Labour Codes implementation status May 2026: which states have notified rules and the staggered rollout calendar

The implementation of India's four Labour Codes, the Code on Wages, 2019, the Industrial Relations Code, 2020, the Social Security Code, 2020, and the Occupational Safety, Health and Working Conditions Code, 2020, has progressed unevenly across states since the central notification in 2022. As of May 27, 2026, 27 of 31 states and Union Territories have notified state-level rules under at least three of the four Codes. The remaining four jurisdictions, Tamil Nadu, West Bengal, Kerala, and Delhi, have notified rules under some Codes but not all four, leaving HR teams operating in those states with a partial-implementation compliance map.

The wage definition recalibration under the Code on Wages is the most operationally significant change for HR and payroll teams. The Code requires that basic wages constitute at least 50 percent of total wages, with the definition of basic wages including all emoluments that are paid universally, necessarily, and ordinarily to all employees across the board. This is a codification of the Supreme Court's Vivekananda Vidyamandir principle (2019). The practical effect is that special allowance, fixed dearness allowance, retention allowance, and any cash component paid universally must be included in basic wages. The downstream impact runs through EPF (12 percent contribution on a higher base), ESI (where applicable), gratuity (15 days of last drawn wages per year of service, calculated on a higher base), and bonus computation.

The fixed-term employment contract framework under the Industrial Relations Code is the most strategically significant lever for businesses with seasonal or project-based workforce. Fixed-term employees are entitled to wages, benefits, and service conditions equivalent to a permanent worker of the same category, but the employer has the right to terminate at the end of the fixed term without termination compensation. This is available in all 27 states that have notified IR Code rules. In the pending states (Tamil Nadu, West Bengal, Kerala, Delhi), fixed-term employment continues to be governed by the legacy ID Act framework which does not provide the same flexibility.

The Social Security Code consolidates the EPF, ESI, gratuity, employee state insurance, and unorganised worker welfare programmes into a single framework. The most operational change is the consolidated registration through a unified portal that several states (Karnataka, Maharashtra, Telangana, Gujarat, Haryana, Andhra Pradesh, Madhya Pradesh) have notified. The unified registration reduces the per-establishment registration friction from 5-7 separate registrations to a single portal submission, with sectoral cross-referencing handled administratively.

The OSH Code amalgamates 13 existing labour laws (Factories Act, Mines Act, Contract Labour (Regulation and Abolition) Act, etc.) into a single Code. The most operationally significant change for industrial employers is the new threshold for factory registration: establishments employing 20 or more workers with power, or 40 or more workers without power, must register as factories. This is a relaxation from the previous Factories Act threshold of 10/20. The relaxation has practical implications for small manufacturing units that can now operate outside the factory licensing regime.

The transition timeline for businesses is no longer indefinite. State labour departments in the 27 notified states are increasingly initiating compliance audits and issuing notices for non-compliance with the new framework. The most common notice categories are: failure to recalibrate wage definition (Code on Wages), continued use of legacy fixed-term contract templates that do not comply with the IR Code framework, and failure to migrate to consolidated registration where the state has notified the unified portal.

KAMRIT's payroll and labour compliance desk handles wage definition recalibration, fixed-term contract template migration, and consolidated registration filing across multi-state workforces.