India’s four labour codes stopped being a future planning exercise on 21 November 2025, when the Ministry of Labour and Employment brought them into force and replaced 29 central labour statutes. For the following six months most employers operated in an uncomfortable gap: the codes had legal effect, but the rules that tell you how to comply had not been notified. That gap closed on 8 May 2026, when the Ministry notified the Code on Wages (Central) Rules, 2026, the Social Security (Central) Rules, 2026, the Occupational Safety, Health and Working Conditions (Central) Rules, 2026 and the Industrial Relations (Central) Rules, 2026, along with the Model Standing Orders, 2026.
If your HR policies still read the way they did in October 2025, you are non-compliant in ways that are easy for an inspector-cum-facilitator to spot and expensive to fix retrospectively. Two areas generate most of the queries reaching our labour and employment law firm in India: how many hours you may ask people to work, and how much notice you owe when employment ends.
Where the Labour Codes Stand Right Now
Labour sits on the Concurrent List, so the central rules are only half the picture. The Central Rules apply where the central government is the appropriate government, which covers banking, insurance, telecommunications, mines, major ports, air transport, railways and central public sector undertakings. For a factory, a shop, a plantation or a services business under state jurisdiction, the applicable state rules govern the detail.
State progress is uneven. A number of states have notified final rules under all four codes, while several large industrial states are still working through draft stages. Until a state notifies its fresh rules, employers there continue to work with the central rules alongside legacy state rules and transitional notifications. If you operate in more than one state, a single national HR policy will not survive contact with the rules. You need a base policy plus state annexures.
Working Hours Under the OSH Code and the 2026 Rules
The 48-hour week and how you may distribute it
The weekly ceiling is 48 hours. What changed is the freedom to arrange those hours. With worker consent, the daily limit can flex: 12 hours a day across four days, 9.5 hours across five days, or the conventional eight hours across six days. A four-day week is now legally available in India, provided the weekly cap holds and the remaining days are treated as rest.
Two limits sit alongside the weekly cap. The spread-over, meaning the total elapsed time from start of work to end of work including breaks, must not exceed 12 hours in a day. Every worker is entitled to a weekly rest day, and where a worker is required to work on that day, a substituted rest day must be provided.
The OSH Rules also settle a question that state Shops and Establishments Acts had answered inconsistently for years. IT and IT-enabled services establishments are within this framework. The 48-hour cap, the overtime rate and the weekly-off entitlement apply, subject to any state-specific exemption your establishment can actually rely on.
Overtime, consent and the quarterly cap
Overtime is payable at twice the ordinary rate of wages. Under the OSH Rules, that trigger is work beyond eight hours in a day for daily-wage workers and beyond 48 hours in a week for everyone else, with payment due at the end of the relevant wage period rather than whenever payroll gets to it.
The rules cap overtime at 144 hours in any quarter. Overtime also requires the worker’s consent, which means an employer who schedules mandatory weekend coverage without documented consent has a problem even if the payment is correct. The practical fix is a written overtime consent and authorisation trail attached to rosters, not a clause buried in an appointment letter signed three years ago.
Women on night shifts
Women may be employed after 7 p.m. and before 6 a.m., subject to conditions the OSH Rules set out: written consent from the employee, pick-up and drop from her residence, a safe and well-lit workplace, CCTV surveillance and compliance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Consent is specific to night work and cannot be presumed from a general shift clause.
Notice Period: What Changed and What did not
This is where employers most often assume more has changed than actually has, and miss the changes that did happen.
Retrenchment notice
For a worker with at least one year of continuous service, retrenchment requires one month’s written notice stating the reasons, or wages in lieu of that notice, together with retrenchment compensation of 15 days’ average pay for each completed year of service. The appropriate government must also be notified in the prescribed manner.
The threshold for the stricter regime moved from 100 to 300 workers. An industrial establishment that employed 300 or more workers on average per working day in the preceding twelve months needs prior government permission before lay-off, retrenchment or closure, and retrenchment there carries three months’ notice or pay in lieu. States may raise the threshold further by notification, which is one more reason to check the state position before you plan a workforce reduction.
The Industrial Relations Code adds an obligation that did not exist under the Industrial Disputes Act. A worker re-skilling fund now operates: an employer who retrenches a worker must transfer 15 days’ last drawn wages, within ten days, to a designated account maintained by the Labour Commissioner, for onward credit to the worker within 45 days. This sits on top of retrenchment compensation, not in place of it.
Notice of change in service conditions
Section 40 continues the 21-day notice requirement for adverse changes to service conditions listed in the Third Schedule, which includes wages, allowances, hours of work, leave and provident fund contributions. Salary restructuring undertaken to meet the new wage definition can fall squarely within this list. We have seen employers issue revised salary structures effective immediately, without the 21-day notice, and then face a dispute that had nothing to do with the merits of the restructuring.
Standing orders now reach the services sector
Standing orders apply to industrial establishments with 300 or more workers, up from 100 under the repealed Industrial Employment (Standing Orders) Act, 1946. Covered establishments are required to prepare or modify their standing orders within six months of the commencement of the Industrial Relations Code.
The Model Standing Orders, 2026 include a dedicated schedule for the services sector, which brings office-based, hybrid and client-facing businesses into a framework that previously felt like a factory instrument. Several provisions have direct consequences for how you end employment:
- Workers are classified as permanent, temporary, apprentices, probationers, badlis, fixed-term employees or casual, with probation set at six months and extendable by up to three months.
