Labour Law Compliance in India: 2026 Employer Checklist, Thresholds and Due Dates

Quick Overview

India’s four Labour Codes have reshaped employer compliance, but obligations still vary by headcount, state, establishment type, workforce category, and wage levels. This guide explains which laws may apply from Day 1 and at key thresholds such as 10, 20, and 50 employees. It also covers wages, EPF, ESI, gratuity, POSH, maternity benefits, contractor compliance, deadlines, records, penalties. A practical HR checklist helps employers manage these obligations more accurately and reduce missed compliance throughout the year.

Running payroll correctly does not automatically make an organisation compliant with labour laws. An employer may calculate EPF and ESI accurately but still face problems if minimum wages are applied incorrectly, contractor records are incomplete, or a required workplace committee is missing.

Labour law compliance in India therefore goes beyond statutory deductions. It can include registrations, appointment letters, wages, leave, workplace safety, POSH, maternity benefits, contractor oversight, and regular filings. Because requirements vary by state, establishment type, workforce category, and salary level, employers need a clear system for identifying what applies and tracking each obligation on time.

Need help navigating India’s changing compliance requirements? Explore Keka’s Compliance Hub for state-wise minimum wages, working-hour rules, statutory forms, public holidays, and key labour laws.

What Is Labour Law Compliance in India?

Labour law compliance in India means meeting the central and state requirements that govern wages, social security, working conditions, workplace safety, employee benefits, documentation, and employment relations.

In practice, labour compliance has five main parts:

Central vs State Labour Compliance

Labour-law compliance in India operates at both national and state levels. While central frameworks govern areas such as social security, many day-to-day requirements depend on the state or location where employees work.

This is why compliance guidance can differ by state, industry, workforce category and effective date.

What Changed Under the Four Labour Codes?

The four Labour Codes came into effect on 21 November 2025, consolidating 29 central labour laws into a simpler framework.

However, this does not mean employers can immediately stop following every existing rule, form, or process. During the transition, older rules may continue to apply where they are consistent with the new Codes. Employers must also check the rules and notifications issued by the relevant central or state government.

Code on Wages (What Changes for Employers)

Minimum-wage protection now extends beyond the earlier system of selected ‘scheduled employments,’ while the Central Government may prescribe a floor wage below which states cannot set their rates. The Code also introduces a common definition of wages: when excluded allowances exceed 50% of remuneration, the excess is added back for statutory calculations. This does not mean the basic salary must always equal 50% of CTC.

It also prohibits gender-based discrimination in wages for the same or similar work and retains statutory bonus obligations for eligible employees.

Social Security Code (Expanded Coverage and Gratuity)

The Social Security Code combines EPF, ESI, gratuity, maternity benefits, employee compensation and worker-welfare provisions. It also recognises gig, platform and unorganised workers for notified social-security schemes.

A fixed-term employee hired directly by an employer becomes eligible for gratuity after completing one year of service. This provision does not automatically apply to workers supplied through contractors.

OSHWC Code (Safety, Contract Labour and Migrant Workers)

The OSHWC Code brings workplace safety, working conditions, contract labour and migrant-worker protections under one framework. Contract-labour provisions generally trigger at 50 contract workers, while specific inter-state migrant-worker provisions apply at 10 workers.

It also supports streamlined registration, common licensing, electronic filings, appointment letters and health examinations for prescribed employee categories.

Industrial Relations Code (Grievances and Standing Orders)

Covered industrial establishments with 20 or more workers must form a Grievance Redressal Committee. Standing Orders apply to 300 or more workers, alongside provisions governing trade unions, retrenchment, lay-offs, and closure.

Which Labour Laws Apply to Your Business?

Employers often assume labour-law compliance begins only after a company becomes ‘large.’’In reality, some requirements can apply from the start of operations, while others are triggered at 10, 20 or 50 employees.

Different laws count employees, persons, workers and contract workers differently. Employers should therefore not use one company-wide headcount to determine every obligation. Remote and multi-state businesses must also consider each employee’s actual work location when reviewing state-specific requirements.

From Day 1 and State-Specific Compliance

Some labour-law responsibilities can apply as soon as a business begins operations, regardless of its size:

• Shops and Establishments: Commercial establishments may need state-specific registration. Timelines, working hours, weekly holidays, leave, overtime and certificate-display rules vary by state.

