An Act to amend and consolidate the laws rela�ng to wages and bonus and ma�ers connected therewith or incidental thereto.

1. INSIDE PAGES
Key Highlights of the Labour Codes
Key Client Concerns
Impact on the Employer/Suggested ac�ons
INDIA’S NEW
LABOUR CODES

2. THE CODE ON WAGES, 2019
01
Acts Repealed
An Act to amend and consolidate the laws rela�ng to wages and bonus and
ma�ers connected therewith or incidental thereto.
The Central Advisory Board is yet to be constituted by the Central Government
Wages: Sec 2(y) defines “Wages” which
was replicated in other codes
All remunera�on (in monetary terms),
whether by way of salaries, allowances,
or otherwise, would form part of wages
The excluded components are bonus
not forming part of remunera�on,
house rent (or the value of living
accommoda�on), provident fund,
commission to the employee, over�me
allowance, and conveyance allowances,
where the aggregate amount paid
under these heads does not exceed 50
percent of the total remunera�on being
paid to the employee
The total excluded components should
not exceed 50% of the total
remunera�on
Na�onal Floor Wage: A floor wage will be fixed by
Central Government for different regions which will
be the basis for the State Governments to fix the
minimum wage. No State Government shall fix the
minimum wage below the na�onal floor wage
While fixing the floor wage the Central Government
will consult the Central Advisory Board and State
Governments
The state or central government shall not exceed a
period of five years for revision of minimum wages
If any State Government is already paying more
minimum wages, it cannot reduce it so as to bring it
on par with na�onal floor wage
The Payment
of Wages Act,
1936
The Minimum
Wages Act, 1948
The Payment of
Bonus Act, 1965
The Equal
Remunera�on
Act, 1976
No.1 No.2 No.3 No.4

3. No.1 No.2
No.9
No.3 No.4
THE CODE ON
SOCIAL SECURITY, 2020
02
Acts Repealed
An Act to amend and consolidate the laws rela�ng to social security with the
goal to extend social security to all employees and workers either in the
organized or unorganized or any other sectors and for ma�ers connected
therewith or incidental thereto.
No.5 No.6
The Maternity
Benefit Act,
1961
The Payment of
Gratuity
Act,1972
The Workmen’s
Compensa�on
Act, 1923
The Employees'
State Insurance
Act, 1948
The Employees'
Provident
Funds &
Miscellaneous
Provisions Act,
1952
No.7 No.8
No.9
The Cine
Workers Welfare
Fund Act,1981
The Building
and Other
Construc�on
Workers
Welfare Cess
Act,1996
The Unorganised
Worker’s Social
Security Act,
2008
The Employment
Exchange
(Compulsory
No�fica�on of
Vacancies) Act,
1959

4. 03
01 The Code introduced defini�ons for
a) Aggregator b) Fixed term employment c) Home based worker
d) Self-employed worker e) Pla�orm worker f) Gig worker
02 Defini�on of 'employee' was introduced and applicable across all provisions under the Code on
Social Security, 2020.
03 The Code has set a statutory limit for 5 years which includes proceedings and inquiries for the
determina�on of money dues of an employee i.e., applicability of the provisions of Employees
Provident Fund Act (“EPF Act”) and Employees State Insurance Corpora�on Act (“ESI Act”).
04
05
Central Government has the power to frame schemes for providing social security to gig workers,
pla�orm workers and all those workers who do not fall under tradi�onal employer- employee
rela�onship.
07 Compounding of offences
Offences punishable with a fine or with imprisonment less than 1 year plus fine under the Code
are compoundable offences.
The contribu�ons paid by the employer to the fund shall be ten per cent of the wages payable
towards each of the employees (whether employed by him directly or by or through a
contactor)
The employee's contribu�on shall be equal to the contribu�on payable by the employer in
respect of him/her and may, if any employee so desires, be an amount exceeding ten per cent
of the wages, subject to the condi�on that the employer shall not be under an obliga�on to pay
any contribu�on over and above his contribu�on payable under the Code
Provident Fund
The Code reduces employer’s contribution from 12% to 10%
Gratuity Act
The comple�on of con�nuous service of 5 years shall not be necessary where the termina�on
of the employment of any employee is due to- “expira�on of fixed term employment or
happening of any such event as may be no�fied by the Central Government”. The Payment of
Wages Act, 1936
Pro-rata Gratuity: In the case of an employee employed on fixed term employment or a
deceased employee, the employer shall pay gratuity on pro rata basis
As per the code, gratuity is now to be calculated on 50% of the gross wages and not only on
basic and DA as done earlier
Since the wages are defined at 50%, any calculations (leave encashment, gratuity, PF etc)
under this Code will now have to be at 50% instead of earlier calculations of only on basic
and DA
06

