Labour & Employment Law
India is consolidating 29 labour laws into 4 codes. The companies that prepare now will have an advantage for the next decade. The rest will be playing catch up.
Overview
India’s labour law framework is undergoing its most significant transformation since independence. Four new Labour Codes, the Code on Wages 2019, Industrial Relations Code 2020, Social Security Code 2020, and Occupational Safety Health and Working Conditions Code 2020, are replacing 29 central labour statutes. This is not a minor amendment. It is a structural reset of employer obligations, worker rights, compliance requirements, and penalty frameworks. At AMLEGALS, we have been advising businesses on this transition through the Under Pivot Labour Code framework. We help companies restructure their employment practices, revise policies, renegotiate standing orders, and build compliance frameworks that are ready for the new codes. Businesses that act now will operate with confidence. Businesses that wait will face retroactive compliance that costs significantly more.
Understanding Labour & Employment Law
Twenty nine central labour laws. Hundreds of state level amendments and rules. Multiple registrations, returns, and compliance obligations for every establishment. This was India’s labour law framework until Parliament enacted four codes to consolidate the entire structure.
The consolidation is significant. The Code on Wages replaces four laws. The Industrial Relations Code replaces three. The Social Security Code replaces nine. The OSH Code replaces thirteen. Each code introduces fundamental changes to how businesses engage, manage, and compensate their workforce.
The Code on Wages redefines "wages" in a way that will restructure salary components across Indian industry. When basic wages must constitute at least 50% of total remuneration, every company with a high allowance structure will see increased PF, ESIC, gratuity, and bonus liabilities. The financial impact across a large workforce runs into crores annually.
The Industrial Relations Code raises the threshold for prior government approval for retrenchment, layoff, and closure from establishments with 100 workers to 300 workers. This gives mid sized companies significantly more flexibility in workforce planning. It also introduces fixed term employment as a recognized category, changing the dynamics of project based and seasonal hiring.
The Social Security Code expands coverage to gig workers and platform workers for the first time. Companies in the gig economy, food delivery, ride hailing, logistics, and similar sectors will need to assess classification of their workforce and potential social security obligations.
Regulatory Landscape
The Code on Wages 2019 consolidates the Payment of Wages Act, Minimum Wages Act, Payment of Bonus Act, and Equal Remuneration Act. Key provisions include a national floor wage, revised definition of wages, overtime at twice the normal rate, and simplified compliance for micro and small enterprises.
The Industrial Relations Code 2020 consolidates the Industrial Disputes Act, Trade Unions Act, and Industrial Employment (Standing Orders) Act. It introduces negotiating unions, raises retrenchment thresholds, recognizes fixed term employment, and establishes the Industrial Tribunal as the primary adjudicatory body.
The Social Security Code 2020 consolidates nine laws including EPF, ESIC, Gratuity, Maternity Benefit, and others. It creates a universal social security framework with provisions for unorganized workers, gig workers, and platform workers. The Social Security Fund will be funded by government contributions.
The OSH Code 2020 consolidates thirteen laws governing factory safety, mine safety, dock workers, building construction, and interstate migrant workers. It introduces a single registration, unified compliance framework, and expanded applicability thresholds.
Until state rules are notified, existing laws continue to apply. This creates a transitional period where businesses must maintain compliance with current laws while preparing for the new codes.
Key Practice Areas
Labour Code Implementation
Comprehensive advisory on transitioning from existing labour laws to the four new codes. Policy revision, standing order updates, wage restructuring, social security registration, and compliance framework redesign.
Employment Contracts & Policies
Drafting and review of employment agreements, appointment letters, non compete clauses, confidentiality agreements, and company policies that comply with current law and anticipate the new codes.
Workforce Restructuring
Retrenchment, voluntary retirement schemes, layoffs, and closure procedures. Compliance with notice requirements, compensation obligations, and government approval thresholds.
Industrial Disputes
Representation before labour courts, industrial tribunals, and High Courts. Strike management, lockout advisory, and collective bargaining support.
Social Security & Benefits
EPFO, ESIC, gratuity, and bonus compliance. Advisory on gig worker and platform worker classification under the Social Security Code.
