Additional FAQs on Labour Codes 16 March 2026

Additional FAQs on Labour Codes (As on 16.03.2026)

1. Does overtime payment 1 Overtime allowance payment forms a part of the 50 form part of the 50 percent percent wage calculation. wage calculation rule? Please refer to FAQ No-3 dated 30.12.2025 available on What constitutes "total MoLE website. remuneration" for applying the 50% wage floor? Only statutory components such as employer PF and 1. Is actual gratuity paid pension contributions and statutory bonus are included for included? arriving at 50% of wages to form part of remuneration. 2. Is gratuity included Gratuity, ESI and other retirement benefits are not where shown as part of included. CTC? 3. Are employer No. Statutory components such as employer share of contributions to PF and PF/Pension contribution, are prescribed under Section other social security 2(y)(c) of the Code on Wages and difference amount of benefits included? total of (a) to (i) of Section 2(y) of the Code will be added back to the wages/remuneration in case it exceeds 50% b. With reference to FAQ of remuneration/wages (First proviso to the Section 2(y) Question No. 7 of the MoLE of the Code on Wages). FAQs under the Code on Wages, 2019, clarification is sought on: whether statutory components such Are there any specific legal The Code on Wages, 2019 has provisions for timely 2. as employer/employee PF provisions in place for the payment of wages. These provisions are applicable to all contribution, statutory wage protection of white-employees. bonus, ESI, or other collar employees? retirement benefits are

included within "Other Allowances" or whether the illustration is based only on gross monthly salary Sl. Query Reply excluding statutory Code on Wages, 2019 No contributions.

3 Can wages and minimum No, minimum wages are the statutory wages fixed by the wages be treated as the appropriate government. An employer is legally prohibited same? from paying an employee less than the prescribed 4 Do annual performance-No. 5 minimum wage. Who is eligible for overtime 9 What is the distinction based incentives form a part Yes. Minimum wages are fixed by the Appropriate Government 8 Whether variable 6 wages--only workers or it is Is the revised definition of Annual performance-based incentives do not form a part Yes. of "wages" for computation between "minimum wages" Yes. for the employees, whereas wages are fixed as per Terms components of wages such Employee, including worker, whose minimum rate of wages The Wages are defined in Section 2(y) of the Code on applicable for Employees of "wages" for computation under the Labour Codes. under the Labour Codes? "wages" under the Code on and "wages" under the of Employment between employee and employer, Overtime allowance payment forms a part of components as overtime (OT) is fixed under the Code on Wages, 2019 is eligible for Gratuity, based on revised definition of wages will be 7 Wages, 2019 and can also be referred to in FAQ No- 2, 3 also? If so does the Wages, 2019 applicable for From which date does the Labour Codes? The definition of "wages" has come into effect from employed in any establishment as per the definition of Pl. refer to Sl. No. 3 of FAQs dated 30.12.2025 available Section 2(a) to 2(i). If such allowance, exceed 50 percent allowance are included while overtime. applicable w.e.f. 21.11.2025 i.e. date of implementation and 4 dated 30.12.2026 available on MoLE website. entitlement also extend to gratuity calculation from the definition of "wages" 21.11.2025. Wages as mentioned in Section 2(y) on the Code of Wages, on the MoLE website. of remuneration then excess over 50 percent is added to of the Codes. calculating the "wages" Sl. Query Reply supervisory and managerial date of enforcement of the under the Labour Codes the wage calculation. under the Codes? No Weblink: 9fb60321f0028fc2fe08d3b3d8626dd7.pdf staff? Code, i.e., 21.11. 2025? come into effect?

15 Whether States can levy cess As per section 114(4) of the Code on Social Security, 2020, 13 For the calculation of gratuity, Any payment made to employee which is not part of on gig and platform workers, the contribution to be paid by the aggregators for the 11 Whether Gratuity calculation Gratuity calculation will be applicable w.e.f. 21.11.2025 14 For Fixed Term Employees Fixed Term Employee (FTE) will be eligible for gratuity if will wage components other components mentioned under section 2(88) of the Code and if so, this will results in a funding Schemes for gig workers and platform workers will be applicable i.e. date of implementation of the Codes. (FTE), is gratuity payable on he/she renders service under the contract for a period of 10 Does fixed-term employment Fixed Term Employment covers employees directly than those specified under on Social Security, 2020 shall not be considered for dual financial burden on will be notified by the Central Government. prospectively or Please refer to Sl. No. 8 of FAQ dated 30.12.2025 16 completion of exactly one year In case of contract labour, one year (from start of contract). As per the section 53 of the Code on Social Security, 2020, cover contract labour engaged by the employer. clauses (a) to (c) of included calculation of gratuity. aggregators? retrospectively? available on MoLE website. of service or more than one whether gratuity liability is to 12 engaged through How will the ESI coverage be With effect from 21.11.2025, the definition of wages under The said contribution will be credited to Social Security the employer (i.e. Contractor) will pay gratuity on rendering part and (a) to (k) of excluded year of service is required for be borne by the Principal contractors, or only direct governed until the finalization the CoSS, 2020 shall apply. At present, Rs 21,000 per Fund set up by the Central Government for social security of five years continuous service at the rate of 15 days part of Section 2(88) of the Sl. Query Reply calculation of gratuity under the Code on Social Security, 2020, Employer or the Contractor? employees of the principal of Rules? month wages notified for ESI coverage will be applicable. and welfare of the gig workers and platform workers. wages for each completed year of service based on the Code on Social Security, 2020 No be included? Labour Codes? employer? last drawn wages.

