What are the new labour codes in India and how do they change payroll in 2026?

India’s four labour codes — the Code on Wages, the Industrial Relations Code, the Code on Social Security, and the Occupational Safety, Health and Working Conditions Code — consolidate 29 earlier central labour laws and were notified as effective from 21 November 2025. Central and state rules are still being finalised through 2026, with full operational alignment targeted around 1 April 2026, so the regime is in a transition phase.

For payroll, the most significant change is the uniform statutory definition of “wages,” under which allowances are broadly capped so that basic wages must be at least 50% of total remuneration. This raises the base used for PF, gratuity, bonus, and leave encashment, increasing those liabilities for salary structures that previously kept basic low. Because labour is a concurrent subject, exact rules and timelines vary by state, so employers should track their state’s notifications rather than assume a single national date.