New Labor Codes: The month of April begins tomorrow. Starting April 1st, under the new labor codes, standard working hours remain the same: 8 hours per day and 48 hours per week. However, working practices have been made more flexible.
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New Labor Codes: April 1, 2026, could bring significant changes for working professionals. The central government’s new labor laws will come into effect nationwide on April 1, 2026. These changes aren’t just on paper, but will directly impact employees’ take-home pay, PF contributions, working hours, and their rights. The government is preparing to abolish 44 labor laws and implement four labor codes, which will feature some significant changes.
According to media reports, standard working hours under the new labor codes remain the same: 8 hours daily and 48 hours weekly. However, work practices have been made more flexible. Companies will be able to provide employees with a flexible working culture. Furthermore, more overtime will be available based on the management of weekly working hours.
Laws are divided into four categories:
Wage Code
This will determine the rules regarding your salary and bonuses.
Social Security Code
For benefits like pension, pension, and insurance.
Industrial Relations Code
For resolving disputes between companies and employees.
Occupational Safety and Health Code (OSH Code)
To ensure safety and better working conditions at the workplace.
Payslips will change
According to the new labor code, your basic salary should be 50% of your total CTC. Currently, many companies keep the basic salary low to save taxes and increase allowances like HRA, Travel Allowance, and Special Allowance to 70-80%. However, under the new rules, companies will not be able to keep all allowances combined to more than 50% of the total salary.
Retirement Fund May Increase
PF and gratuity are calculated based on basic salary. Therefore, if your basic pay increases, your retirement fund and your contribution to it will automatically increase. Higher PF deductions will impact your take-home salary. Higher PF deductions may result in a slight decrease in your take-home salary. However, this will also depend on the current company structure. The impact of keeping your basic pay at 50% will depend on your current basic salary.
Expanding Social Security
One of the key focus areas of the new labor codes is expanding social security coverage. The government aims to extend social security benefits to 1 billion workers by March 2026, up from approximately 940 million currently. Social security coverage has already increased significantly, from 19% in 2015 to over 64% by 2025. This increased coverage is expected to include workers in the unorganized sector, gig and platform workers, as well as the self-employed.
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