Labour law compliance is a critical responsibility for employers in India. It covers wages, employment conditions, social security, workplace safety, industrial relations, contract labour and statutory records.

India’s labour law framework has undergone a major change with the implementation of the Code on Wages, 2019, Industrial Relations Code, 2020, Code on Social Security, 2020, and Occupational Safety, Health and Working Conditions (OSHWC) Code, 2020. The four Codes came into force on 21 November 2025, consolidating 29 central labour laws.

A significant development followed in May 2026, when the Central Government notified the final Central Rules under all four Labour Codes. However, State Rules and implementation are at different stages. This means compliance requirements can vary depending on the appropriate government, state, establishment and nature of business.

A structured labour law compliance checklist helps employers identify applicable requirements, track statutory thresholds, assign responsibilities, maintain evidence and address compliance gaps.

What Is Labour Law Compliance and Why Does It Matter in 2026?

Labour law compliance means meeting the statutory requirements governing an organisation’s employees, wages, working conditions, social security, workplace safety and industrial relations.

For employers, compliance involves more than filing returns. It requires accurate payroll processing, timely wage payments, statutory appointment letters, wage slips, attendance and overtime records, social security contributions, workplace safety measures, employee grievance mechanisms and prescribed registers and notices.

In 2026, employers should review existing HR and payroll processes against the four Labour Codes, the final Central Rules and the applicable State Rules. They should also determine which government is the appropriate government for each establishment before applying specific requirements.

Understanding the Four Labour Codes and Key Compliance Changes

India’s four Labour Codes are:

• Code on Wages, 2019: Covers minimum wages, payment of wages, bonus and the statutory definition of wages.
• Industrial Relations Code, 2020: Covers trade unions, grievance redressal, standing orders and industrial disputes.
• Code on Social Security, 2020: Consolidates provisions relating to EPF, EPS, EDLI, ESI, gratuity, maternity benefits and other social security measures.
• Occupational Safety, Health and Working Conditions Code, 2020: Covers appointment letters, occupational safety, health, welfare and working conditions.

The final Central Rules notified in May 2026 provide detailed requirements for implementing the Codes. However, employers should not assume that the Central Rules apply identically to every establishment. The applicable framework depends on whether the Central Government or State Government is the appropriate government and on the State Rules and notifications applicable to the establishment.

Labour Law Compliance Checklist for Indian Employers

Wage and Salary Structure Compliance

The new definition of wages is one of the most important payroll changes under the Labour Codes.

Wages generally include basic pay, dearness allowance and retaining allowance. Certain allowances and benefits can be excluded when calculating wages, subject to the conditions under the Codes. However, the exclusions are subject to a 50% ceiling of total remuneration.

If the excluded components exceed 50% of total remuneration, the excess amount is added back to wages for statutory calculations.

For example, if an employee receives total remuneration of ₹60,000 and ₹35,000 consists of eligible excluded components, the 50% limit is ₹30,000. The excess ₹5,000 is added back to wages for the relevant statutory calculations.

Employers should therefore:

• Review the composition of basic pay, dearness allowance and other salary components.
• Identify which allowances qualify for exclusion.
• Calculate the 50% threshold against total remuneration.
• Add back excess excluded components where applicable.
• Reassess statutory benefits and contributions affected by the wage definition.
• Update payroll systems and salary structures.
• Verify that wage slips reflect the correct statutory information.

Employers must also verify the applicable minimum wage for the relevant employee category, employment and location.

Wage Payment Timelines and Wage Slips

Employers should establish a payroll calendar based on the wage period and statutory payment deadlines.

For employees paid monthly, wages must generally be paid before the expiry of the seventh day of the succeeding month. Different wage periods have corresponding statutory payment timelines.

When an employee is removed, dismissed, retrenched or resigns, wages earned by the employee are required to be paid within two working days, subject to the applicable statutory provisions.

Employers should also issue wage slips containing the prescribed particulars and retain evidence of:

• Wage calculations
• Salary payments
• Deductions
• Overtime payments
• Wage-slip issuance
• Final settlement payments

Payroll and HR teams should reconcile payroll records with attendance and bank-payment records to identify discrepancies before statutory deadlines are missed.

Employee Documentation and Appointment Letters

The requirement to issue appointment letters should be treated as a statutory compliance obligation, not merely an HR documentation practice.

The OSHWC Code requires employers to issue appointment letters to employees covered by its provisions. Employers should ensure that appointment letters contain the prescribed employment particulars, including information relating to designation, wages and terms of employment.

HR teams should conduct an employee-file audit to identify workers who have not received compliant appointment letters.

The employee master file should also contain relevant employment, salary, attendance and statutory information. Any changes in designation, remuneration or employment terms should be appropriately documented.

