B. D. ARORA & ASSOCIATES, ADVOCATES.
17-B, Shastri Nagar, Jyoti Colony, Ludhiana.
Phone: 2457930, 2455488
Mobile: 98148-34107
Mobile: 98157-34107
[email protected]Circular No. 10 2 /2025 Dated: 09.12.2025
Dear friends,
Recently, the Government of India has introduced 4 Labour Codes vide 4 different notifications
dated 21.11.2025 which are:-
1. The Code on Wages,2019
2. The Industrial Relation Codes, 2020
3. The Occupation, Safety, Health and Working Condition Code, 2020
4. The Code on Social Security, 2020
There are rumors in the industrial organizations that these codes may give financial impact to a
great extent and the wages are going to rise but there is no such thing. The basic law is the
same. Rather through these codes the Central Government has endeavoured to consolidate 29
various Labour Acts in 4 codes. The detail of Acts combined in 4 Codes is on the last page of
the circular. The main purpose of consolidation of 29 Acts was for easing of business and
compliances.
There is also rumors that as to what extent Central Government will introduce Floor wage and I
want to apprise that at present national floor wage is Rs.178/-. Now, the Central Government
will introduce new floor wage which may be more than this amount and the State Government
is to fix minimum rate of wages above the floor wage, if required, but not below the minimum
rate of wages which the employees are already getting.
Earlier there were different definitions on workman, industry, wages, employee, employer etc.
in all 29 Acts. But these definitions have been replaced with the definition in these 4 Codes.
The definition of wages in all the 4 Codes is same.
The Code on Wages 2019:
a) The present code will facilitate in implementation and will remove the multiplicity of the
definitions.
b) The un-organized sector/unorganized workers have also been covered in this code.
c) The present code has been made applicable to all types of establishments, from
unorganized to organized, public and private sectors.
d) The Central Government will provide floor wage for different geographical areas to ensure
that no State Government shall fix the minimum wages below the floor wage.
e) Though the penalty has been increased but the Inspector before filing the prosecution will
give an opportunity to the employer before initiating prosecution.
f) The authorities will be appointed to dispose of cases of punishment with fine upto
Rs.50,000/- to reduce the burden on judiciary.
g) Provision of compounding of offence has been given subject to minimum fine will be upto
50% of the fine as prescribed in the Codes.
h) A Uniform definition of wages has been formulated eliminating the ambiguity and confusion
which business houses used to face earlier due to difference in the definition in different
statutes.
i) Now bonus to an employee can be forfeited if he is convicted for an offence of sexual
harassment.
j) Payment to an employee including payment of bonus has to be made through
cheque/electronic mode.
k) The last day of payment of wages has been fixed as 7th of every month. Earlier there were
2 different dates which were 7 th (upto 1000 workers), 10th above 1000 workers.
l) As per code on wages the Payment of Bonus Act which was earlier on 10 employees will be
on 20 employees.
m) In the code on wages it has been clearly stated that employers employing upto 5 workers
for agriculture or domestic purpose, there will be is no need for them to maintain record.
n) The amount of fine has been increase. Earlier under Payment of Wages, Payment of Bonus
and Minimum Wages Act, the maximum amount of fine was upto Rs.500/- to Rs.2000/- but
now under this code the impact of fine has been increased upto Rs.1.00 lac and with
imprisonment.
o) Now, the records can be maintained in electronic form which were earlier maintained
manually and permission had to be sought and now, no permission is required to maintain
the record electronically.
I am mentioning hereunder the financial impact with the new definition of wages.
In the definition of wages under Section 2(y) there is an inclusion clause which consists of
(basic wages + dearness allowance + retaining allowance)
All the allowances which we book come under the definition of exclusion clause but under
section 2(y) following allowances has been taken under exclusion clause:-
i) Bonus payable
ii) Amenities like housing accommodation supply of water, light etc. Medical attendance
and any other amenities excluding from computation of wages
iii) Employer Share of PF and interest which may have accrued on it
iv) Conveyance allowance
v) Special allowance
vi) House Rent allowance
vii) Remuneration payable under any award or settlement between the parties
viii) Overtime Allowance
ix) Commission payable to the employees
For Example: If the total amount of basic wage + DA + retaining allowance is Rs.10,000/- and
the total amount of perks which comes under exclusion clause is Rs.11,000/- then the total
amount comes out to Rs.21,000/- and the 50% of this amount is Rs.10,500/- then the excess
amount of Rs.500/- will be added in the basic wage rate.