5. No.2
No.1 No.3
THE INDUSTRIAL RELATIONS CODE, 2020
Acts Repealed
An Act to consolidate and amend the laws rela�ng to Trade Unions, condi�ons
of employment in industrial establishments or undertaking, inves�ga�on and
se�lement of industrial disputes and for ma�ers connected therewith or
incidental thereto.
The Trade
Unions Act,
1926
The Industrial
Employment
(Standing Orders)
Act, 1946
Industrial
Disputes Act,
1947
Key Highlights
04
01 Defini�ons of both, employee and fixed term employment were introduced.
02 The term 'workmen' got replaced and renamed as 'worker' in the Industrial Rela�ons Code, 2020.
03
Defini�on of “Appropriate Government” has been modified including the establishments of the
contractors, thus Contractor appropriate government shall be of the establishment where the
contract labour has been deployed
05
04 Fixed Term Employment : Fixed term employment was not defined under any earlier labour
legisla�ons. The Code defines it as engagement of a worker on the basis of a wri�en contract of
employment for a fixed period
Note: Several judicial pronouncements held fixed term employment as permissible, especially in projects having a
fixed tenure, for eg. Building of roads, damns, bridges, etc. The fixed contracts are supposed to come to an end upon
completion of the tenure or the completion of the project. However, many employers continued fixed term employees
for number of years
The hours of work, wages, allowances and other benefits provided to a fixed term employee shall
not be less than that of a permanent worker doing the same work or work of similar nature

6. 05
08 An employee can raise industrial dispute with the employer within the �me limit of 2 years
instead of 3 years
09
07
06 Sole Bargaining Agent: The Code provides for nego�a�ng union or nego�a�ng council in every
establishment wherever there is a registered trade union
- Wherever there is one trade union of workers, the employer shall recognise such trade union
as sole nego�a�ng union of the workers. Previously it was only applicable in Maharashtra under
MRTU & PULP Act
- In cases of more than one union, the employer will recognise the union having membership of
51% or more workers on the muster roll
- In-case no union has 51% or more membership, then the employer shall cons�tute a
nego�a�ng council for nego�a�ons, consis�ng of representa�ves of unions which have support
of not less than 20% of the workforce at the rate of one representa�ve for each 20%.
If majority of the nego�a�ng council reaches an agreement it will be construed as a binding
se�lement
Permission for lay-off, retrenchment, closure only when 300+ workers. Ease of doing business
for smaller firms
10 Every offence that is not an offence punishable with imprisonment or with imprisonment plus
fine, is a compoundable offence under the Code.

7. THE OCCUPATIONAL SAFETY,
HEALTH & WORKING CONDITIONS
CODE, 2020
An Act to consolidate and amend the laws regula�ng the occupa�onal safety,
health and working condi�ons of the persons employed in an establishment
and for ma�ers connected therewith or incidental thereto
06
Acts Repealed
No.1 No.2 No.3 No.4
No.5 No.6
The Working
Journalists
(Fixa�on of
Rates and
Wages) Act,
1958
The Motor
Transport
Workers' Act,
1961
The Factories
Act, 1948
The Planta�ons
Labour Act,
1951
The Mines Act,
1952
The Working
Journalists and
Other Newspaper
Employees
(Condi�ons of
Service) and
Miscellaneous
Provisions Act,
1955
02
03
Applicable to establishments – any industry, trade, business, manufacturing or occupa�on with
10 or more workers
Applicable to contractor’s establishment employing 50 or more contract labourers. The
defini�on of contractor includes sub-contractor
01 If majority of the nego�a�ng council reaches an agreement it will be construed as a binding
se�lement
Key Highlights