Working Hours, Leave, Shifts and Attendance

Employers should maintain accurate records of:

• Daily working hours
• Weekly working hours
• Overtime
• Weekly rest days
• Shifts
• Leave
• Attendance

Under the Central Rules, the normal working-day framework generally provides for eight hours, with working time subject to the 48-hour weekly framework and applicable conditions. Overtime is generally payable at twice the normal rate of wages when the statutory conditions are met.

However, employers should verify the applicable State Rules and establishment-specific requirements before changing working-hour or leave policies.

Employers should also:

• Configure attendance systems according to applicable working-hour requirements.
• Record and approve overtime.
• Maintain weekly rest-day records.
• Reconcile attendance and payroll data.
• Review shift arrangements.
• Verify requirements applicable to women working night shifts.

Workplace Safety, Health and Working Conditions

The OSHWC Code establishes requirements concerning occupational safety, health and working conditions.

Depending on the establishment and applicable rules, employers should assess requirements relating to:

• Workplace safety measures
• Cleanliness and sanitation
• Ventilation and lighting
• Drinking water
• First-aid facilities
• Welfare facilities
• Personal protective equipment
• Emergency procedures
• Safety training
• Health examinations

The 2026 framework also provides for health examinations for specified categories of workers. The annual health-check requirement should not be treated as a blanket obligation for every employee. Employers should verify the category of establishment, employee and the applicable Central or State Rules before determining whether the requirement applies.

Social Security, EPF, EPS, EDLI, ESI and Employee Benefits

Social security compliance should be reviewed against the Code on Social Security and the applicable 2026 framework.

For covered employees and establishments, employers should reconcile:

• EPF – Employees’ Provident Fund
• EPS – Employees’ Pension Scheme
• EDLI – Employees’ Deposit Linked Insurance Scheme
• ESI – Employees’ State Insurance
• Gratuity
• Maternity benefits
• Other applicable statutory social security benefits

Payroll teams should verify employee eligibility, contribution calculations, monthly deposits, challans, returns and employee records.

Employers should also review whether payroll configurations correctly account for the applicable wage definition and contribution requirements rather than relying on legacy salary structures.

The Social Security Code also recognises unorganised, gig and platform workers. However, recognition under the Code does not automatically make gig or platform workers conventional employees for EPF or ESI. Employers and aggregators should assess the specific registration, scheme and contribution requirements applicable to these categories.

Gratuity Compliance

Employers should review gratuity calculations under the Social Security Code, including provisions applicable to fixed-term employees.

A fixed-term employee directly engaged by an employer becomes eligible for gratuity after one year of service under the contract, subject to the applicable statutory provisions.

HR and payroll teams should review:

• Fixed-term employment contracts
• Completed service periods
• Wage components used for gratuity calculations
• Gratuity provisions in payroll systems
• Employee exit records
• Final settlement processes

Gratuity calculations should also be reviewed whenever salary structures or statutory wage definitions change.

Industrial Relations and Standing Orders

The Industrial Relations Code introduces important employee-strength thresholds that employers should monitor as headcount changes.

An establishment employing 20 or more workers is required to constitute a Grievance Redressal Committee (GRC) for individual grievances relating to employment and conditions of service, subject to the Code’s requirements.

The statutory standing-order framework applies to industrial establishments employing 300 or more workers, subject to the applicable provisions.

Employers should therefore:

• Monitor employee headcount against statutory thresholds.
• Constitute and operate the GRC when applicable.
• Establish a documented grievance process.
• Maintain grievance records.
• Assess standing-order requirements at 300+ workers.
• Review disciplinary procedures.
• Review termination, retrenchment and closure processes.
• Maintain industrial-relations documentation.

Contract Labour and Vendor Compliance

Employers engaging contract labour should assess their obligations as principal employers.

The OSHWC Code contains a 50-contract-labour threshold relevant to the application of contract-labour provisions and licensing requirements. Employers should determine whether these provisions apply based on the number of contract workers, the establishment and the nature of work.

Where applicable, employers should verify that contractors hold the required licence and statutory registrations.

Principal employers should establish mechanisms to monitor contractor compliance with applicable wage, safety, welfare and social security requirements.

Contractor due diligence should cover:

• Contractor licence and validity
• Worker deployment records
• Wage payments
• Wage slips
• Applicable PF/ESI compliance
• Statutory contributions
• Safety and welfare measures
• Required registers and records

Contracts with labour vendors should clearly specify statutory responsibilities, documentation requirements and audit rights.

The principal employer should maintain evidence of periodic contractor compliance reviews rather than relying solely on contractual declarations from vendors.

PoSH and Workplace Equality Compliance

Workplace sexual-harassment compliance continues to be governed by the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, commonly known as the PoSH Act.

PoSH is not one of the four Labour Codes and must therefore be tracked as a separate statutory compliance requirement.

Workplaces with 10 or more employees are required to constitute an Internal Committee in accordance with the PoSH Act.

