India Labour Law Compliance 2026: Employer Guide

Labour law compliance in India means meeting your obligations as an employer: what you pay and when, what you deduct and deposit, the conditions people work under, the records you keep, and the returns you file.

The framework changed. The four Labour Codes came into force on 21 November 2025, replacing twenty-nine central labour laws. Central rules were notified on 8 May 2026. State rules are still being notified and are not uniform.

So 2026 is the first full year of operating under the new framework, and the practical work is checking what actually applies to you rather than waiting for further change.

What labour law compliance covers

Five areas, owed from your first hire: wages, social security, working conditions, industrial relations, and the statutes that sit outside the Codes.

Two of those five are state law rather than central, which is where most errors come from.

The four Codes, and what each replaced

Code on Wages, 2019. Absorbed the Minimum Wages Act 1948, Payment of Wages Act 1936, Payment of Bonus Act 1965 and Equal Remuneration Act 1976.

Wages due by the 7th of the following month. The concession letting employers with 1,000 or more staff pay by the 10th has been removed.
Deductions capped at 50% of wages in any wage period.
Final settlement within two working days of removal, dismissal, retrenchment or resignation.
Equal pay widened beyond male and female to expressly include transgender employees.
A claim for unpaid wages can be filed for up to three years.

Code on Social Security, 2020. Absorbed the EPF & MP Act, ESI Act, Payment of Gratuity Act, Maternity Benefit Act and Employees Compensation Act. Gig and platform workers are now in scope, with the obligation sitting on the aggregator and measured on turnover, not payroll.

Industrial Relations Code, 2020. Absorbed the Industrial Disputes Act, Trade Unions Act and Standing Orders Act. Certified standing orders now apply at 300 workers, raised from 100, and prior government permission to retrench, lay off or close also moved from 100 to 300. Retrenchment compensation is 15 days average pay per completed year.

OSH and Working Conditions Code, 2020. Absorbed the Factories Act, Contract Labour Act, Inter-State Migrant Workmen Act and eight others. Governs hours, overtime, rest and safety, and sets a central floor for annual leave with wages.

What the Codes did not change

Three obligations sit outside the Codes and are the ones SMEs most often miss.

POSH, at ten employees. The Sexual Harassment of Women at Workplace Act, 2013 applies unchanged. An Internal Committee is mandatory at ten or more staff regardless of whether any are women, an enquiry must conclude within 90 days, and the annual return goes to the District Officer by 31 January even in a year with no complaints. Penalties start at ₹50,000 and double on repeat.

Equal opportunity, at any size. Section 21 of the Rights of Persons with Disabilities Act, 2016 requires every establishment to publish an equal opportunity policy and register a copy. No headcount threshold. Almost no Indian SME has one.

Your state Shops and Establishments Act. Not repealed. It governs a commercial office, and several states amended theirs during 2025 and 2026, generally moving daily hours and quarterly overtime caps. Not all amendments are in force.

A compliance checklist for 2026

Work through this against your own headcount and states.

Registrations current in every state where an employee works: Shops and Establishments, PF at 20 employees, ESI at 10 in most states, professional tax, and Labour Welfare Fund where the state operates one.
Monthly filings: PF, ESI, professional tax and TDS, with reminders set three working days before each deadline.
Minimum wages checked against the current notification for each state, zone and skill category. Paying last year rate is underpayment.
Contracts naming the employee actual work state, with the salary structure, notice period and probation terms written down.
POSH committee constituted if you have ten or more people, with the January return diarised.
Equal opportunity policy published and registered.
Employee data: a written retention rule and restricted access under the Digital Personal Data Protection Act, 2023.
Handbook reviewed for references to repealed Acts. If it cites the Factories Act or the Payment of Wages Act as live obligations, it is quoting law that no longer exists.

The mistakes that actually happen

Treating the head-office state as the employing state. Professional tax, minimum wages and Shops and Establishments rules follow where the employee works. This is the single most common error we find when taking over an in-house process.

Workers engaged as consultants who function as employees. The most expensive exposure to unwind, because liability accrues from the start of the engagement rather than from when it was noticed.

Assuming small companies are not looked at. PF and ESI compliance is visible through your own filings, so a gap does not require anyone to visit.

Why it matters commercially

Compliance is increasingly something you are asked to evidence rather than assert. Enterprise clients send vendor questionnaires. Investors run diligence. Both ask for the POSH committee, the statutory filings and the contract template.

Companies that can produce those in an afternoon win work from companies that cannot.

Where software helps, and where it does not

A system helps with the calendar and the arithmetic: filings, deadlines, statutory settings per work location, and a record you can produce at an inspection.

It does not decide whether a contractor is really an employee, or whether a dismissal followed a proper enquiry. Those need judgement, and they are where the expensive failures sit.

The short version for 2026

The Codes are in force, not pending. Check your registrations per state, your handbook for repealed statutes, and the two thresholds that moved from 100 to 300 workers.

If tracking this is not a good use of your week, our labour and employee compliance service covers registrations, filings and policy upkeep across every state you employ in, with an HR Manager who owns your account. Send us your headcount and locations and we will tell you what is missing.