New Labour Codes 2025 — Complete Guide for Maharashtra Employers
Four labour codes in force from 21 November 2025: wage rule, gratuity, overtime, 4-day week, gig workers & more
Information by Shree HR Services – PF & ESIC Consultant, Satara. Last updated: October 2026.
The Four New Labour Codes — Overview
The Government of India has consolidated 29 central labour laws into four labour codes. These codes came into force on 21 November 2025, and Maharashtra has notified its state rules. This is the most significant labour law reform in decades, and every employer in Satara must understand the changes.
| Code | Year | Replaces | Key Focus |
|---|---|---|---|
| Code on Wages | 2019 | Payment of Wages Act 1936, Minimum Wages Act 1948, Bonus Act 1965, Equal Remuneration Act 1976 | Wage definition, minimum wages, bonus, gender equality |
| Industrial Relations Code | 2020 | Trade Unions Act 1926, Industrial Employment (Standing Orders) Act 1946, Industrial Disputes Act 1947 | Trade unions, standing orders, retrenchment, strikes |
| Code on Social Security | 2020 | EPF Act 1952, ESI Act 1948, Gratuity Act 1972, Maternity Benefit Act 1961, and 6 others | Social security for all workers including gig & platform workers |
| Occupational Safety, Health & Working Conditions (OSH) Code | 2020 | Factories Act 1948, Contract Labour Act 1970, Inter-State Migrant Workers Act 1979, and 10 others | Workplace safety, working hours, contract labour, migrant workers |
Key Changes Under the New Labour Codes
50% Wage Rule
Under the Code on Wages, "wages" for the purpose of PF, gratuity, and bonus calculation must include basic wages + dearness allowance + retaining allowance, which must be at least 50% of the total remuneration. If allowances exceed 50% of total remuneration, the excess is deemed as wages for PF and gratuity calculation.
Impact: This increases the wage base for PF and gratuity calculation, resulting in higher employer and employee PF contributions and higher gratuity payouts. Employers in Satara need to restructure salary components.
Gratuity for Fixed-Term Employees
Fixed-term employees are now eligible for gratuity after completing 1 year of service (instead of the previous 5-year requirement for regular employees). This is a major change benefiting contract and project-based workers.
Overtime at Twice the Ordinary Rate
Overtime must be paid at twice the ordinary rate of wages. The OSH Code defines "ordinary rate of wages" as basic wages + DA + retaining allowance, excluding HRA and other allowances.
48-Hour Weekly Cap with 4-Day Week Option
The maximum working hours are 48 per week. Employers can offer a 4-day work week with 12-hour shifts (including rest intervals), provided the total weekly hours do not exceed 48. Employees get a minimum 3-day rest period.
Mandatory Appointment Letters
Every employer must issue a formal appointment letter to every employee. This is now a statutory requirement under the OSH Code.
National Floor Wage
The Central Government will fix a national floor wage. State minimum wages cannot be below the national floor wage. This ensures a minimum income floor for all workers across India.
Social Security for Gig & Platform Workers
For the first time, gig workers, platform workers (delivery, ride-hailing, etc.), and unorganised sector workers are covered under social security. Contributions from aggregators and the government will fund their PF, insurance, and other benefits.
Wider ESIC Coverage
The Code on Social Security expands ESIC coverage to all establishments with 10+ employees. The wage ceiling and area restrictions are being eased to bring more workers under ESIC coverage.
Free Annual Health Check-Up for Workers 40+
Employers must provide a free annual health check-up to all workers aged 40 years and above. This is a new requirement under the OSH Code.
Women Allowed Night Shifts
Women are permitted to work night shifts (6 PM – 6 AM) with their written consent. Employers must ensure safety, security, and transportation for women workers on night shift.
Retrenchment Approval Threshold Raised to 300 Workers
Prior government approval for retrenchment, lay-off, or closure is now required for establishments with 300+ workers (increased from the previous 100-worker threshold). Establishments with fewer than 300 workers can retrench without prior approval but must pay compensation.
