Blogs & Labour Law Updates

The four Labour Codes — Code on Wages, Industrial Relations Code, Code on Social Security, and Occupational Safety Code — continue to shape India's employment law landscape. While full implementation remains phased, several states have made significant progress in notifying rules. Key changes include revised definitions of 'worker', updated fixed-term employment provisions, and new thresholds for applicability of various statutes. Employers operating across multiple states must track state-specific notifications carefully.

EPFO's push towards complete digitisation continued in 2024, with mandatory UAN-Aadhaar linking for all members and new guidelines on joint declarations. The ESIC extended coverage to new categories of workers and streamlined the online claim process. Employers must ensure all employees have verified UANs and that contribution remittances happen before the 15th of every month to avoid penalties. EPFO's new wage definition under the Code on Wages will significantly impact PF calculations once fully notified.

States including Maharashtra, Karnataka, Delhi, and Haryana announced minimum wage revisions effective April 2024 and October 2024. Employers must update wages for all categories of workers — unskilled, semi-skilled, skilled, and highly skilled — as per applicable state schedules. Non-compliance can result in prosecution under the Minimum Wages Act, with penalties including imprisonment. VDA revisions must also be tracked separately as they are typically revised quarterly in many states. Employers in multiple states must maintain state-specific wage registers.

Under the Contract Labour (R&A) Act, 1970, establishments employing 20 or more contract workmen must obtain a Principal Employer Certificate of Registration. The Act mandates that if a contractor fails to provide welfare facilities — canteen, rest rooms, first aid — the principal employer must provide them and recover costs from the contractor. Recent judicial decisions have reinforced principal employer liability for PF, ESI, and minimum wages non-compliance by contractors. Companies must conduct regular audits of contractor compliance, maintain Form V records, and ensure contractor licences are valid.

The Code on Wages introduces a unified definition of 'wages' that limits allowances to 50% of total remuneration. This means the basic wage must be at least 50% of CTC — a major shift for many companies that currently structure salaries with a low basic and high allowances to reduce PF contributions. The new definition will increase PF contributions, gratuity liability, and bonus calculations — but may reduce take-home pay for employees in higher salary brackets. HR and payroll teams must model the impact on their employee base and plan for implementation. Companies should also review employment contracts for any guaranteed allowance structures that may need revision.