20 Are leave encashment Leave provisions apply to workers as per the OSH & WC 21 What is the maximum number provisions under the OSH & Code, 2020 and only to those supervisors having wage A worker can carry forward up to 30 days of leave to the of days of leave that can be WC Code applicable only to not exceeding Rs 18,000/ per month. The definition of succeeding calendar year. Further, a worker who has carried forward to the workers, sales promotion worker includes sales promotion employees and working applied for leave with wages and has not been granted, 19 Is a fixed-term employee Fixed Term Employee (FTE) will be eligible for gratuity if 17 18 Whether gratuity for service What types of benefits or engaged for 11 months eligible succeeding year under the The employee will be paid gratuity based on the rate of Benefits under the terms of employment such as food he/she renders service under the contract for a period of employees, and working journalists. can carry forward the leave refused without any limit. rendered prior to 21 November facilities will be considered as for gratuity upon contract applicable Labour Codes and wages last drawn by the employee at the time of coupons, ration items, mobile recharge etc. would one year (from start of contract). journalists, or to all 2025 will be calculated under expiry? Is gratuity payable Rules? If Employer agrees to superannuation or retirement or resignation or death etc, constitute remuneration in kind. employees? "remuneration in kind" under the Payment of Gratuity Act, the definition of wages? Please where a fixed-term employee Leave-related provisions apply carry forward 120 days of on and after 21.11.2025 as per the provisions of Code on The Occupational Safety, Health and Working Conditions Code, 2020 1972, and service on or after provide illustrative examples. exits before completion of the to managerial, supervisory, Leave to next calendar year, Social Security, 2020. (OSH&WC) Sl. Query Reply that date under the Labour contracted tenure? and corporate office staff? whether he is allowed to do so? Industrial Relations Code 2020 No Codes?

22 Under the Labour Codes, who 24 At what stage does overtime Worker is entitled for leave encashment. The Code prescribes working hours as 8 hours per day. *** is eligible for leave become payable under the The sales promotion employees are included in the If, a worker works for more than eight hours in any day as encashment--only workers or OSH&WC Code, when it Disclaimer: The above FAQs are for information purposes only, to enable public to have quick definition of Worker under Section-2(1)(zzl) of OSH&WC daily wager, or for more than forty-eight hours in any week, employee? Whether the exceeds 8 hrs of daily working and easy access to information, and do not purport to be legal documents. In case of any variance Code, 2020. as the case may be, a worker shall in respect of such Relationship Manager and hours or 48 hrs of weekly limit? between what has been stated and what is contained in the relevant Labour Code, the latter shall overtime work be entitled to wages at the rate of twice the prevail. Salesperson working 25 26 If maximum working hours limit Where the OSH&WC Code What is the maximum number The provision of the OSH&WC, 2020 Code will prevail over There is no prescribed maximum limit for leave normal rate of wages and shall be paid at the end of each 27 is prescribed as 12 Hours by permits accumulation of leave of leave days that can be Where the age threshold for the State Law for provisions which are inconsistent with the encashment under the OSH&WC Code, 2020. Leave Central rules will be applicable on the establishments independently (doesn't wage period. supervises anyone) and 23 Is the provision of crèche the appropriate government, up to 30 days, but a State law encashed under the applicable annual health check-ups differs The creche facility is available to employees, irrespective Code. However, an employee is entitled to benefits under exceeding 30 days, if applied but not granted by the where Central Government is Appropriate Government drawing wage of more than facility dependent on any whether Overtime is applicable (e.g., Andhra Pradesh) allows Labour Code(s)? between Central Rules and of gender. State Law if more favourable to him than those under the employer, can be encashed at the end of the calendar and state rules will be applicable on the establishments Sl. Query Reply specific gender composition of for Hours exceeding 8 Hours 60 days, which provision will State Rules, which provision Code. year. At the time of separation from service, the worker is where State Government is Appropriate Government. ₹18,000 are entitled for Leave No Encashment? the workforce? on a particular day? prevail? will apply? entitled to encash the leave to his/ her credit.