- Fixed-term employees get parity in wages and benefits with permanent workers doing the same work, and gratuity where the contract runs to one year. Cessation on expiry of a fixed term is not retrenchment, so no notice or retrenchment compensation arises on expiry. If you hire through a vendor, read this alongside your staffing agency agreements, because the principal employer obligations have moved too.
- A service certificate must be issued within ten days of resignation, discharge, termination or retirement.
- Wages and dues payable on removal, dismissal, retrenchment, resignation or closure-related unemployment must be cleared by the end of the second working day from termination. Full-and-final settlements running to 45 or 60 days do not survive this provision.
- Disciplinary enquiries are ordinarily to be completed within 90 days of suspension, with subsistence allowance at 50 per cent of wages for the first 90 days and 75 per cent thereafter where the delay is not attributable to the worker. An appeal against a punishment order may be filed within 21 days.
Work from home and virtual workplace arrangements are expressly recognised, and for the IT sector the model schedule provides that working hours follow the agreement or conditions of appointment. That is a useful drafting hook, and it only helps you if your appointment letters actually say something specific about hours. Our contract lawyers in Delhi are currently rewriting a lot of hours and shift clauses for exactly this reason.
Employees who are not “workers”
The codes did not create a general statutory notice period for every employee. Managerial and administrative staff who fall outside the definition of “worker” are still governed by their contract, their employer’s standing orders where applicable, and the relevant state Shops and Establishments Act. If your standard notice clause says 90 days for senior roles, that clause continues to do the work, so it is worth re-reading your employment terms and conditions against the new definitions before you rely on them. What has changed is the arithmetic behind pay in lieu of notice, which brings us to the wage definition.
The Wage Definition that Changes Every Number
Under the Code on Wages, wages mean basic pay, dearness allowance and retaining allowance. Excluded components such as house rent allowance, conveyance allowance, overtime and commissions may not together exceed 50 per cent of total remuneration, and any excess is added back into wages.
Every wage-linked figure moves as a result: provident fund and ESI contributions, gratuity, statutory bonus, retrenchment compensation, the 15 days’ wages payable to the re-skilling fund, the overtime rate and pay in lieu of notice. Employers whose basic pay currently sits at 25 or 30 per cent of CTC face the largest adjustment. Gratuity is also now payable to fixed-term employees at one year of service, which changes provisioning for project-based hiring models and for anyone engaging people through service and work contracts.
What to Fix in the Next Quarter
The compliance items that create the most exposure, in the order we usually address them:
- Reissue appointment letters. Issuing them is mandatory for all employees, and the OSH Rules prescribe the contents, including type of employment, universal account number or insurance number where available, the establishment’s labour identification number, skill category, broad nature of duties, and maternity benefits available to women employees. Our guide to the employment contract in India sets out what else the document should carry.
- Rebuild the salary structure against the 50 per cent test, model the cost, and serve 21 days’ notice before implementing changes that touch Third Schedule matters.
- Rewrite working-hours and overtime policy: chosen schedule, spread-over control, weekly off and substituted rest day, consent capture, and the 144-hour quarterly cap tracked per worker rather than per team.
- Adopt or certify standing orders if you cross 300 workers, and inform the certifying officer electronically where you adopt the Central Government’s model.
- Move separation processes to the two-working-day settlement timeline and the ten-day service certificate.
- Set up annual health check-ups for workers aged 40 and above, electronic wage slips, and the electronic annual return due by the last day of February.
- Map your establishments against the applicable state rules and keep that map current. If you are setting up in India or opening a second establishment in another state, do this before you sign the lease rather than after.
Talk to us Before the Next Restructuring
Most of the disputes we expect over the next two years will not turn on whether an employer intended to comply. They will turn on documentation: whether consent was recorded, whether notice was served on the right people at the right time, whether the standing orders on file match what the establishment actually does.
Our employment lawyers in Delhi advise Indian and multinational employers on working-hours policy, appointment letter and standing orders drafting, salary restructuring under the new wage definition, retrenchment and closure planning, and disputes before labour authorities. We also act for Indian companies hiring employees abroad from India, where the codes interact with the terms of an overseas posting.
FAQs
Are the new labour codes in force in India?
Yes. All four codes took effect on 21 November 2025, and the final Central Rules were notified on 8 May 2026. The codes had legal effect from November 2025 even while rules were pending, so service rendered after that date is governed by the new framework. State rules are still being notified, which affects the operational detail rather than whether the codes apply.
What are the maximum working hours under the new labour codes?
Forty-eight hours a week. Daily hours depend on how you distribute the week, with a ceiling of 12 hours in a day. Separately, the spread-over from start to finish of a working day, including breaks, must not exceed 12 hours. Every worker is entitled to one rest day a week, or a substituted rest day where work is required on it.
Is a four-day work week legal in India now?
Yes, with worker consent and within the 48-hour weekly cap. The permitted patterns are 12 hours a day across four days, 9.5 hours across five days, or eight hours across six days. The three non-working days in a four-day pattern are treated as rest days rather than leave taken from the worker's entitlement.
How much overtime can an employer require, and at what rate?
Overtime is paid at twice the ordinary rate of wages, calculated on the new wage definition, and is capped at 144 hours in any quarter. It is triggered by work beyond eight hours in a day for daily-wage workers and beyond 48 hours in a week for others. Overtime needs the worker's consent, and payment falls due within the relevant wage period.
What notice period applies to retrenchment?
A worker with at least one year of continuous service is entitled to one month's written notice stating the reasons, or wages in lieu, plus 15 days' average pay for each completed year of service. Establishments with 300 or more workers need prior government permission and must give three months' notice or pay in lieu.