Key considerations of the notified Central Rules under the Labour Codes

On 8 May 2026, the Ministry of Labour and Employment (“MOLE”) notified the central rules (“Central Rules”) under the 4 (four) labour codes (“Labour Codes”):

• Code on Wages (Central) Rules, 2026 (“Wage Rules”) under the Code on Wages, 2019 (“Wage Code”),
• Social Security (Central) Rules, 2026 (“Social Security Rules”) under the Code on Social Security, 2020 (“Social Security Code”),
• Industrial Relations (Central) Rules, 2026 (“IR Rules”) under the Industrial Relations Code, 2020 (“IR Code”) and
• Occupational Safety, Health and Working Conditions (Central) Rules, 2026 (“OSH Rules”) under the Occupational Safety, Health and Working Conditions Code, 2020 (“OSH Code”).

Notification of the Central Rules precipitates a renewed phase of compliance preparedness for businesses operating across India. In addition to these rules, the MOLE has also issued notifications under the (i) IR Code regarding appointment of and delegation of powers to officers under certain provisions, notification of model standing orders, setting up of re-skilling fund; and (ii) Social Security Code regarding appointment of and delegation of powers to officers under certain provisions, reporting of vacancies to career centres, and framing of medical facilities scheme, amongst others (please refer to details below).

Central Rules and their applicability

Several provisions under the Labour Codes have a dependency on the ‘appropriate Government’ to prescribe operational mechanism in terms of implementation and compliance measures. It is important to note that the Central Rules do not apply uniformly to all establishments in India. Applicability depends on whether the Central Government or the relevant State Government is the ‘appropriate Government’ for a particular establishment. In other words, (i) evaluation of the definition of ‘appropriate Government’ under the relevant Labour Code, and (ii) determination of whether the Central Government or the concerned State Government is designated as the ‘appropriate Government’ for that establishment as per such definition, would be relevant in understanding applicability of the Central Rules to a particular business.

For certain sectors—for instance inter alia public sector undertakings, railways, mines, ports, banking and insurance companies, Central Government is defined to be the ‘appropriate Government’. Consequently, the Central Rules are to apply to establishments operating in the above sectors. For other establishments including those operating in certain other sectors—for instance inter alia factories, plantations, newspaper establishments, the relevant State Government is the designated ‘appropriate Government’. For such establishments, rules framed and notified by the appropriate State Government will need to be examined from an implementation and compliance perspective, under the Labour Codes.

Key compliances under the Central Rules

Wage Rules under the Wage Code

• Wage Rules apply to establishments in respect of which the Central Government is the appropriate Government.
• Where wages are fixed on a time work basis, the minimum rate of wages is to be fixed on a day basis, keeping in mind the criteria which will be specified later by the Central Government by general or special order. The daily rate of wages is to be used as the base for computation of hourly and monthly rates, in the manner prescribed in the Wage Rules.
• In alignment with the OSH Code, Wage Rules provide that where wage period is regarded on a daily basis, daily working hours will be 8 (eight) hours while the interval of rest will be as prescribed under notifications under the OSH Code. Separately, where wage period is not regarded on a daily basis, daily working hours will be so fixed that weekly working hours do not exceed 48 (forty-eight) hours.
• Employees are entitled to a weekly rest day, typically Sunday in a 6-day week, or both Saturday and Sunday in a less-than-6-day week. Employees to be provided a substituted rest day where they undertake work on a rest day and accordingly, be paid wages at overtime rate for rest days worked and wages at the rate applicable to previous working day for the substituted rest day.
• Manner of fixing floor wage has been outlined; Central Government is required to consult with the Central Advisory Board, while taking into account minimum living standard, and such consultation may be circulated to all State Governments for further consultation and comments. Consultation of the Board and comments from State Governments may be considered before fixing the floor wage.
• Employers to impose a fine or make a deduction for damage or loss only by first issuing a show cause notice. Employees are to be provided with 7 (seven) days to respond, and in the event of no response from the concerned employee, the incidence of penalty must be communicated within 15 (fifteen) days of the deduction.
• Where total authorised deductions under Wage Code exceed 50 (fifty) percent of wages, excess is to be carried forward and recovered in instalments in successive wage periods, such that recovery on a monthly basis does not exceed 50 (fifty) percent of monthly wages of an employee.
• In the event of default of minimum bonus by any contractor, principal employer is required to pay minimum bonus to contract labour, upon receipt of written intimation of such default from employees or their registered trade union and confirmation of default thereof.
• Where an employer intends to make a deduction from wages due to absence from duty, employer should intimate employee—either in writing or electronically—of this intention and invite a response within 7 (seven) days. If, after considering employee’s response a deduction is warranted, employer may proceed. However, if no response is received within 7 (seven) days, employer may proceed with deduction and should inform employee within 15 (fifteen) days from date of such deduction.
• An accused person seeking to compound an offence may submit an application—electronically or in writing—to the designated gazetted officer. Upon receipt, officer will assess whether the offence is compoundable and, if so, may permit compounding upon payment of 50 (fifty) percent of maximum prescribed fine within 30 (thirty) days. Following payment, a composition certificate is to be issued within 10 (ten) days. If the amount is not paid within stipulated timelines, prosecution will be initiated. Where compounding occurs after prosecution has already commenced, gazetted officer will notify courts in which prosecution is pending and the person against whom the offence has been compounded will get discharged.

