The Ultimate Guide to the New Indian Labour Codes 2020
The Indian government has consolidated 29 central labor laws into 4 new Labour Codes. While the implementation date has seen delays, organizations must proactively audit and prepare their hr policies and payroll structures.
The 4 Labour Codes at a Glance
1. Code on Wages, 2019
The Wage Code universally applies to all employees in organized and unorganized sectors. A critical change is the new definition of "Wages."
- Key Impact: Basic salary must be at least 50% of the gross remuneration.
- Action Required: Overhaul compensation structures to ensure allowances do not exceed 50%. This will inherently increase Gratuity and PF liabilities.
2. Code on Social Security, 2020
This code extends social security benefits to gig workers, platform workers, and unorganized sectors.
- Key Impact: Mandatory registration and contribution to gig worker welfare funds.
- Action Required: Companies relying on heavy freelance or gig models must restructure their engagement budgets.
3. Occupational Safety, Health and Working Conditions Code, 2020
Focuses on the welfare and safe working conditions of employees, particularly in factories, mines, and construction.
- Key Impact: Introduces single registration for all establishments. Standardizes leave policies.
- Action Required: Align current leave accumulation and encashment policies with the new standardized norms.
4. Industrial Relations Code, 2020
Aims to streamline the dispute resolution mechanism and provide flexibility in hiring and firing for certain sectors.
How yfy® Automates the Transition
With yfy.ai, adapting to the sweeping changes of the 2020 Labour Codes is a 1-click operation. Our Compliance Engine automatically adjusts salary components if the 50% basic threshold is breached, recalculates PF/ESI, and dynamically generates the new required statutory registers.
Don't wait for the official notification. Start your compliance audit today.