• Minimum wages: Employers must pay at least the applicable minimum wage. The rate can differ by state, industry, location, skill category and the latest government notification.

• Professional Tax: In states that levy Professional Tax, employers may need to register, deduct it from eligible employees’ salaries and remit it to the state authority.

• Child and adolescent labour: Children below 14 generally cannot be employed, except in the limited situations permitted by law. Adolescents aged 14–18 cannot work in notified hazardous occupations or processes.

10+ Employees or Persons

Once the workforce reaches 10, employers should evaluate the following:

• ESI: The scheme generally applies to covered factories and establishments with 10 or more persons, subject to the applicable notification. Employees earning up to ₹21,000 per month are generally covered, with a ₹25,000 ceiling for persons with disabilities. Employers should register within the prescribed period once coverage begins.

• POSH Internal Committee: Workplaces with 10 or more workers must constitute an Internal Committee. Complaints from smaller workplaces are handled through the district-level Local Committee.

• Gratuity: Covered shops and establishments generally come within the gratuity framework at 10 or more employees. Most employees qualify after five years of continuous service, while qualifying fixed-term employees may become eligible after one year.

• Maternity benefits: Covered shops and establishments with 10 or more employees must evaluate maternity-benefit obligations for eligible employees.

20+ Employees or Workers

At this stage, employers should check two separate requirements:

• EPF: Establishments in covered categories generally come within EPF at 20 or more employees. Employees joining with basic wages and dearness allowance up to ₹15,000 per month must generally be enrolled. Establishments below the threshold may also apply for voluntary coverage.

• Industrial relations: Covered industrial establishments with 20 or more workers must evaluate the Grievance Redressal Committee requirement. The Standing Orders requirement should also be reviewed when such establishments reach 300 workers.

50+ Employees or Contract Workers

The number 50 creates two different triggers because each provision counts a different group:

• Crèche facility: Covered establishments with 50 or more employees must provide access to a crèche, independently or through an eligible shared facility. Eligible women must be allowed the prescribed number of visits during the day.

• Contract labour: Contract-labour provisions generally apply where 50 or more contract workers were employed on any day during the preceding 12 months. Contractors meeting the threshold must obtain the required licence before deployment.

Sector and Workforce-Specific Triggers

Some organisations face additional requirements because of their industry or workforce structure:

• Construction establishments: Review applicable registration, construction-worker welfare cess, safety and welfare obligations.

• Factories, mines and hazardous operations: These workplaces may face additional licensing, occupational safety, health examination, accident-reporting and welfare requirements.

• Inter-state migrant workers: Specific provisions generally apply when an establishment has employed 10 or more inter-state migrant workers on any day during the preceding 12 months. These may include worker records, journey allowances and prescribed welfare support.

Remember: Thresholds are only a starting point; final applicability also depends on the state, establishment type, workforce category, wages and current government notifications.

Labour Law Compliance Checklist:What Must Employers Do to Stay Labour-Law Compliant

Identifying the applicable labour laws is only the first step. Employers must then convert those requirements into reliable payroll, workplace, employee-documentation and contractor-management processes.

1. Review Wages and Payroll Before Every Salary Cycle

Before processing salaries, payroll teams should confirm that wages, deductions and employee records reflect the latest central and state requirements. Salary structures should also follow the wage definition discussed earlier, particularly where allowances form a large share of remuneration.

Payroll teams should:

• Verify minimum wages based on the employee’s state, industry, work zone and skill category.

• Check Variable Dearness Allowance whenever a revised notification takes effect.

• Reconcile overtime with approved attendance, shift and holiday-work records.

• Pay wages on time within the applicable wage period.

• Issue wage slips showing earnings, overtime and statutory deductions clearly.

• Apply Professional Tax according to the employee’s work state and salary slab.

• Deduct Labour Welfare Fund contributions where the applicable state requires them.

• Review statutory bonus eligibility and annual payment obligations where applicable.

2. Calculate and Deposit EPF, ESI and Gratuity Correctly

Once social-security provisions apply, employers must calculate contributions accurately, make payments on time and maintain employee-level records.