Social Security Rules under Social Security Code

• Social Security Rules apply to establishments in respect of which Central Government is the appropriate Government, including establishments having operations in more than one State.
• Where provisions of Chapter III (Employees’ Provident Fund) or Chapter IV (Employees State Insurance Corporation) of Social Security Code have been made applicable to any establishment by the concerned authority, employer of such establishment may make an application to have such provisions made inapplicable only after completion of 5 (five) years of such coverage. Such application must be made to competent authority in prescribed manner under Social Security Rules, with written consent of majority of employees, and is permissible only if all statutory dues and returns have been fully complied with.
• Income (from all sources) threshold for dependent parents (including the father‑in‑law and mother‑in‑law of a woman employee) has been limited to INR 14,000 (Indian Rupees Fourteen Thousand) per month, or such other amount as may be notified by Central Government for purposes of being treated as ‘family’ with respect to earnings from the Employees State Insurance Corporation (“ESIC”).
• For purposes of contribution payable to the ESIC for each wage period, (a) employer’s contribution has been fixed as 3.25 per cent of wages payable to employee; and (b) employee’s contribution is fixed as 0.75 per cent of wages payable to employee, where both contributions are rounded to the next higher rupee.

  Further, with respect to persons with disabilities defined under the Rights of Persons with Disabilities Act, 2016 or the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999, an employer will be exempt from payment of the employer’s share of contribution for a maximum period of 3 (three) years (or such other period as may be notified) from commencement of contribution period, and employer’s share for such period will be reimbursed to the ESIC by Central Government.

• Funeral expenses payable in respect of a deceased person insured under the ESIC is capped at INR 20,000 (Indian Rupees Twenty Thousand).
• Entitlement to gratuity for fixed-term employees upon completion of at least 1 (one) year of service has been further clarified by expressly providing that any subsequent period of service exceeding 6 (six) months but less than 1 (one) year will be rounded off to 1 (one) additional completed year for purposes of gratuity computation.
• Social Security Rules significantly expand and standardise crèche requirements by prescribing detailed infrastructure, staffing of crèche attendant, safety, hygiene, ventilation and operational norms, and regulate common crèche facilities in notified industrial parks and areas, including conditional relaxation of the 1 (one)‑kilometre distance rule by the competent authority. Social Security Rules also introduce a structured framework allowing substitution of crèche facilities with a mandatory crèche allowance through agreement with a recognised negotiating union, council, or majority employees, along with a minimum allowance of INR 500 (Indian Rupees Five Hundred) per month per child. Further, eligibility for crèche allowance is capped at 2 (two) children, except when the number of children exceeds 2 (two) due to second child birth resulting in multiple births. Maternity benefits are to be processed within 48 (forty-eight) hours of receiving proof of delivery.
• For purposes of depriving a woman of her maternity benefit or medical bonus, or both due to dismissal at any time during her pregnancy, acts constituting gross misconduct have been listed in Social Security Rules—which largely appear to be similar to the previous regime—and which include:
  • wilful destruction of employer’s goods or property,
  • assault at workplace,
  • criminal offences involving moral turpitude,
  • theft, fraud or dishonesty connected with employer’s business or property, and
  • wilful non-observance or interference with safety measures.