POSH Compliance
Prevention of Sexual Harassment Act 2013 compliance. Internal committee constitution, policy drafting, training programmes, and investigation support for complaints.
TCL Framework Application
Technical
Understanding the client’s workforce structure, operational model, and industry specific labour practices. A technology company and a manufacturing unit have fundamentally different employment compliance challenges.
Commercial
Labour law compliance has direct P&L impact. Wage restructuring under the new codes will change take home pay, PF contributions, and gratuity calculations. We model these impacts before recommending changes.
Legal
Four Labour Codes, state rules (yet to be notified in many states), existing central and state labour laws, and evolving judicial interpretation. We track every notification and rule making exercise.
Regulatory Framework
Industries Served
Our Approach
The Under Pivot Labour Code framework structures our advisory approach. We begin with a comprehensive audit of current employment practices against both existing laws and the new codes.
The audit identifies gaps, risks, and restructuring opportunities. Wage structure analysis models the financial impact of the new wages definition. Employment contract review identifies clauses that need updating. Policy gap analysis maps current policies against code requirements.
We then develop a phased implementation plan. Immediate actions (policy updates, contract amendments), medium term actions (payroll restructuring, registration consolidation), and long term actions (compliance system redesign, training programmes).
Implementation support includes drafting revised employment contracts, updating standing orders, restructuring wage components, and training HR teams on new compliance obligations.
Practical Guidance
Start wage restructuring analysis now. The Code on Wages will increase employer costs for companies with high allowance structures. Modelling the impact before the codes are notified gives you time to adjust compensation strategies without disrupting employee relations.
Review all contractor and gig worker engagements for potential reclassification risk. The Social Security Code’s expanded coverage means that workers previously classified as independent contractors may attract social security obligations.
Update employment contracts to include fixed term employment provisions. The Industrial Relations Code recognizes fixed term employment with benefits comparable to permanent employees. This creates a legitimate alternative to indefinite employment for project based roles.
Ensure POSH compliance is current. Internal Committee constitution, annual training, and return filing are mandatory. Non compliance creates both legal liability and reputational risk.
Frequently Asked Questions
When will the new Labour Codes be implemented?
The four codes have been enacted by Parliament but state rules are still pending in most states. Implementation requires both central and state rule notification. Businesses should begin preparation now because the transition period once notified will be limited.
How will the Code on Wages affect salary structures?
The code redefines "wages" to ensure that basic wages constitute at least 50% of total remuneration. This will increase PF, ESIC, gratuity, and bonus calculations for companies where allowances currently exceed 50% of total compensation. The financial impact can be significant and requires advance modelling.
What is the Under Pivot Labour Code framework?
It is our proprietary approach to labour code transition. Five pivots that redefine how businesses approach employment compliance. Rather than treating the new codes as a compliance exercise, we help companies use the transition to build more efficient, compliant, and worker friendly employment frameworks.
What are the key changes in the Industrial Relations Code?
Key changes include raising the threshold for prior government approval for retrenchment and closure from 100 to 300 workers, introducing fixed term employment, recognizing negotiating unions, and establishing the Industrial Tribunal. These changes significantly affect workforce planning and restructuring strategies.
How should companies prepare for the Social Security Code?
Companies should audit current registrations, review gig and platform worker engagements for potential coverage, model the financial impact of expanded social security obligations, and update payroll systems. Early preparation prevents compliance gaps when the code is notified.
What are POSH compliance requirements?
Every employer with 10 or more employees must constitute an Internal Committee, adopt a POSH policy, conduct annual awareness programmes, and file annual returns. Non compliance attracts penalties and can lead to cancellation of business licenses.
Why AMLEGALS
The Under Pivot Labour Code framework represents our institutional thinking on the most significant employment law reform in India’s history. We have been advising companies on this transition since the codes were first introduced in Parliament.
Our labour practice combines regulatory expertise with commercial understanding. Wage restructuring, workforce planning, and compliance design require advisory that integrates legal requirements with business operations.
Pan India presence across 10 offices means we handle labour compliance across multiple states as a coordinated engagement. Different states, different rules, different factory inspectors. One firm that manages the complexity.
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Labour & Employment Law Advisory
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