointment letters to all employees.
- Train HR teams on new provisions and compliance requirements.
- Ensure timely payment of wages and social security contributions.
Stay informed, stay compliant. For detailed insights and updates, visit www.hrinfo.in.
