What Has Changed for India HR in 2026
India's labor law landscape is in active transition. The four Labour Codes (Code on Wages, Industrial Relations Code, Social Security Code, and Occupational Safety, Health and Working Conditions Code) consolidated 29 central labor laws — and their state-by-state operationalization has been the major HR compliance theme of 2024–2026.
This guide is a practical overview of India hiring laws as of 2026, what HR teams need to do, and the key changes from previous years.
The Four Labour Codes (2026 Status)
1. Code on Wages, 2019
Consolidates: Minimum Wages Act, Payment of Wages Act, Payment of Bonus Act, Equal Remuneration Act.
HR implications:
- Floor wages defined nationally with state-level adjustments
- Standardized wage definition for compensation
- Equal pay for equal work strengthened
- Bonus calculation simplified
2. Industrial Relations Code, 2020
Consolidates: Trade Unions Act, Industrial Employment (Standing Orders) Act, Industrial Disputes Act.
HR implications:
- Standing orders required for establishments with 300+ workers (raised from 100)
- Layoff/retrenchment thresholds raised
- Strike/lockout procedures clarified
- Recognition of "single negotiating union" principle
3. Social Security Code, 2020
Consolidates: EPF Act, ESI Act, Maternity Benefit Act, Employees' Compensation Act, and others.
HR implications:
- Universal social security framework
- Coverage extended to gig and platform workers
- Maternity benefits clarified (still 26 weeks for women in establishments with 10+ employees)
- EPF and ESI consolidated under one administration
4. Occupational Safety, Health and Working Conditions Code, 2020
Consolidates: 13 acts including Factories Act, Contract Labour Act.
HR implications:
- Health and safety standards consolidated
- Working hours flexibility (10–12 hours per day permitted in certain conditions; weekly cap remains 48 hours)
- Mandatory health checkups for hazardous occupations
- Welfare provisions for inter-state migrant workers
Practical Compliance Requirements for 2026
A. Statutory Registrations
- [ ] EPF (Employees' Provident Fund): Mandatory for establishments with 20+ employees
- [ ] ESI (Employees' State Insurance): Mandatory for establishments with 10+ employees in implemented areas, for employees earning under ₹21,000/month
- [ ] Professional Tax: State-specific
- [ ] Shops and Establishments Act registration: State-specific
- [ ] POSH compliance (Internal Committee): Mandatory for 10+ employees
B. Employment Contract Requirements
- [ ] Written appointment letter specifying:
- Role and responsibilities
- Compensation and benefits
- Notice period (typically 30/60/90 days)
- Probation period (if applicable, typically 3–6 months)
- Confidentiality and IP terms
- Non-compete (limited enforceability in India)
- Termination conditions
- [ ] Acknowledged by employee in writing or e-signed
- [ ] Compliant with Labour Code definitions (especially for contract workers and fixed-term employment)
C. Payroll Compliance
- [ ] Monthly EPF and ESI filings
- [ ] TDS deduction and quarterly filing
- [ ] Professional Tax remittance (state-specific)
- [ ] Annual PT, EPF, ESI returns
- [ ] Form 16 issuance by 15 June for previous financial year
D. Termination and Separation
- [ ] Notice period as per contract
- [ ] Final settlement:
- Last salary
- Pending bonuses, commissions
- Leave encashment (if applicable)
- Gratuity (for employees with 5+ years of service, per Payment of Gratuity Act)
- [ ] Relieving letter and experience certificate
- [ ] EPF withdrawal/transfer support
E. Specific Compliance Areas
- [ ] POSH Act compliance (see India POSH Act Compliance Checklist)
- [ ] Maternity benefits: 26 weeks paid leave for women in establishments with 10+ employees
- [ ] Paternity leave: No central mandate; many companies offer 5–15 days
- [ ] Annual leave: Per state Shops and Establishments Act (typically 12–21 days/year)
- [ ] Public holidays: State-specific lists
Contract Types in 2026
Permanent Employment
Standard full-time employment with all statutory benefits. Most regulated.
Fixed-Term Employment
Now formalized under the Industrial Relations Code. Employees on fixed-term contracts get equal benefits to permanent employees during the contract period.
Contract Labour
Subject to Contract Labour (Regulation and Abolition) Act and now consolidated under the OSH Code. Contractor employer is responsible for primary statutory compliance.
Gig and Platform Workers
Now covered under the Social Security Code. Aggregator platforms must contribute to social security funds.
Apprentices
Separate regulation under Apprentices Act, 1961. Statutory benefits apply differently.
Common India Hiring Compliance Mistakes
- Treating contract labor as employees. Misclassification carries heavy penalties.
- Skipping POSH compliance. Required for any organization with 10+ employees.
- Missing EPF/ESI deadlines. Monthly filings; penalties accrue daily for delays.
- No written employment contract. Verbal agreements are legally weak and create disputes.
- Improper full-and-final settlement. Pending dues, gratuity, and leave encashment must all be handled at separation.
Recommended Tools
- Indian payroll providers: Razorpay Payroll, GreytHR, Keka, Zoho Payroll, Spine HR — handle EPF, ESI, TDS, PT
- HRIS with India payroll: GreytHR, Darwinbox, Keka — full HRIS with India compliance built in
- Modern HRIS without India payroll: PeoplePilot, HiBob — pair with an Indian payroll provider for compliance
See our Best HR Software in India 2026 guide for detailed comparisons.
Frequently Asked Questions
When are the Labour Codes fully implemented?
Most provisions are notified; state-level rule notifications continue through 2024–2026. HR teams should track central and state notifications.
What about non-compete enforcement?
India courts generally restrict post-employment non-compete clauses except for legitimate business interests (trade secrets, customer lists). Garden leave is more enforceable than restraint clauses.
Are background checks mandatory?
Not legally mandatory but practically standard, especially for finance, education, and senior roles.
Are remote/hybrid arrangements compliant?
Yes, but state Shops and Establishments Act applicability and POSH coverage extend to remote workplaces.
Should we use a PEO/EOR for India hiring?
For non-Indian companies hiring in India, PEO/EOR services (like Multiplier, Deel, Remote.com) are common and reduce compliance burden. For Indian companies hiring locally, direct employment is standard.
Related Reading
See where you stand: Take the Analytics Maturity Quiz and benchmark your India HR compliance and analytics in under 5 minutes.