In a landmark reform, the Centre has brought into force four new labour codes—Wages, Industrial Relations, Social Security, and Occupational Safety & Health—replacing 29 older laws. This marks the biggest labour rule overhaul since Independence, aimed at modernising India’s workforce regulations and extending protection to employees across sectors including IT, MSMEs, textiles, media, and gig work.
Prime Minister Narendra Modi described it as a “historic step for workers’ welfare.”
Salary Must Be Paid by the 7th of Every Month
One of the most impactful changes is the mandatory salary payment timeline. All companies must now pay employees by the 7th of every month. The government says this will improve transparency, reduce wage disputes, and enhance financial stability for millions of workers.
For IT and ITES employees—many of whom faced payment delays under vendor or contract arrangements—this is a major shift.
Equal Benefits for Fixed-Term IT Workers
A significant reform for the IT sector is the parity in benefits for fixed-term and permanent employees. Fixed-term staff will now receive:
- Provident Fund
- ESIC
- Medical insurance
- Gratuity (proportionate)
- Mandatory appointment letters
NITES President Harpreet Singh Saluja said the codes address long-standing concerns in a sector heavily dependent on contract roles, project staffing and vendor-based employment.
However, he cautioned that misuse of fixed-term roles and “consultant” classifications could continue unless enforcement is strict.
Why Take-Home Salary May Reduce
The updated definition of “wages” now mandates that 50% of total remuneration must be counted as wages (basic + DA + retaining allowance). This means:
- PF
- Gratuity
- ESIC
- Other statutory contributions
…will be calculated on a higher base.
According to labour law expert Alay Razvi, this does not force employers to raise basic pay, but it does raise deduction bases, which may reduce take-home salary unless companies restructure compensation.
No Retrospective Deductions
Importantly, companies cannot demand past PF or ESIC shortfalls, as the new calculation applies only from the implementation date.
A More Secure but More Regulated Workplace
From social security coverage for gig workers to night-shift provisions for women, the codes aim to modernise India’s workforce. For employees, especially in IT, the reforms promise greater protection—though possibly at the cost of slightly lower in-hand pay.