From the above example it is, thus, clear that the amounts in inclusion clause and exclusion
clause either should be same or the amounts in exclusion clause may be less also.
And now the financial impact will be as under:-
1. With the increase in the basic wage rate the amount of gratuity will increase
2. Amount of EPF and ESI contribution will increase
3. Total wage rate and CTC of employee will increase
4. If the employer is paying encashment of earned leave on basic wage rate, then, it will
also cause financial impact
The Code on Social Security 2020: (Main Features)
1. Special provision under this Code for coverage of establishment on voluntary basis under
ESI and EPF Acts.
2. Social security for gig workers and platform workers which is an unorganized sector.
3. Definition of contract labour and contractor has been added in this code recognizing him
entitled for payment of gratuity also.
4. Earlier for filing an appeal on the assessed amount under section 7-A of EPF Act the
employer was to deposit 75% of the assessed amount which has now been reduced to
25%.
5. The lapses regarding deduction of employer contribution, reduction of wages of employees,
non-submission of returns, failure to pay compensation, failure to send statement to
competent authority (under Employees Compensation Act) will be punishable offences.
6. The provision of payment of gratuity has been clarified under this code and now, a fixed
term employee after completion of one year of service will get gratuity proportionately
according to his service.
7. I further want to clarify that the time limit of payment of gratuity for an employee who is
working on regular basis will be only after completion of his 5 years service.
8. The penalty and fine has been revised and now, under this Code the penalty for violation
under various law is upto Rs.3.00 lac and imprisonment upto 2 years though this figure is
for continuing offences, but even, otherwise, the penalty and punishment under this Act
has been enhanced.
The Industrial Relation Code 2020 (Main Features)
1. Causal leave in a concerted manner comes under the definition of strike.
2. Certification of Standing orders will be applicable to the industrial establishment employing
300 workers
3. Now there will be two members in Industrial Tribunal: One judicial member or other
administrative member
4. Under Industrial Disputes Act earlier for adjudication the state government was to make a
reference and in this code there will be no reference of dispute to the Industrial Tribunal
but the workman or the employer can approach the Industrial Tribunal and file their claim
application within 90 days after receipt of report from Conciliation officer.
5. Now, in the definition of Industrial Disputes contractor and contract labour has been added
in it and contractor has been added in the definition of employer also.
6. Charitable institution, social and philanthropy institution/religious institution has been kept
out from the definition of industry.
7. Definition of worker apart from employee has been added. The definition of worker
consists of working journalist, newspaper employee, sale promotion employee etc.
8. Under the clause of retrenchment the termination of service of fixed term employees will
not be considered as retrenchment.
9. This code provides that where an employer has adopted model standing orders, then, such
model standing order shall deem to have been certified under the provisions of this Act.
10. Any dispute can be raised by an employee within a period of 2 years only and conciliation
officer will not entertain any demand notice given beyond 2 years of alleged date of
termination of an employee.
11. As per this code there will be no publication of Award and it shall become enforceable after
expiry of 30 days of its communication.
12. If the offence has been done again by the employer after bearing penalty for his earlier
mistake, then, the minimum fine will be Rs.5.00 lacs but can be extended upto Rs.20.00
lacs.
13. If any person involves in the acts of unfair labour practice, then fine will be from
Rs.10,000/- to Rs.2.00 lac.
14. Any work who gets involved in any act in furtherance of strike which is illegal can be
punished with a fine which will be minimum of Rs.1000/- but may extend to Rs.10,000/-
and there is a provision of imprisonment also.
15. Any person who instigates other workers to go on strike or lockout which is illegal copy be
punishable with fine upto Rs.10,000/- but again extend to Rs.50,000/- and provision of
imprisonment is upto one month.
16. Under this code also offences can be compounded.
THE OCCUPATIONAL, SAFETY, HEALTH AND WORKING CONDITION CODE 2020:
1. This code is combination of 13 various Acts. Detail is on the last page. Main feature of this
code are:-
1. A new type of registration has been added under this Code i.e. Registration of
establishment. Now, the establishment employing upto 20 workers will have to get
registration under this code by depositing of fee as prescribed in the rules.