    Further, Social Security Rules stipulate that where dismissal of a woman employee during pregnancy or maternity is based on the above prescribed gross misconduct, employer may, by a written order, deprive her of maternity benefit or medical bonus. Any appeal against such dismissal order is to be made in writing to the competent authority, in the manner prescribed.

• A gig worker or platform worker registered under Social Security Code will cease to be eligible for benefits under applicable social security schemes upon attaining the age of 60 (sixty) years. Eligibility will also cease where the worker is not engaged as a gig or platform worker with any aggregator for a minimum period of 90 (ninety) days, or, where the worker is associated with multiple aggregators, for a minimum period of 120 (one hundred and twenty) days during the immediately preceding financial year.
• In addition to the above and as a step towards full operationalisation of Social Security Code, some of the other key notifications issued by MOLE on 8 May 2026 under the Social Security Rules relate to:
  • For Chapter IV (Employees State Insurance Corporation): Authorisation of officers to exercise powers of Authorised Officer under the chapter, appointment of officers for various functionalities including to discharge powers of Compounding Officers in relation to establishments covered under the chapter, to exercise powers in relation to providing an opportunity to employers before prosecution for offences under the chapter, and to institute prosecution or accord sanction of prosecution for purposes of offences under the chapter (and other provisions of Social Security Code and the rules, regulations or schemes framed thereunder),
  • For Chapter XIII (Employment Information and Monitoring): Appointment of officers to discharge functions including of the Executive Officer, and sanctioning of prosecution and compounding of offences relating to and under the chapter,
  • Setting the rate of simple interest to 12 (twelve) percent per annum for any contribution or any other amount payable under the Social Security Code,
  • Framing the ‘other beneficiaries and members of their families medical facilities Scheme, 2026’, and
  • Notifying timeline of 90 (ninety) days from the date of notification of the Social Security Rules within which every establishment in public sector and private sector is required to report vacancy to the concerned career centre, and specifying that requirement to report vacancies to career centres is not applicable to vacancies which carry a total remuneration of less than INR 11,000 (Indian Rupees Eleven Thousand) per month.

IR Rules under the IR Code

• IR Rules apply to establishments in respect of which Central Government is the appropriate government. However, in case of contract labour disputes, the ‘appropriate Government’ will be determined by the entity which has control over the concerned industrial establishment where such dispute arises from.
• Detailed modalities governing constitution, composition, and functioning of works committee, along with procedural framework for grievance redressal through grievance redressal committees, are now prescribed under the IR Rules.
• IR Rules provide separate model standing orders for industrial establishments in sectors such as mines, manufacturing and service, and prescribe procedures for certification, authentication, and submission of draft standing orders, including joint submissions by similar industrial establishments.
• IR Rules require employers to issue a notice of change in prescribed form for any modification in service conditions under the third schedule to IR Code. IR Rules requires display of notice prominently on the notice board or main entrance of an establishment, and uploading the same on designated portal, where applicable. It also permits issuance, service, and maintenance of such notices electronically.
• IR Rules provide for detailed procedures regarding conciliation proceedings, with conciliation officers encouraging parties to come to fair and amicable settlement of dispute and preparing a report with prescribed details in both situations—where settlement is arrived at and if settlement fails.
• Notices of strikes and lockouts by employees and employers respectively are required to be issued in prescribed formats, with a copy to the Secretary, Ministry of Labour and Employment.
• For retrenchment of any worker employed in industrial establishment, lay-offs and closure of industrial establishments, there are certain processes that need to be considered under IR Rules, for instance, certain forms are prescribed to effectuate this.
• For retrenchment of any worker employed in industrial establishment, employer will be required to transfer an amount equivalent to 15 (fifteen) days of last drawn wages of such retrenched worker to a fund, to be used to transfer to each of the retrenched workers to enable them to use such amounts for re-skilling. By way of MOLE’s notification dated 8 May 2026, while Central Government has set up a fund to be called “worker re-skilling fund”, practical implementation and compliance modalities are yet to be seen.
• IR Rules prescribe detailed procedure for compounding of offences, with serving of notice by officer notified by Central Government to the accused.
• In addition to the above and as a step towards full operationalisation of IR Code, some of the key notifications issued by MOLE on 8 May 2026 under IR Rules relate to:
  • appointment of officers to exercise functions of appellate authority on certification of standing orders, and appointment of certifying officers and conciliation officers under IR Code,
  • notification of model standing orders (separate for mining, manufacturing and service sectors),
  • appointment of officers for holding inquiries and imposing penalty in certain matters under IR Code, and

