New labour codes to take effect from April 1; will salaries decrease and work hours increase? full details

New Delhi (The Uttam Hindu): New labour laws (New Labour Codes) will come into effect across the country from April 1, 2026. These new rules are expected to bring significant changes to the lives of salaried employees. Key aspects such as in-hand salary, working hours, overtime, and social security provisions will undergo major revisions. The central government has nearly finalized the rules for all four labour codes, and this reform will directly impact millions of employees and companies across India.

What are the four new labour codes?

The government has consolidated 44 existing labour laws into a simplified framework of four codes. These include the Wage Code, Social Security Code, Industrial Relations Code, and Occupational Safety, Health and Working Conditions Code. These codes were notified on November 21 last year, and after public consultation on draft rules, the ministry has now prepared for their implementation based on feedback received until January.

Working hours and overtime rules

One of the biggest concerns among employees is regarding working hours. Under the new labour laws, standard working hours will remain unchanged at 8 hours per day and 48 hours per week. However, the system will now be more flexible. Companies will be able to introduce flexible working arrangements. The overtime framework has also been aligned with international labour practices, ensuring better management of workload fluctuations and fair compensation for extra work.

Will in-hand salary decrease?

There is a possibility that in-hand salary may slightly decrease for some employees. This is because the new wage structure increases the share of basic pay in total salary (generally at least 50%). As a result, contributions towards provident fund (PF) and gratuity may increase, reducing take-home salary but improving long-term savings and retirement benefits.

Expansion of social security

A key objective of these reforms is to expand social security coverage. The government aims to extend benefits to nearly 1 billion workers, up from around 940 million currently. Coverage has already increased significantly from 19% in 2015 to over 64% by 2025. The new system will include unorganized workers, gig workers, platform workers, and self-employed individuals under the social security net.

Special provisions for women and senior employees

The new labour codes strengthen employee rights and transparency. It will now be mandatory for employers to provide appointment letters to all employees at the time of joining. Strict provisions for equal pay for equal work for women have been introduced. Women will also be allowed to work in different shifts with proper safety arrangements. Additionally, employees aged 40 years and above will be entitled to free annual health check-ups under the new rules.

While the new labour codes may slightly reduce in-hand salary for some employees, they aim to provide better long-term financial security, improved work flexibility, and broader social protection. The overall impact will depend on how companies implement these changes.