The next phase of workforce compliance: What the newly notified Central Labour Rules mean for employers

On May 8 and 9, 2026, the Ministry of Labour and Employment ("MoLE") notified the final Central rules under the 4 (four) labour codes ("Labour Codes"), namely: (i) the Code on Wages (Central) Rules, 2026 ("Wages Rules"); (ii) the Social Security (Central) Rules, 2026 ("SS Rules"); (iii) the Industrial Relations (Central) Rules, 2026 ("IR Rules"); and (iv) the Occupational Safety, Health and Working Conditions (Central) Rules, 2026 ("OSH Rules") (together, the "Central Rules"). While the Labour Codes themselves were notified on November 21, 2025, the absence of subordinate legislation hindered the complete implementation of the Labour Codes.

The MoLE has clarified in its FAQs dated March 16, 2026, that the Central Rules do not apply uniformly to all establishments, but only to those establishments where the Central government is the "appropriate government" under the Labour Codes, which include but are not limited to railways, mines, banking and insurance and central public sector undertakings. The employers of other establishments, where the State government is the "appropriate government", would need to assess their compliance under the rules published by the concerned State.   

Nevertheless, the notification of these Central Rules marks a significant shift from legislative reform to practical compliance for employers to whom these rules apply. This article provides an overview of key considerations for employers under each of the Central Rules, as discussed below.

The Wages Rules supplement the Labour Codes by reaffirming the requirement for capping the workday at 8 (eight) hours and the work week at 48 (forty-eight) hours. The Wages Rules also stipulate the requirement for a weekly day of rest, which shall ordinarily be Sunday (or Saturday and Sunday in the case of a five-day working week). This rule is flexible, as Rule 6(2) permits an employee to work even on the rest day provided that such employee is allowed a substitute rest day on one of the working days in the week. However, employers should be wary of the proviso to Rule 6(2), which prohibits any employee from working for more than 10 (ten) days consecutively without a rest day.

Another notable change is with respect to employee deductions under Rule 13, which provides that where the total authorised deductions exceed 50% (fifty percent) of the employee's wages, the excess shall be carried forward and deducted from the wages of the succeeding wage period. This ensures that no deduction in any month may exceed 50% (fifty percent) of an employee's wages. Furthermore, under Rule 18, where any deduction is made by an employer for damage or loss caused by an employee, the employer is mandated to give such employee an opportunity to submit an explanation within 7 (seven) days, showing cause.

The SS Rules lay down the rates of contribution payable to the Employee State Insurance Corporation ("ESIC"), by fixing the rate of contribution: (i) for employers at 3.25% (three point two five percent); and (ii) for employees at 0.75% (zero point seven five percent); of the wages payable to the employee, rounded up to the next higher rupee. However, Rule 19(2) exempts employers from paying, in respect of persons with disabilities, the employer's contribution for a maximum period of 3 (three) years from the date of commencement of the contribution period.

Under Rule 33, the entitlement to gratuity for fixed-term employees upon completion of 1 (one) year of service has been further clarified. Employers should note that if a fixed-term employee renders service for a period of at least 1 (one) year and for a subsequent period in excess of 6 (six) months but less than 1 (one) year, such period of service shall be rounded up to 1 (one) additional year for the purpose of gratuity calculation.

The SS Rules further elaborate on maternity benefits provisions, laying down a 15 (fifteen) minute duration for each of 2 (two) nursing breaks to be allowed by employers. Rule 37 further lays down specifications for crèche facilities to be installed by employers within 1 (one) kilometer of the establishment.

The IR Rules mandate employers to give notice of lock-out to the secretary of every registered trade union relating to the industrial establishment, and such notice shall be displayed conspicuously by the employer on the notice board or electronic board at the main entrance of the industrial establishment. Further, Rule 29 lays down the timeline for providing notice of closure of an establishment at 60 (sixty) days before the date of intended closure. Employers should also be wary of Rule 37, under which, every employer who has retrenched a worker shall, within 10 (ten) days of such retrenchment, electronically transfer an amount equivalent to 15 (fifteen) days of the last drawn wages of such retrenched workers to the worker re-skilling fund.

The IR Rules also provide for the Model Standing Orders in respect of industrial establishments in the mining, manufacturing and services sector, and prescribe the procedure for certification of draft standing orders under Rule 10. It is pertinent to note that the Model Standing Orders, 2026, containing the draft model standing orders for the mining, manufacturing and services sector each, have also been published by the MoLE on May 8, 2026.

The OSH Rules reaffirm the requirement of an appointment letter for all employees and further lay down the format for such an appointment letter. Employers should be vigilant of this format as it requires specific informationm such as labour identification number of the establishment and universal account number of the employee.

The OSH Rules also elaborate on provisions regarding overtime pay under Rule 69. Workers who work more than 8 (eight) hours a day as a daily wager or otherwise more than 48 (forty-eight) hours a week, are entitled to overtime pay at 2x (twice) the rate of normal wages, and such overtime pay shall be paid at the end of the respective wage period. The calculation methodology for overtime hours has also been laid down under this rule. Furthermore, Rule 69 states that no worker shall be allowed to work overtime exceeding 144 (one hundred and forty-four) hours in any quarter of a year.

Rule 83 further lays down special provisions with respect to employment of women in night shifts (i.e, before 6:00 A.M. or beyond 7:00 P.M.), including but not limited to obtaining the consent of the women employee, adequate transportation facilities for pick-up and drop at her residence and dedicated emergency telephone numbers to be displayed at conspicuous places inside the establishment.

The notification of the Central Rules marks a significant milestone in India's long awaited labour law reform and is expected to be soon followed by the State-wise implementation of the Labour Codes, with many states already having notified the draft rules. However, despite the phase-wise implementation, employers should take proactive steps to ensure compliance with the Labour Codes' framework and its evolving landscape. Rather than adopting a "wait-and-watch" approach, employers would benefit in the long run by proactively reviewing their existing employment models and wage structures and assessing compliance risk under the Labour Codes.

About of authors: Akanksha Dua is a Partner and Divyaansh Dulles is an Associate at Obhan Mason.

Disclaimer: The opinions expressed in this article are those of the author(s). The opinions presented do not necessarily reflect the views of Bar & Bench.

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