LexHR Pro Knowledge Hub

1. Comprehensive Guide to India's 4 Labour Codes

The Government of India has consolidated 29 legacy Central Labour Acts into 4 streamlined, modernized Labour Codes designed to enhance ease of doing business while guaranteeing universal statutory social security and wage protection for all workers.

A. The Code on Wages, 2019

Amalgamates the Payment of Wages Act (1936), Minimum Wages Act (1948), Payment of Bonus Act (1965), and Equal Remuneration Act (1976).

• Uniform Definition of Wages (Section 2(y)): Standardizes salary structures across India. If total specified allowances exceed 50% of gross remuneration, the excess is treated as statutory Basic Wage, directly expanding PF, ESI, and Gratuity safety nets.
• Mandatory 48-Hour Full & Final Settlement (Section 17): Employers must disburse all pending wages, earned leaves, and statutory dues within 2 working days of an employee's resignation, termination, or retrenchment.
• Floor Wage Mechanism: The Central Government sets a National Floor Wage taking into account minimum living standards, below which no State Government can set minimum wage rates.

B. The Code on Social Security, 2020

Consolidates 9 key enactments including the Employees' Provident Funds Act (1952), Employees' State Insurance Act (1948), Payment of Gratuity Act (1972), and Maternity Benefit Act (1961).

• Inclusion of Gig & Platform Workers: Aggregators and digital platforms must contribute between 1% to 2% of annual turnover towards the Social Security Fund for gig workers.
• Pro-Rata Gratuity for Fixed-Term Employees: Removes the mandatory 5-year continuous tenure condition for fixed-term contract staff, granting pro-rata gratuity rights for contracts of 1 year or more.
• National Electronic Database: Integration of Aadhaar-linked Universal Account Numbers (UAN) across EPF, ESIC, and unorganized worker databases.

C. The Industrial Relations Code, 2020

Streamlines the Trade Unions Act (1926), Industrial Employment (Standing Orders) Act (1946), and Industrial Disputes Act (1947).

• Standing Orders Threshold: The requirement for certified standing orders is elevated to establishments employing 300 or more workers.
• Prior Notice for Strikes & Lockouts: Mandatory 14-day advance notice required for strikes in all industrial establishments to foster bipartite dispute conciliation.
• Worker Reskilling Fund: Employers contribute 15 days of last-drawn wages per retrenched worker into a dedicated government reskilling fund.

D. Occupational Safety, Health & Working Conditions (OSHWC) Code, 2020

Replaces 13 enactments including the Factories Act (1948), Contract Labour (Regulation & Abolition) Act (1970), and Inter-State Migrant Workmen Act (1979).

• Single Pan-India Electronic Registration: Centralized digital registration replaces multiple state-level factory licenses and establishment registrations.
• Women in Night Shifts: Women employees are permitted to work night shifts (7:00 PM to 6:00 AM) across all sectors subject to explicit consent and mandatory employer provisions for safety, security, and transport.
• Mandatory Annual Health Examinations: Free yearly medical check-ups for employees across hazardous and industrial operations.

2. State-Wise Minimum Wages & Variable Dearness Allowance (VDA) in India

Minimum wages in India are revised semi-annually (April 1 and October 1) based on the Consumer Price Index for Industrial Workers (CPI-IW). Employers must pay wage rates categorized across skill tiers (Unskilled, Semi-Skilled, Skilled, and Highly Skilled / Clerical):

* Note: Non-compliance with Minimum Wages attracts recovery proceedings under Section 20 of the Minimum Wages Act / Section 45 of the Code on Wages, along with fines up to ₹50,000 and claim damages up to 10 times the shortfall amount.

3. Statutory Social Security Handbook: EPFO, ESIC, Gratuity & Bonus

Employees' Provident Fund (EPF) Mandates

Applicable to all commercial establishments employing 20 or more persons. The employee contributes 12% of statutory Basic + DA, matched by an equal 12% employer contribution (split into 8.33% Employees' Pension Scheme up to ₹1,250 ceiling and 3.67% EPF), plus 0.50% EDLI and 0.50% administrative charges. Monthly ECR electronic challans must be submitted on or before the 15th of each calendar month.

Employees' State Insurance (ESIC) Regulations

Applicable to non-seasonal factories and establishments employing 10 or more persons. Employees drawing gross wages up to ₹21,000 per month contribute 0.75% of gross wages, while the employer contributes 3.25%, totaling 4.00% monthly remittance to ESIC portal by the 15th of the succeeding month.

Payment of Gratuity Act, 1972

Gratuity is a statutory terminal retiral benefit payable to employees who have completed at least 5 years of continuous service (or 1 year on pro-rata basis for fixed-term employees). Calculated as: (15 × Last Drawn Basic Salary + DA × Completed Tenure Years) ÷ 26, capped at the statutory ceiling of ₹20,00,000 (Tax-exempt under Section 10(10) of the Income Tax Act).

Payment of Bonus Act, 1965

Mandatory for establishments employing 20 or more persons. Employees with at least 30 working days in an accounting year drawing basic salary up to ₹21,000/month are entitled to statutory bonus ranging between a statutory minimum of 8.33% (or ₹100) and a maximum of 20% of basic wages earned, payable within 8 months of the close of the financial year (Form D annual return).

4. POSH Act 2013 Governance & Internal Committee Compliance

Under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, every organization with 10 or more employees must implement a strict zero-tolerance anti-harassment framework:

• Constitution of Internal Committee (IC) (Section 4): Formal office order designating a senior female Presiding Officer, at least two employee members committed to gender equality, and an independent External Member from an NGO or legal background. Minimum 50% representation must be women.
• Mandatory Inquiry SLA (Section 11): The IC must initiate formal proceedings within 90 days of receipt of a written complaint, follow principles of natural justice, and submit an Inquiry Report within 10 days of completion.
• Section 21 Annual Report Filing: Employers must file the mandatory POSH Annual Return with the District Officer / District Collector by January 31 of each calendar year, detailing total complaints received, resolved, and pending.
• Statutory Penalties: Failure to constitute an IC attracts a statutory fine of ₹50,000 for the first offence, double penalties for repeat violations, and potential cancellation of company trade/shop licenses.

5. About LexHR Pro & Siyaram Infotech Editorial Standards

LexHR Pro is owned, developed, and maintained by Siyaram Infotech (Contact: siyaraminfotech108@gmail.com).

Our statutory compliance content is authored and vetted by senior labour law consultants, HR directors, and payroll attorneys in India. We cross-verify gazette notifications directly from the Ministry of Labour & Employment (MoLE), EPFO, ESIC, and official State Labour Department portals before publishing updates.

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