• • setting up of fund called the worker re-skilling fund.

OSH Rules under the OSH Code

• OSH Rules apply to establishments in respect of which Central Government is the appropriate government.
• A single registration requirement is prescribed under the OSH Code for covered establishments. Establishments that have applied for a registration under the OSH Code will be deemed to be registered within 7 (seven) days from the date of submission of a complete application on the Shram Suvidha Portal and will receive an auto-generated certificate of registration.
• OSH Rules prescribe the format in which appointment letters are required to be issued to all employees; containing specific information such as inter alia type of employment, universal account number and/or insurance number (if available), labour identification number of the establishment, category of skill of employee, broad nature of duties to be performed, maternity benefits available in case of women employee, etc.
• Maximum working hours for a worker has been limited to 48 (forty-eight) hours in a week. Further, workers are only permitted to undertake 144 (one hundred forty-four) overtime hours in any quarter of a year.
• OSH Rules prescribe that overtime wages are required to be paid at twice the rate of the workers’ wages at the end of each wage period for any work done beyond (a) 8 (eight) hours in a day, for daily wage workers; and (b) 48 (forty-eight) hours in a week, for all other workers. For calculating overtime wages, fraction of an hour between 15 (fifteen) to 30 (thirty) minutes will be counted as 30 (thirty) minutes, and any time beyond 30 (thirty) minutes will be rounded off and counted as 1 (one) hour.
• Employers of dock work, building or other construction work will arrange to conduct annual medical examination for employees who have completed 40 (forty) years of age, free of cost.
• Establishments having 500 (five hundred) or more workers are required to constitute a safety committee consisting equal number of representatives from workers and employers, not exceeding 20 (twenty). Tenure of such safety committee will be for 3 (three) years and an employer is required to take action and implement recommendations of the safety committee within 15 (fifteen) days from the date of receipt of such recommendations.
• OSH Rules prescribe specific health, safety and working conditions relating to hygiene and cleanliness; ventilation, temperature and humidity; artificial humidification; precaution against dust, noxious gas, fumes and other impurities; potable water; lighting; overcrowding; latrine and urinal accommodation; and treatment of waste and effluents for: (a) factories, (b) mines, (c) building or other construction work, (d) industrial premise for manufacture of beedi or cigar, (e) motor transport undertaking, (f) dock work, and (g) plantation.
• Similarly, common welfare provisions such as washing facilities; bathing places and locker rooms; canteen; sitting arrangement; first-aid and medical appliances; ambulance room; shelter and rest room; crèche facilities; appointment of welfare officers; and mock drills are prescribed for different categories of workplaces with varying threshold applicability under the OSH Rules.
• All employers are required to issue wage slips in electronic form to their employees—a requirement similar to what has been prescribed under the Wage Rules.
• Registers and records are required to be maintained for at least 5 (five) years for purpose of production to inspector-cum-facilitator during inspections.
• Annual returns are required to be filed electronically with local inspector-cum-facilitator of the jurisdiction on or before the last day of February following the end of each calendar year.
• OSH Rules prescribe special conditions to be undertaken by establishments for facilitating employment of women at night i.e. after 7 P.M. and before 6 A.M. These conditions include inter alia obtaining written consent from women employees, pickup and drop from the woman employee’s residence, provisions of CCTV surveillance, etc.
• OSH Rules prescribe conditions for obtaining contractor license, including obtaining a single license for contractors operating in more than one State, or in the whole of India.

This blog is authored by Sonakshi Das, Lijin Varughese, Mayank Jain, Devika Sreekumar, and Shreeya Sucharita.