Employers should:

• Maintain a written PoSH policy.
• Constitute the Internal Committee where applicable.
• Ensure the committee has the required composition.
• Display prescribed information.
• Conduct employee awareness programmes.
• Train Internal Committee members.
• Maintain confidentiality of complaints.
• Follow statutory complaint and inquiry timelines.
• Maintain annual reporting documentation.

Registrations, Licences, Returns, Registers and Notices

Employers should maintain an establishment-wise register of all applicable registrations, licences, statutory returns, renewal dates, registers and notices.

Depending on the establishment, this may include:

• EPFO registrations and records
• ESIC registrations and records
• Professional tax registrations
• Shops and Establishments registrations
• Factory-related registrations
• Contract labour licences
• Labour welfare registrations
• Wage records
• Attendance records
• Overtime records
• Leave records
• Wage slips
• Safety records
• PoSH records
• Statutory returns
• Challans and payment records

Employers should also verify which registers, notices and workplace displays are mandatory for their establishment under the applicable Code, Central Rules and State Rules.

A compliance file should be maintained for each establishment so that registrations, returns, payment evidence, employee records and inspection-related documents can be produced when required.

Labour Law Compliance Requirements for Multi-State Businesses

Multi-state businesses should not operate on the assumption that a single labour compliance policy will meet all requirements across India.

The final Central Rules were notified in May 2026, but State Rules are at different stages of implementation. The applicable requirements can therefore vary depending on the appropriate government and state.

Employers operating across multiple states should maintain a separate compliance matrix for each establishment covering:

Compliance Area	What to Check
Appropriate government	Central or State Government jurisdiction
Labour Code Rules	Central Rules and applicable State Rules
Minimum wages	State/category/location-specific rates
Working hours	Applicable working-hour and overtime requirements
Leave and holidays	State and establishment-specific requirements
Registrations	Establishment-specific registrations
Returns	Applicable periodic and annual filings
Contract labour	Thresholds, licences and records
Welfare facilities	Applicable establishment requirements
Safety and health	Applicable establishment/worker requirements
Registers	Prescribed Central/State registers
Notices	Mandatory workplace displays
Renewals	Licence and registration expiry dates

Before implementing a common HR policy nationwide, employers should check whether State Rules impose different requirements on working hours, leave, wages, forms, registers, notices or other employment conditions.

How to Build a Labour Law Compliance Calendar

A compliance calendar should convert statutory requirements into specific tasks, deadlines and ownership.

Compliance Area	Frequency/Timeline	Responsible Team	Evidence to Maintain
Wage payment	According to applicable wage period	Payroll	Payroll and bank records
Wage slips	Each wage cycle	Payroll	Wage-slip records
PF/EPS/EDLI/ESI compliance	Periodic/monthly as applicable	Payroll/Finance	Challans, returns and records
Attendance and overtime	Continuous/monthly review	HR/Payroll	Attendance and overtime records
Contract labour compliance	Periodic	HR/Compliance	Licences and audit records
PoSH compliance	Annual and as applicable	HR/IC	Policy, training and annual records
Statutory returns	As prescribed	Compliance	Filed returns
Licence renewals	As applicable	Compliance	Renewal certificates
Health and safety	Periodic/as applicable	HR/Safety	Inspection and examination records
Labour compliance audit	Periodic	HR/Legal/Compliance	Audit report and remediation tracker

Each compliance item should have a responsible owner, statutory deadline, evidence requirement and escalation mechanism.

Common Labour Law Compliance Mistakes Employers Should Avoid

Employers should avoid:

• Continuing outdated salary structures without testing the 50% wage rule.
• Failing to issue statutory appointment letters.
• Missing wage-payment deadlines.
• Failing to issue or retain wage slips.
• Delaying final wage settlement beyond the applicable statutory timeline.
• Ignoring the 20-worker GRC threshold.
• Failing to assess standing-order requirements at 300+ workers.
• Ignoring the 50-contract-labour threshold and applicable contractor licensing requirements.
• Assuming contractors are solely responsible for all compliance obligations.
• Treating gig and platform workers automatically as conventional employees for EPF or ESI.
• Assuming Central Rules apply identically to every private establishment.
• Applying one labour compliance policy across multiple states without checking State Rules.
• Treating PoSH as part of the four Labour Codes.
• Failing to maintain statutory registers, notices and filing evidence.
• Treating labour compliance as an annual exercise instead of monitoring obligations throughout the year.

How to Prepare for a Labour Law Compliance Audit

An employer should begin an audit with an establishment-wise applicability assessment.