2. Women workers allowed to work in the night shift subject to strict compliance of
conditions like safety, health, working hours etc. but with their consent.
3. A provision of common licence for factory and contract workers.
4. Issuance of single licence for all India basis especially for contract employees.
5. Definitions of Inter-state Migrant Workers, Mines, Metro Railways, Minerals, Motor
Transport undertaking, Motor Transport Workers, Newspaper Establishment, Plantation
etc. has been added which were not there in the earlier Acts.
6. Under this code, Letter of appointment will have to be issued to every employee.
7. Under this Code duties of employees have been introduced because if in happening of
an accident the mistake will be of an employee, then, penalty can be imposed on him by
the Inspector-cum-facilitator and employer cannot be prosecuted for the mistakes done
by the employee.
8. Requirement of Safety Committee : 500 workers
a. Hazardous Process: 250 workers
b. BOCW : 250 workers
c. Mines: 100 workers
9. Under this code, Canteen facility is required if the factory/establishment is employing
100 workers including contract labour.
10. Overtime will be allowed but with the consent of workers. Number of hours are yet to be
notified. But in the draft rules the maximum number of hours a worker can be deputed
on overtime in the draft rules is 125.
11. In this Code, entitlement of a worker for availing the benefit of leave with wages will be
after working of 180 days in the preceding year instead of 240 days.
12. Upto 30 leaves can be carried forward in excess.
13. Workers can apply for encashment of leave upto the end of Calendar year
14. Contract Labour: Applicability for every establishment in which 50 contract labour are
employed and the Act would be applicable on contractors if he is employing more than
50 contract workers
15. Now, a contractor can obtain one licence for executing the work in more than one State
or whole of India.
16. Now, the licence under contract labour will be valid for 5 years. Under this Code, the
contractor shall pay wages to its employees through bank transfer or through electronic
mode only.
17. Under this code Experience certificate be given to contract workers by the contractor.
18. This Code provides common licence for contractors and factories.
19. Under this code, Medical examination of employees – After one year
20. 26 days a month to be counted for overtime
21. Penalties under this Code have been enhanced upto Rs.5.00 lac with imprisonment upto
2 years.
It is pertinent to mention that yet no rules have been notified by the State and
Central Government and there are draft rules only and I expect notification in April,
2026 and till then, these codes though notification has been issued but in the
absence or rules, compliance under old Acts is to be ensured.
In case of any difficulty or for further details, kindly contact the undersigned either
personally between 5.00 p.m. to 8.00 p.m. and it is assured that full cooperation will be
extended at all levels.
Thanking you,
Yours Sincerely,
Anil Arora
Digitally signed by Anil Arora
Date: 2025.12.09 11:43:54
+05'30'
(Anil Arora)
Advocate
Occupational, Safety,
CODE OF SOCIAL INDUSTRIAL RELATION CODE OF
S.NO Health and Working
SECURITY 2020 CODE WAGES
Condition Code 2020
The Employees Payment of
1 The Factories Act Trade Union Act
Compensation Act Wages Act
The Employees’
The Plantations Labour Industrial Employment Minimum
2 State Insurance
Act Standing Order Act Wages Act
Act
The Employees’
Provident Funds The Building and Other Payment of
3 Industrial Disputes Act
and Miscellaneous Construction Workers Act Bonus Act
Provisions Act
The Working Journalists
and other Newspaper
The Equal
The Employment Employees (Conditions of
4 Remuneration
Exchanges Act Service) and
Miscellaneous Provisions Act
Act
The Maternity The Working Journalists
5
Benefit Act Act
The Payment of The Motor Transport
6
Gratuity Act Workers Act
The Beedi and Cigar
The Cine Workers
7 Workers (Conditions of
Welfare Fund Act
Employment) Act
The Building and
The Contract Labour
other Construction
8 (Regulation and Abolition)
Workers Welfare
Act
Cess Act
The Unorganized The sales Promotion
9 Workers Social Employees (Condition of
Security Act Service) Act
The Inter-State Migrant
10
Workmen Act
The Cine-workers and
11 Cinema Theatre Workers
Act
12 The Dock Workers Act
The Mines Act
13
Digitally signed by
Anil Arora Anil Arora
Date: 2025.12.09
11:44:31 +05'30'
