Final Central Rules under the four labour codes shift India’s labour reforms from policy to implementation, putting immediate compliance focus on employers
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The notification of the final central rules under the four labour Codes on May 8 marks a clear shift from policy intent to implementation. These rules, issued under the Code on Wages, Code on Social Security, Occupational Safety, Health and Working Conditions Code, and the Industrial Relations Code, provide the operational framework needed to implement the labour Codes.
For industry, the focus now moves from understanding the law to preparing for compliance.
Applicability: Immediate impact for specific sectors
The central rules apply to establishments where the Centre is the appropriate authority. This includes sectors such as banking, insurance, telecommunications, oil and gas, mines, major ports, air transport and central public sector undertakings, along with their contractors. In addition, the social security rules apply to establishments operating across more than one state. As a result, a section of industry may need to begin compliance immediately, even as most states are yet to notify their rules.
Wages for gratuity: A key area for review
Under the social security framework, gratuity is to be calculated based on “wages”. The draft rules issued in December 2025 had specified certain exclusions, such as bonuses, stock options and reimbursements. However, the final rules do not include these clarifications. This places the responsibility on employers to evaluate how “wages” should be interpreted for gratuity and other statutory benefits.
Working hours and overtime
The rules specify a 48-hour work week for workers. Overtime is applicable where this limit is exceeded, and is payable at twice the rate of wages. However, provisions on rest intervals and spread-over are not covered in detail and may continue to be governed by state regulations. Organisations will need to align working hour policies and payroll practices accordingly.
Contract labour: Clearer responsibilities
The rules place defined obligations on both contractors and principal employers.
Contractors are required to ensure timely payment of wages. Where there is a failure, the principal employer is required to make payment. Other requirements include timelines for wage payment, issuance of experience certificates, principal employer obligation towards minimum statutory bonus and option for contractors to obtain a common licence for multiple states.
The principal employer may settle contractor dues for contract labour in line with agreed contractual terms. These provisions increase accountability in contract labour arrangements and require stronger oversight by principal employers.
Gig and platform workers: Structured framework
The social security rules introduce a framework for registration of gig and platform workers. Aggregators are required to register workers within a specified timeline.
While social security schemes for such workers are yet to be notified, aggregators must now register and provide details of gig and platform workers on a designated portal within 45 days of commencement.
Committees and grievance mechanisms
The rules mandate structured governance mechanisms such as grievance redressal committees and safety committees, with defined composition and responsibilities.
There is also a requirement for a separate grievance mechanism for contract labour under the occupational safety Code. This shifts focus towards more formalised internal governance processes.
Health, safety and welfare
The rules prescribe requirements relating to workplace conditions, including cleanliness, ventilation, facilities and welfare measures for specified sectors such as factories, construction and transport. They also include provisions for women employees, including conditions for night work such as consent and transport arrangements. Organisations in these sectors may need to assess existing arrangements and address any gaps.
Standing orders, reskilling and documentation
The industrial relations framework continues to require standing orders for establishments crossing the prescribed threshold, alongside model standing orders.
The rules also provide clarity on the worker re-skilling fund to support workers impacted by retrenchment. In addition, there are requirements relating to appointment letters, registers, wage records and other documentation. This increases the importance of documentation and record-keeping in demonstrating compliance.
Way forward: Focus on readiness
With the notification of the central rules, certain employers may be required to commence compliance immediately. Others may need to prepare for implementation once state rules are notified.
In this context, organisations may need to:
*Review compensation structures, particularly the definition of wages
*Align HR policies and payroll practices with the rules
*Strengthen compliance in contract labour and gig workforce arrangements
*Evaluate workplace safety and welfare standards
*Ensure proper constitution of committees and governance mechanisms
*Review standing orders and documentation practices
*The direction of reform is now clear. The emphasis for industry is on preparedness and
execution, with a focus on managing compliance risk as the labour Codes move towards full implementation
(The writer is the Partner, People Advisory Services-Tax, EY India)
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