• EPF: Employees and employers generally contribute 12% each of basic wages and dearness allowance. The employee’s full share goes to EPF, while the employer’s share is divided between EPF and the Employees’ Pension Scheme. EDLI contributions and administrative charges are separate employer costs, so the total employer outflow should not be described simply as “13% EPF.” Employers must also file the Electronic Challan-cum-Return and maintain UAN, KYC and nomination details.

• ESI: Employers contribute 3.25% of wages, while eligible employees contribute 0.75%. Coverable employees should be registered promptly, and monthly contributions must be paid within 15 days of the following month. Employers should maintain accurate employee-registration, wage, contribution and accident records.

• Gratuity: Track employee service periods throughout employment rather than reviewing eligibility only at exit. The usual requirement is five years of continuous service, except in cases of death or disablement. Qualifying fixed-term employees become eligible after completing one year under a direct employment contract; this rule does not automatically extend to outsourced contract workers.

3. Maintain Working-Hour, Leave, POSH and Maternity Systems

Employers must maintain workplace systems that connect attendance, leave, employee safety and statutory benefits.

• Working hours and leave: Follow the rules applicable to the employee’s state and establishment type for working hours, rest intervals, weekly holidays, overtime and leave. Attendance, shifts, holiday work and overtime records should align with payroll. For night shifts, obtain consent and provide the safeguards prescribed by the appropriate government.

• POSH compliance: Maintain a written policy and constitute the Internal Committee correctly with a woman Presiding Officer, employee members and an external member. Employers should conduct awareness and committee training, protect confidentiality, maintain inquiry records and complete annual reporting.

• Maternity benefits: Track the prescribed service condition and provide up to 26 weeks of benefit in qualifying cases. Women with two or more surviving children are generally eligible for 12 weeks, while qualifying adopting and commissioning mothers receive 12 weeks. Employers must also protect employees lawfully using maternity benefits and provide crèche access where applicable.

Also Read: 9 Common Challenges Of Leave Management

4. Strengthen Employment Records and Contractor Oversight

Clear employment records help employers demonstrate that workers have been hired, classified and managed correctly. Appointment letters should clearly state the employee’s role, employment category, salary and benefits, work location, working hours, leave, notice period and termination conditions.

Employers should also:

• Classify workers correctly as permanent employees, fixed-term employees, contractor-deployed workers, consultants or freelancers. The written agreement should reflect the actual working arrangement.

• Maintain industrial-relations processes such as the Grievance Redressal Committee and Standing Orders where applicable. Lay-offs, retrenchment and closure require careful legal review.

• Audit contractor licences, worker lists, attendance, wage payments and worker-level EPF and ESI records.

• Review workplace welfare and safety arrangements for contractor-deployed workers.

A vendor invoice or summary challan is not proof that every worker received the correct wages or statutory coverage. If a contractor fails to pay workers fully or on time, the principal employer may have to make the payment.

Need a trackable version? Download the complete 2026 Labour Law Compliance Checklist with applicability triggers, owners, deadlines, evidence requirements and task-status fields.

Monthly, Half-Yearly, Annual and Event-Based Compliance Calendar

A compliance calendar helps HR and payroll teams act before deadlines are missed. Use the schedule below as a planning reference, while checking state-specific due dates, holidays and extensions.

Monthly Tasks

• File the EPF ECR and deposit contributions on or before the 15th of the following month.

• Submit employee-wise ESI contribution details and make payment within 15 days of month-end.

• Deduct and remit Professional Tax and LWF, where applicable, according to the relevant state schedule.

• Review payroll compliance, including minimum wages, Variable Dearness Allowance (VDA), overtime and approved attendance records.

• Issue wage slips and retain salary-payment evidence.

• Check contractor documents, including attendance, wage-payment and worker-level EPF and ESI records

Half-Yearly or Contribution-Period Tasks

• Complete the ESI Return of Contributions for:

April–September: by 11 November

October–March: by 12 May

• Correct missing employee, wage or contribution details before the return is finalised.

• Deposit LWF contributions where the applicable state follows a half-yearly cycle.

The ESI return is generated online using the monthly contribution data already submitted by the employer.

Annual Tasks

• File the applicable unified, sector-specific or state annual return.

• Submit the POSH Internal Committee’s annual report to the employer and District Officer.

