Urgent and Immediate Review by Establishments is critical!

Code on Wages

The Code on Wages applicability extends to all employees, regardless of wage ceilings or scheduled employment a significant departure from earlier laws that restricted coverage to “scheduled industries”.

Industrial Relations Code

The Industrial Relations Code rationalises procedures for trade union recognition, employment conditions, and dispute resolution with threshold increased to 300 for mandatory Government approval, legalising fixed term employment, 14-day notice for strike, formation of grievance committee for 20 and more workers, and 51% membership for trade unions.

Social Security Code

The most controversial code is social security code dealing with PF, ESI, Maternity, Gratuity, etc. bringing gig, platform and unorganised workers in to the ambit of the law.

OSHWC Code

The OSHWC Code mandates electronic registration for establishments employing ten or more workers and introduces the concept of a common licence for factory, contract, and beedi-cigar operations, removing discrimination and allowing women in night shift, increasing applicability from 10 to 20, thereby simplifying procedural compliance.

Review job descriptions, job roles, job enlargements, job promotions, job transfers, for purpose of re-classifications so to align with new ‘employee’ and ‘worker’ and employer definitions.

Re-assess the dynamics of hiring models and employment contracts and appointment letters, including fixed-term arrangements and restrictions on contract labour for core activities and bucketing clearly non-core activities.

Analyse and regroup salary structures with clear notation of the impact on compensation structures and payroll systems to comply with the new statutes on uniform definition and implementation of wages and benefit calculations.

Assess the financial impact of enhanced employee benefits on the organization in terms of permanent workers, casuals, temporary, apprentices, interns, gig and platform workers, contract workers, retiring workers.

Update HR and Employee Relations Policies, including working hours, overtime, flexible working options, commission, variable pay, leave entitlement, state declared public holidays, election holidays, bonus, gratuity, layoff and retrenchment processes.

Implement strong internal controls, conduct periodic diagnostic reviews, and ensure effective governance.

If possible, after all being done, conduct a survey of your organisation o “Good Place to Work” on parameters such as Management Leadership, People Policy and treatment, People Recognition and Celebration, Endorsement to the outside world, etc.

Existing HR, payroll and compliance practices may no longer remain valid.

Several areas including ESI, wage restructuring, contract labour, working hours and statutory facilities require urgent reassessment.

Penalties under the Codes have been significantly enhanced, with fines going up to ₹20 lakhs for a single violation.

Grey areas regarding coverage, accident benefits, supervisory roles, and outside job work require professional interpretation before implementation.

Technology and system upgrades must be reconfigured to reflect updated codes derived from the new labour law, automate compliance, generate accurate reports, and align with state-wise variations, ensuring long-term efficiency and audit readiness.

HR and Payroll policies: The labour codes significantly affect various aspects of HR and Payroll Policies. Certain provisions overlap with existing state-specific Shops and Establishments laws, which are not superseded by the labour codes, potentially leading to conflicts, especially concerning working hours, leave, and related issues. Organizations operating in multiple states may have to ensure compliance with both sets of laws in each jurisdiction. Additionally, since specific provisions apply only to 'workers,' organizations may need to implement different policies for various employee categories.