Editor’s Note
The government has taken a significant step toward implementing its landmark labor reforms by releasing draft rules for all four consolidated labor codes. These rules will now undergo public consultation before finalization.
The Ministry of Labour and Employment has notified the draft rules under all four Labor Codes, paving the way for their practical implementation. These draft rules pertain to the Code on Wages, the Code on Social Security, the Industrial Relations Code, and the Code on Occupational Safety, Health and Working Conditions.
The ministry has sought comments from all stakeholders on the draft rules within 30-45 days, after which the final rules will be notified. According to an official, the final rules are expected to be notified in March. This will enable all Labor Code provisions to come into effect from the beginning of the next financial year, i.e., April 1. The old rules will remain in force until the final notification of the new rules is issued.
The government had notified all four Labor Codes in November this year, which were passed by Parliament five years ago. Prior to this, draft rules were circulated for public comments in 2020 and 2021 but were not notified.
Labor Codes essentially establish a broad legal framework, while the draft rules detail how these laws will be implemented on the ground. This includes wages, working hours, social security, safety standards, and dispute resolution.
The 2025 Draft Code on Wages (Central) Rules provide detailed guidelines on how to determine, calculate, and revise the minimum wage and floor wage.
This calculation is based on the needs of a standard working-class family, including food, clothing, house rent, fuel, electricity, education, medical expenses, and other basic necessities. The central government will set a National Floor Wage, below which no state can set its minimum wage, although states will have the power to set a higher wage according to local conditions.
The draft rules have also clarified the definition of wages, specifying how allowances will be counted if they exceed 50% of the total remuneration. Certain payments such as bonuses, incentives, and reimbursements will be excluded from the definition of wages, while provisions have been made to prevent tactics aimed at reducing basic pay.
The draft rules emphasize enforcing a maximum limit of 48 working hours per week. Salary calculation will be based on 8 hours of work per day. Additionally, provisions are made for how wages will be paid for overtime, rest days, and substituted rest days.
Special provisions detail salary calculation for night shifts. They include rules to be followed if work is done after midnight. These provisions are crucial for sectors like manufacturing, services, logistics, and IT, which operate 24/7. Women are permitted to work night shifts, provided they consent and mandatory safety arrangements are ensured.
The draft rules set deadlines for salary payments and impose strict limits on deductions. Total deductions in any wage period cannot exceed 50% of the employee’s salary. Before imposing any fine or deduction, the employer must inform the employee and provide an opportunity for a hearing.
The draft rules have tightened compliance requirements and made annual medical check-ups mandatory for employees over 40 years of age. Where creche facilities are not available for children, a provision has been made to provide a creche allowance of at least 500 rupees per child.
