Ministry of Labour and Employment issues the Compliance Handbook for Employers under the Four Labour Codes

The Ministry of Labour and Employment (“MOLE”) has issued the Compliance Handbook for Employers under the Four Labour Codes (“Compliance Handbook”). The Compliance Handbook has been prepared to make the employers aware of the new provisions under the Labour Codes in a simplified manner. Each chapter under the Compliance Handbook provides an overview of compliances under each Code, with a focus on making compliance simpler, faster, and easier.

Key Highlights:

I. Code on Wages 2019:

The Code on Wages, 2019 (“Wage Code”) consolidates four wage and payment-related labour laws into a single framework to simplify compliance while protecting workers’ rights. It establishes universal minimum wages, ensures timely payment of wages, promotes gender equality through equal pay for equal work. Key features and compliance framework under the Wage Code are as follows:

• Minimum Wages: Employers must pay wages not less than the rates notified by the appropriate government.

• Non-Discrimination: Employers must ensure no gender-based discrimination in wages for the same or similar work, or in recruitment.

• Wage Periods & Timelines: Mandates fixation of wage periods which may be daily, weekly, fortnightly, or monthly, along with clearly prescribed payment deadlines.

• Final Settlement: All dues must be paid within two working days when an employee exits the establishment.

• Working Hours & Overtime: Compliance with prescribed daily/weekly limits is mandatory and overtime is payable at least at twice the normal wage.

• Registers & Records: Employers must maintain register of attendance, wage, overtime, and fines/deductions registers, either electronically or in physical form for five years and issue wage slips on or before payment.

• Display Requirements: Mandates display of minimum wages, working hours, wage period, payment date, and Inspector-cum-Facilitator details in English, Hindi, and the local language.

• Deductions: Only authorised deductions are permitted, capped at 50% of wages for a wage period.

• Bonus: Eligible employees (meeting wage limits and minimum service of 30 days in the accounting year) must receive an annual bonus ranging from 8.33% to 20% of wages.

II. The Industrial Relations Code, 2020:

The Industrial Relations Code, 2020 consolidates three central labour legislations into a single framework governing trade union, conditions of employment, and the investigation and settlement of industrial disputes. Key Features and Compliance Framework under this Code are as follows:

• Bi-partite Committees:
  • Works Committee: Industrial establishments with 100 or more workers may be directed by the appropriate government to constitute a Works Committee to promote harmonious relations. Worker representation must be at least equal to employer representation.
  • Grievance Redressal Committee is mandatory for establishments employing 20 or more workers to address individual grievances. The committee must have equal employer and worker representation with a maximum of 10 members

• Standing Orders: These are applicable to industrial establishments employing 300 or more workers. The Central Government will notify Model Standing Orders and such Model Standing Orders may be adopted by employers by intimation. If such Model Standing Orders are not adopted then employers must prepare draft Standing Orders within six months of commencement of the Code, based on the notified Model Standing Orders and the same must be submitted to the Certifying Officer for certification.

• Recognition of Negotiating Union / Negotiating Council: A single registered trade union must be recognised as the sole negotiating union. Where ore than one registered trade union operates in an industrial establishment, the employer must recognise the trade union that has the support of 51% or more of the workers on the muster roll as the negotiating union. If no trade union meets the 51% threshold, the employer must constitute a Negotiating Council.

• Lay-off, Retrenchment, and Closure:
  • Industrial Establishments such as factories, mines, and plantations with 50–299 workers: Prior notice to the appropriate government is required. Workers are entitled to compensation for lay-off, retrenchment notice and compensation, and contributions to the Workers’ Re-Skilling Fund.
  • Industrial Establishments such as factories, mines, and plantations with 300 or more workers: Prior permission of the appropriate government is mandatory for lay-off, retrenchment, or closure, along with longer notice periods, similar compensation and re-skilling obligations.

• Mandatory Notice of Strike or Lockout: Employers must report notice of strike to the Appropriate Government or the prescribed authority, and to the Conciliation Officer within 5 days. If the employer issues a lockout notice, the same must be reported within 5 days to the Appropriate Government or the prescribed authority, and to the Conciliation Officer.

III. The Occupational Safety, Health & Working Conditions Code, 2020:

The Occupational Safety, Health and Working Conditions Code, 2020 consolidates 13 Central labour laws into a single, unified legislation to ensure safe, healthy, and dignified working conditions across establishments. Key Features and Compliance Framework under this Code are as follows:

• Registration and Intimation: Establishments employing 10 or more workers must register electronically within 60 days of the applicability of the Code. Existing registered establishments are not required to re-register but must intimate registration details and subsequent changes within prescribed timelines. Employers of existing registered establishments must notify commencement or cessation of operations electronically.

• Duties of Employers: Employers are responsible for issuance of appointment letter to employees, providing annual health check-ups free of cost, and ensuring that workplace is free from hazard likely to cause injury or disease.

• Safety Committees and Officers: Establishments must constitute Safety Committees with employer and worker representatives, as prescribed. In establishments carrying out building and other construction works employing 250 or more workers, and mines employing 100 or more workers, the employer must appoint the prescribed number of safety officers who must possess the prescribed qualifications and perform duties as may be specified by the appropriate Government.

