Article · 15 min read

Labour Codes 2025: A Practical Guide for HR Leaders

Prachi S · greytHR Free Beginner India

An employer's guide, from an Indian payroll company, to the four Labour Codes that took effect on 21 November 2025 and replaced 29 older laws, covering the new wage definition, fixed-term gratuity, appointment letters and gig-worker social security.

  • Allowances cannot exceed 50% of total remuneration, so the wage base for PF and gratuity rises and take-home pay may fall.
  • Fixed-term employees become eligible for gratuity after one year instead of five, with parity with permanent staff.
  • Employers must issue a formal appointment letter to every employee.
  • Many state rules were still being finalised, so follow existing rules in the transition while preparing for the new regime.
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It answers 3 questions

  1. What paperwork and compliance do I need in place before my first employee's start date in India?
  2. How do I set up basic HR and statutory compliance in India without a full HR hire?
  3. What do the four Labour Codes, in force since 21 November 2025, change for my offer letters, salary structure and fixed-term or gig staff?

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