8. 11
12
13
04
07
Under the OSHWC Code, 2020 an employee qualifying as a ‘worker’, is en�tled to encash
unu�lized leave at the end of a calendar year
- This will be an addi�onal cost to the employer as under the current laws, workers are eligible to
encash their unu�lized leaves only upon termina�on of employment
- Hence, employers, depending on role and profile of employees in various en��es, need to
analyze whether they qualify as ‘workers’, before determining applicability towards this provision
Under the Code on Social Security, 2020, gratuity will have to be paid on the basis of the defini�on
of wages for the en�re tenure of employment of the employees (including the past period). This
will result in a substan�al increase in the cost to the company on account of the incremental base
on which gratuity will be calculated
The provisioning for gratuity, including contribu�ons to be made by the company, will have to be
done accordingly, based on the actuarial valua�on as per the terms of gratuity policy of the
respec�ve en�ty
Applicable to any establishment engaging 10 or more inter-state migrant workers. Employers
shall cover them under social security and pay a lumpsum amount of fare for travel to hometown
every year
05 Defini�on of ‘Factory’ : Increase in number of employees for coverage from 20 to 40 without
power and, 10 to 20 with power
06 Defini�on of ‘Industry’: Same as laid down in the case of Bangalore Water Supply –Triple test
07 Defini�on of ‘Employer’: in case of a factory, it is the Occupier. In case of other establishments,
it is the manager or managing director
08 The Code defines ‘Core-Ac�vity of an establishment’: ‘any ac�vity for which the establishment
is set up and includes any ac�vity which is essen�al or necessary to such ac�vity’ (Amendment
to CL(R&A) Act in AP)
09 Inspector under the Code is now renamed as inspector-cum-facilitator. Inspector-cum-facilitator
is required to inform and sensi�se employer and worker regarding provisions of the code and
compliance
10 The Code provides for "common license" for factory, contract labour and beedi and cigar
establishments and introduced the concept of a Pan India license for a period of five years to
engage the contract labour

9. 14
15
16
17
08
The Code covers journalists working in electronic media and digital media, such as newspaper,
radio or other like media establishments in the defini�on of "working journalists”
The Code provides for employment of women (with consent) before 6 am and beyond 7 pm in
all establishments for all types of work, subject to the condi�on that the employer would take
necessary steps to ensure their safety and other condi�ons of work.
The Code provides for overriding powers to the Central Government to regulate general safety
and health of persons residing in whole or part of India in the event of declara�on of epidemic or
pandemic or disaster; like COVID-19
Compounding is available for offences such as non-maintenance of registers and records, not
filing of returns, disclosure of certain informa�on, contraven�on of provisions of du�es rela�ng
to safety provisions resul�ng in an accident, general penal�es etc.

10. 09
House Rent Allowance - Upto
50% of Basic is tax-exempt,
therefore HRA allowance could
go up
Group Life and Accidental
Insurances - If linked to
Basic Pay, the insurance
covers would move up
leading to higher
premiums
Superannua�on - Employer
contribu�on Superannua�on could
increase
Leave Travel Allowance -
Where Leave Travel Allowance
is linked to Basic (for e.g. 1
months Basic Pay), the
alloca�on towards LTA would
move up
Employees State
Insurances - Could impact
eligibility as current ESI
wages includes HRA but
the Labour Code defini�on
of Wages excludes HRA
poten�ally resul�ng in
more employees falling
within the threshold of ESI
Statutory Bonus - Poten�al
exclusion of some employees if
eligibility salary is higher than the
current Basic Pay used for eligibility
threshold (INR 21,000)
Set-up an internal
Task-Force (HR, Legal,
Finance, etc.) to
review various
aspects of the Labour
Codes along with the
Labour Law experts
Incorporate
Labour Code
impacts within
2021 salary
budgets
Assess Technology
readiness
Representa�ons
to Govt through
trade/industry
associa�ons
Focus on
100%
Compliance
Financial impact
assessments on
various scenarios –
Social
Security/Fixed Term
Employees/Consult
ants etc.
Realign
components
of salary as per
the Code on
Wages, 2019
01
02
03
04
05
06
07
OTHER CONCERNS
SUGGESTIONS FOR EMPLOYERS

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The information contained in this document is intended for informational purposes only and does not constitute legal opinion or advice.
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the information provided herein without appropriate professional advice after a thorough examination of the facts and circumstances
of a particular situation. There can be no assurance that the judicial/quasi judicial authorities may not take a position contrary to the
views mentioned herein.
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