Full & Final Settlement Within 2 Working Days
Full and final settlement of resigned or retrenched employees must be completed within 2 working days of the last working day. This is a significant reduction from the previous timelines.
Single Registration, Licence & Return
Under the new codes, employers need a single registration, a single licence, and can file a single return instead of multiple registrations and returns under different laws. This simplifies compliance significantly.
Old Law vs New Code — Comparison Table
| Aspect | Old Law | New Code (from Nov 2025) |
|---|---|---|
| Wage definition for PF/gratuity | Basic + DA only (often below 50% of CTC) | Basic + DA + retaining allowance must be ≥ 50% of total remuneration |
| Gratuity for fixed-term employees | 5 years of service required | 1 year of service required |
| Overtime rate | Twice the ordinary rate | Twice the ordinary rate (definition clarified) |
| Working hours | 48 hours/week, 6-day week typical | 48 hours/week, 4-day week option available |
| Appointment letter | Not mandatory | Mandatory for all employees |
| Social security for gig workers | Not covered | Covered under Code on Social Security |
| Retrenchment approval threshold | 100+ workers | 300+ workers |
| Full & final settlement | Within reasonable time | Within 2 working days |
| Night shift for women | Restricted | Allowed with consent and safety measures |
| Health check-up | Not mandatory | Free annual check-up for workers 40+ |
| Registration/Returns | Multiple under different laws | Single registration and single return |
What Employers in Satara Must Do Now
- Restructure salary: ensure basic + DA is at least 50% of total remuneration to comply with the 50% wage rule
- Issue formal appointment letters to all current employees (if not already done)
- Review and update fixed-term contracts to include gratuity eligibility after 1 year
- Update HR policies for night shift women workers (consent, safety, transport)
- Prepare for mandatory annual health check-ups for workers aged 40+
- Ensure full & final settlement within 2 working days of exit
- Review retrenchment/lay-off policies if employing 300+ workers
- Update statutory registers and compliance processes for single registration/return
- Review PF and gratuity cost impact due to the 50% wage rule
- Train HR and payroll teams on new compliance requirements
How Shree HR Services Helps Satara Employers with the New Labour Codes
Shree HR Services is helping factories, MSMEs, and businesses across Satara MIDC, Karad, Phaltan, Wai and nearby areas transition to the new labour codes smoothly. Our services include:
- Salary restructuring to comply with the 50% wage rule
- Updated appointment letters and employment contracts
- Revised HR policies for working hours, overtime, night shifts, and F&F settlement
- PF and gratuity cost impact analysis
- Compliance audit against new code requirements
- Single registration and return filing support
- Training sessions for HR and management teams on new code changes
Frequently Asked Questions
When did the new labour codes come into force?
The four new labour codes came into force on 21 November 2025, replacing 29 central labour laws. Maharashtra has notified its state rules.
What is the 50% wage rule?
Under the Code on Wages, basic wages + DA + retaining allowance must be at least 50% of total remuneration. If allowances exceed 50%, the excess is treated as wages for PF and gratuity calculation, increasing employer costs.
Are fixed-term employees eligible for gratuity now?
Yes, fixed-term employees are eligible for gratuity after completing 1 year of service under the new codes, compared to the previous 5-year requirement.
Can employers offer a 4-day work week?
Yes, the OSH Code allows a 4-day work week with 12-hour shifts (including rest intervals), provided total weekly hours do not exceed 48. Employees get a minimum 3-day rest period.
Do women workers get night shift rights now?
Yes, women can work night shifts (6 PM–6 AM) with their written consent. Employers must ensure safety, security, and transportation for women on night shift.
How does the new retrenchment threshold affect my business?
If you employ fewer than 300 workers, you can retrench without prior government approval (but must pay compensation). Establishments with 300+ workers need prior government approval.
How soon must full & final settlement be done?
Under the new codes, full and final settlement must be completed within 2 working days of the employee’s last working day.
Related Guides
Need help? Contact Shree HR Services, Satara – call +91 92097 09369.
Rates and rules are as per current government notifications and may change.