• Safety, Health, and Welfare Facilities: Employers must maintain hygienic and safe working conditions, including ventilation, lighting, drinking water, sanitation, and waste disposal. Welfare facilities such as washing and bathing facilities, lockers, first aid, rest rooms, canteens (where applicable), ambulance rooms, shelters, and crèches must be provided based on workforce strength. Separate and inclusive facilities for male, female, and transgender workers are mandated.

• Registers, Records, and Returns: Employers must maintain prescribed registers relating to employees, attendance, wages, overtime, deductions, and dangerous occurrences. Wage slips must be issued, and annual returns must be filed electronically in the prescribed manner.

• Accidents, Dangerous Occurrences, and Diseases: Employers must notify prescribed authorities of fatal accidents, serious injuries, dangerous occurrences, and occupational diseases within specified timelines.

• Employment of Women: Women are permitted to work in all establishments and all types of work. Employment during night hours is allowed subject to consent and compliance with prescribed safety measures. Special safeguards apply for employment in hazardous operations, and restrictions may be imposed on the employment of pregnant women in high-risk processes.

• Common Licence: A common electronic licence is provided for factories and industrial premises for beedi and cigar work engaging contract labour.

• Contract Labour: Contract labour provisions apply to establishments employing 50 or more contract labourers. Every contractor employing 50 or more contract workers must obtain a licence which will be valid for 5 years. The Principal Employer will be responsible for providing welfare facilities and in case the contractor fails to make payment of wages within the prescribed period or makes short payment, the principal employer will be liable to make payment to the contract labour.

• Inter-State Migrant Workers: Special provisions apply to establishments employing 10 or more inter-State migrant workers, including payment of an annual journey allowance.

• Sector-Specific Provisions:
  • Mines: Additional obligations relating to safety standards, medical examinations, welfare officers, managerial control, and compliance with mine-specific regulations notified by Central Government.
  • Major Docks: Compliance with dock-specific safety and health standards and regulations.
  • Building and Construction Work: Provision of temporary accommodation, responsibility for related costs, and restrictions on employment of workers unfit for hazardous construction activities.

IV. The Code on Social Security, 2020:

The Code on Social Security, 2020 consolidates 9 central labour laws into a single legislation to create a comprehensive and uniform social security framework for workers. It provides provisions relating to EPFO, ESIC, Gratuity, Maternity Benefit, Employee’s Compensation, Social Security and Cess for Building and Other Construction Workers, Social security for unorganised workers, gig workers and platform workers and social security records. Key Features and Compliance Framework under this Code are as follows:

• Employees’ Provident Fund (“EPF”): Applicable to all establishments employing 20 or more employees and the earlier requirement of coverage being limited to “scheduled employments” under EPF has been removed. The Code further provides for Provident Fund, Pension, and Deposit Linked Insurance Schemes. Employers and employees must each contribute 10% of wages towards the Provident Fund, with voluntary higher contributions permitted by employees.

• Employees’ State Insurance (“ESI”): Applicable to establishments employing 10 or more persons, including mines and dock work areas, and to hazardous establishments even with a single employee. Employers are now responsible for depositing both employer and employee contributions. Insured employees are entitled to benefits such as sickness, maternity, disablement, dependent’s, medical, and funeral benefits, with expanded family coverage for female employees.

• Gratuity: Gratuity must be paid after five years of continuous service due to retirement, resignation, superannuation, death, or disablement. Fixed-term employees are now entitled to gratuity after completion of one year of service. Gratuity is calculated at 15 days’ wages for each completed year of service, subject to notified limits, and must be paid within 30 days.

• Maternity Benefit: Women employees are eligible for maternity benefit if she has worked for at least 80 days in the preceding 12 months. Employers must provide 26 weeks of paid maternity leave, protection against dismissal during maternity absence, medical bonus, maternity benefits for miscarriage and related procedures, nursing breaks, and mandatory crèche facilities ( for establishments employing 50 or more employees).

• Employees’ Compensation: Employers are liable to pay compensation for injury or death arising out of and in the course of employment, including accidents during commuting. Compensation in cases involving minors or death must be deposited with the competent authority.

• Social Security for Unorganised, Gig, and Platform Workers: The Code Introduces statutory recognition of gig and platform workers. Aggregators are required to contribute between 1% and 2% of their annual turnover, subject to a cap of 5% of payments made to such workers, towards social security schemes.

• Building and Other Construction Workers (BOCW): Under this Code, building and other construction work excludes work related to a factory or mine, work employing fewer than ten workers in the preceding twelve months, and construction undertaken for personal residential use where the total cost does not exceed ₹50 lakh (or such higher amount as may be notified) and the number of workers remains within the limit prescribed by the appropriate Government.

• Employment Exchanges / Career Centres: The appropriate Governments may require employers to notify vacancies to designated career centres in the prescribed manner. Reporting of vacancies does not oblige the employer to recruit through the career centre.

Source: Ministry of Labour and Employment