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Introduction:

The Government of India consolidated 29 existing labour laws into 4 comprehensive codes to simplify compliance and improve worker welfare. These are:

1. Code on Wages, 2019,
2. Industrial Relations Code, 2020
3. Code on Social Security, 2020
4. Occupational Safety, Health and Working Conditions Code,

Purpose: These codes aim to make labour laws simpler, ensure worker protection, and create a business-friendly environment.

Payroll Compliance Impact: Two codes play a significant role in payroll compliance:

1)      Code on Wages, 2019 – Ensures fair wages, introduces a national floor wage, and mandates equal pay for equal work.

Aspect	Before (Old Laws)	After (Code on Wages, 2019)	CoE Section
Coverage	Minimum wages applied only to scheduled employments under Minimum Wages Act, 1948.	list of Universal coverage – applies to all employees across sectors.	Section 1(4) and Section 5 of CoW
Minimum Wage	Different rates by state and category; no national benchmark.	National floor wage introduced; states cannot set wages below this benchmark.	Sec. 9  CoW
Definition of Wages	Varied across laws, causing disputes in PF, gratuity, bonus calculations.	Uniform definition: Basic + DA + retaining allowance ≤ 50% of total pay; excess counts as wages.	Sec. 2(y) CoW
Equal Pay	Separate Equal Remuneration Act; limited to gender equality between men and women	Gender-neutral, includes transgender workers; integrated into the Code.	Sec. 3  CoW
Payment Timeline	Monthly wages had to be paid by 7th for establishments with <1,000 employees and by 10th for those with ≥1,000 employees.	Wages must be paid by 7th of next month; retrenchment dues within 2 working days.	Sec. 17  CoW

 

1)      Code on Social Security, 2020 – Extends social security benefits like EPF, ESIC, and gratuity to all workers, including gig and platform workers.

 

Aspect	Before (Old Laws)	After (Code on Social Security, 2020)	SSC Section's
Coverage	Fragmented laws; gig and platform workers excluded.	Universal coverage including gig workers, platform workers, and unorganized sector employees.	Sec. 2(35), 2(61) – SSC
Benefits	EPF, ESIC, gratuity, maternity benefits under separate Acts.	Integrated benefits: EPF, ESIC, gratuity, maternity, disability, old-age protection.	Sec. 3 – SSC
Aggregator Contribution	No provision for gig/platform workers.	Aggregators must contribute to social security fund for gig/platform workers.	Sec. 114 – SSC
Portability	No portability; benefits tied to employer/state.	Aadhaar-linked portability across states and jobs.	Sec. 142 – SSC
Compliance	Multiple registrations and filings under different Acts.	Single registration and unified compliance system under the Code.	Sec. 6 – SSC

 

 

Law / Benefit	Earlier Definition	Now (Under Labour Codes)
EPF (Provident Fund)	Basic Pay + DA (HRA excluded); universally paid allowances included as per SC ruling	Basic + DA + Retaining Allowance; 50% rule applies (excess allowances added back); HRA excluded
Gratuity	Last drawn Basic + DA; eligibility after 5 years	Basic + DA + Retaining Allowance; 50% rule applies; fixed-term employees eligible after 1 year
Minimum Wages	Basic + DA (sometimes HRA included under state rules)	Basic + DA + Retaining Allowance only; excludes HRA, bonus, conveyance, PF contribution, etc.
Maternity Benefit	Average daily wages = Basic + DA for 3 months preceding leave	Basic + DA + Retaining Allowance; exclusions cannot exceed 50% of CTC