The review should cover:

1. Employee headcount and statutory thresholds.
2. Appropriate government and applicable Central/State Rules.
3. Salary structure and the 50% wage rule.
4. Minimum wages and wage-payment timelines.
5. Appointment letters and wage slips.
6. Attendance, overtime and leave records.
7. EPF, EPS, EDLI, ESI and gratuity compliance.
8. GRC and standing-order requirements.
9. Contract labour and contractor licences.
10. Workplace safety and applicable health requirements.
11. PoSH policy, Internal Committee and statutory records.
12. Registrations, licences, returns, registers and notices.
13. Final settlement and exit documentation.

For every gap identified, employers should record the requirement, current status, responsible owner, corrective action, deadline and supporting evidence.

Consequences of Labour Law Non-Compliance in India

Failure to meet applicable labour-law requirements can result in penalties, interest, recovery proceedings, inspections, employee claims and litigation.

Compliance gaps can also create operational problems. Incorrect wage calculations can result in employee disputes, missing statutory records can complicate inspections, and inadequate contractor oversight can increase the principal employer’s compliance exposure.

For this reason, employers should treat labour compliance as an ongoing control framework rather than a one-time documentation exercise.

Labour Law Compliance Checklist: Quick Summary

Employers should verify:

• Identify the appropriate government for each establishment.
• Track the applicable Central and State Rules.
• Review salary structures under the 50% wage rule.
• Verify applicable minimum wages.
• Ensure wages are paid within statutory timelines.
• Issue compliant wage slips.
• Issue statutory appointment letters.
• Maintain employee, attendance and payroll records.
• Reconcile EPF, EPS, EDLI and ESI compliance.
• Review gratuity eligibility and calculations.
• Review one-year gratuity eligibility for applicable fixed-term employees.
• Check the 20-worker GRC threshold.
• Check the 300-worker standing-order threshold.
• Assess the 50-contract-labour threshold.
• Verify applicable contractor licences and principal-employer responsibilities.
• Maintain required registers and workplace notices.
• Review workplace safety and applicable health-check requirements.
• Maintain PoSH compliance separately under the PoSH Act, 2013.
• Track periodic and annual returns.
• Monitor licence and registration renewals.
• Maintain final-settlement records.
• Conduct periodic labour compliance audits.

FAQs About Labour Law Compliance

What are the four Labour Codes in India?

The four Labour Codes are the Code on Wages, 2019; Industrial Relations Code, 2020; Code on Social Security, 2020; and Occupational Safety, Health and Working Conditions Code, 2020. They came into force on 21 November 2025.

When were the final Central Rules under the Labour Codes notified?

The final Central Rules under all four Labour Codes were notified by the Central Government in May 2026. However, State Rules are at different stages, so employers must determine which rules apply based on the appropriate government and their establishment.

What is the 50% wage rule?

The Labour Codes allow certain components to be excluded from wages, subject to statutory conditions. If the excluded components exceed 50% of total remuneration, the excess amount is added back to wages for relevant statutory calculations.

Is an appointment letter mandatory under the Labour Codes?

Yes. The OSHWC Code provides for appointment letters as a statutory requirement for employees covered by its provisions. Employers should review appointment-letter formats and ensure covered employees receive the required information.

When is a Grievance Redressal Committee required?

A Grievance Redressal Committee is required at establishments with 20 or more workers, subject to the requirements of the Industrial Relations Code.

When do standing-order requirements apply?

The Industrial Relations Code provides for statutory standing-order requirements for industrial establishments employing 300 or more workers, subject to the applicable provisions.

What is the contract labour threshold under the OSHWC Code?

The OSHWC Code contains a 50-contract-labour threshold relevant to contract-labour provisions and licensing. Employers should assess the exact applicability based on their establishment, worker strength, nature of work and applicable rules.

Does PoSH come under the four Labour Codes?

No. PoSH compliance continues under the PoSH Act, 2013 and operates separately from the four Labour Codes. Workplaces with 10 or more employees must constitute an Internal Committee as required under the Act.

Do the Central Rules apply to every private establishment?

No. Employers must determine the appropriate government and identify the applicable Central and State Rules. State-level implementation is at different stages, making establishment-wise and state-wise compliance mapping important.

What should employers check for multi-state labour compliance?

Employers should maintain a separate compliance matrix for each state and establishment covering applicable rules, minimum wages, working hours, leave, registrations, returns, contract labour, welfare, safety, registers, notices and renewal deadlines.

What should employers do first to prepare for Labour Code compliance?

Start with an establishment-wise applicability assessment. Identify the appropriate government, map applicable Central and State Rules, review employee headcount and statutory thresholds, audit payroll and appointment letters, verify social security compliance and create a compliance calendar with assigned owners and evidence requirements.

Strengthen Your Labour Law Compliance with comply360°

Labour Code implementation in 2026 requires employers to monitor more than the four Codes themselves. Payroll structures, appointment letters, statutory thresholds, social security, contract labour, workplace safety, PoSH and state-level rules all need to be reviewed as part of an integrated compliance framework.

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