Indian Labour Law for Foreign Employers: What Changed Under the New Labour Codes

A foreign company hiring in India, or a researcher studying Indian labour regulation, needs to know that India spent decades operating under roughly 29 separate central labour statutes before consolidating them into four Labour Codes, a reform still being phased in state by state.

The four codes

The Code on Wages, 2019 consolidates minimum wage, payment of wages, equal remuneration, and bonus law. The Industrial Relations Code, 2020 consolidates trade union recognition, industrial disputes, and standing orders. The Code on Social Security, 2020 consolidates provident fund, employee state insurance, gratuity, and maternity benefit law, and for the first time extends some social security coverage to gig and platform workers. The Occupational Safety, Health and Working Conditions Code, 2020 consolidates factory, contract labour, and inter-state migrant worker protections.

Why “fully in force” is not quite accurate yet

All four codes received presidential assent, but because labour is a Concurrent List subject (both Parliament and state legislatures can legislate on it), each state must separately notify its own implementing rules before the codes take full effect in that state, so the practical rollout has been gradual and uneven across states rather than a single national switch-on date. A foreign employer should confirm the specific status in the state where they are hiring rather than assume uniform nationwide applicability.

Points foreign employers most often get wrong

The new wage code’s broadened definition of “wages” (capping allowances at 50% of total remuneration for calculation purposes) changes how provident fund and gratuity contributions are computed compared to the older, narrower definition many foreign payroll systems were built around. Fixed-term employment is now explicitly recognized and regulated under the Industrial Relations Code, giving employers a formal route to hire for defined periods with proportionate statutory benefits, something worth knowing if comparing India’s flexibility to other jurisdictions’ fixed-term employment rules.

Lexfolio’s Labour Codes for HR certificate course covers compliance mechanics under the new codes in practical, employer-facing detail.