• Review and renew registrations, licences and contractor documents where required.

• Conduct prescribed safety audits and health examinations.

• Review statutory records, workplace policies and payroll settings for the coming year.

Exit and Full-and-Final Settlement

• Settle outstanding wages within the applicable period; the Code on Wages generally requires payment within two working days after resignation, removal, dismissal or retrenchment.

• Calculate and pay gratuity within 30 days where due.

• Update EPF, ESI, payroll, attendance and benefit records.

• Complete leave encashment, incentives, lawful deductions and other settlement items.

• Issue applicable separation documents and retain calculations, approvals and payment proof.

Other Event-Based Compliance Tasks

Some obligations arise only when the organisation, workforce, or employment arrangement changes. HR teams should review compliance whenever any of these events occur:

Records, Penalties and Inspection Readiness

Labour-law compliance is not just about making payments or filing returns on time. Employers should also be able to prove that each obligation has been met. During an inspection, audit, or employee dispute, incomplete records can create problems even when the original calculation or payment was correct.

Maintain an Inspection-Ready Evidence Trail

Record-retention note: Prescribed wage, attendance, overtime, fine and deduction registers may be maintained electronically or physically and must generally be preserved for five years from the last entry. Other retention periods may differ under state and establishment-specific rules.

Prepare for an Inspection

Employers should maintain one organised and searchable compliance repository for each location or establishment. Payroll, attendance, bank-payment records, statutory challans, filing acknowledgements, and contractor documents should be easy to retrieve and reconcile with one another.

Under the Labour Codes, Inspector-cum-Facilitators may inspect the workplace, review records, request information, and verify whether the employer has complied with the applicable legal requirements. This means records should not only exist, they should also be complete, current, and easy to produce when asked.

Common Non-Compliance Risks

The law may also provide for improvement notices or compounding in certain cases. However, repeated or serious non-compliance can lead to heavier penalties, prosecution, and reputational risk.

Make Labour-Law Compliance Easier to Manage

Labour-law compliance becomes easier when employee data, attendance, payroll, statutory deductions, and records are connected instead of managed across separate spreadsheets.

With Keka, HR and payroll teams can:

• Keep attendance, leave, shifts, and salary data in sync

• Generate filing-ready payroll and compliance reports

• Stay prepared with organised, audit-ready records

Complex legal questions may still require expert review, but Keka can make everyday compliance more accurate, timely, and manageable.

See how Keka can simplify payroll and compliance for your organisation. Book a free demo.

Disclaimer: This article provides general information and does not constitute legal advice. Applicability may vary by state, establishment type, workforce category, wage level and government notification. Verify current requirements with the relevant authority or a qualified professional.

Frequently Asked Questions

How many employees trigger EPF registration?

EPF registration generally becomes mandatory when a covered establishment employs 20 or more persons. Establishments below this threshold may also apply for voluntary coverage.

What is the current EPF contribution rate?

Employees and employers generally contribute 12% each of basic wages and dearness allowance, with the employer’s share split between EPF and EPS.

What is the current ESI contribution rate?

The employer contributes 3.25% of wages, while the employee contributes 0.75%, making the total ESI contribution 4%.

How is gratuity calculated in India?

Gratuity is generally calculated as: Last-drawn wages × 15 × completed years of service ÷ 26. It is payable at 15 days’ wages for each completed year, subject to applicable eligibility rules.

Is the POSH Act applicable to small companies?

Yes. All workplaces must provide protection against sexual harassment. An Internal Committee is required at 10 or more workers; smaller workplaces use the district Local Committee for complaints.

What maternity benefits must employers provide?

Eligible employees can receive up to 26 weeks of maternity benefit, subject to the prescribed service and child-related conditions. Establishments with 50 or more employees must also provide access to a crèche.

Does the 50% wage rule mean the basic salary must be 50% of CTC?

No. If excluded allowances exceed 50% of total remuneration, the excess is added back to wages for statutory calculations. Basic salary itself does not have to equal 50% of CTC.

Do labour-law requirements differ across Indian states?

Yes. Central laws provide a broad framework, but minimum wages, Shops and Establishments rules, Professional Tax, Labour Welfare Fund, leave, working hours and filing procedures can vary by state.