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Labour Codes for contractors

The new Labour Codes: what changes for labour contractors

The four Labour Codes came into force on 21 November 2025, replacing 29 older labour laws, including the Contract Labour Act, the Minimum Wages Act, the Payment of Wages Act and the EPF and ESI Acts. For labour contractors, the biggest changes are a licence only from 50 contract labour, three common registers that can be kept electronically, wages paid by the 7th of the next month through the bank, and the principal employer paying unpaid wages and recovering them from you.

Part of our guide: Compliance checklist for labour contractors in India

By HaazriPro Team · Last updated 8 October 2026

What are the four Labour Codes?

The government brought four Codes into force from 21 November 2025, "rationalising 29 existing labour laws". For a contractor supplying security, housekeeping or construction staff, all four matter, but three touch your monthly work most:

Code	What it covers for you	Old laws it replaces (examples)
Code on Wages, 2019	Minimum wage, wage payment dates, deductions, bonus, overtime rate	Minimum Wages Act, Payment of Wages Act, Payment of Bonus Act, Equal Remuneration Act
Code on Social Security, 2020	PF, ESI, gratuity, registration of establishments	EPF Act, ESI Act, Payment of Gratuity Act and others
OSH Code, 2020	Contractor licence, registers, working hours, welfare facilities, principal employer duties	Contract Labour Act, Factories Act and 11 others
Industrial Relations Code, 2020	Standing orders, disputes, retrenchment	Industrial Disputes Act, Trade Unions Act, Standing Orders Act

Do the old rules still apply?

Partly, and this is where most confusion comes from. The government said that during the transition the existing Acts' rules, notifications and schemes "will continue to remain in force". The Ministry of Labour's FAQ says old rules stay in force "till final notification of new rules under the Code, to the extent these are in line with Codes".

For the central sphere, the final central rules came on 8 May 2026: the Code on Wages (Central) Rules, 2026 and the Occupational Safety, Health and Working Conditions (Central) Rules, 2026. The OSH rules expressly supersede the Contract Labour (Regulation and Abolition) Central Rules, 1971. Most private security, housekeeping and construction contracts fall under a state government, so they depend on when your state notifies its own rules. Until then, your state's old rules continue where they agree with the Codes. Ask your labour consultant which rules govern each of your sites.

What changes for your contractor licence?

Under the old Contract Labour Act, the licence rules started at 20 contract workers. Under the OSH Code, the contract labour chapter applies to establishments, and to manpower supply contractors, with 50 or more contract labour on any day in the past twelve months. The Ministry of Labour confirms the threshold went from 20 to 50 "for administrative ease". Under the central rules, the licence is applied for online on the Shram Suvidha portal in Form XXI, needs a bank guarantee of ₹1,000 per contract worker, and is valid for five years. A contractor working in more than one state can apply for a single licence. See our guide to the contractor licence.

What changes in wages and pay day?

Pay dates. Monthly wages must be paid by the 7th of the next month; daily wages at the end of the shift (Code on Wages, section 17). When someone leaves, resigns or is removed, pay within two working days.
Pay by bank. The OSH Code requires contractors to pay wages through bank transfer or electronic mode and to inform the principal employer electronically of what was paid (section 55). Cash is allowed only where electronic payment is not practicable.
Deductions. Only the deductions the Code allows, capped at 50% of wages in a wage period (section 18). See how to handle advances.
Overtime. At not less than twice the normal rate of wages (section 14). The OSH Code sets eight hours a day as the standard; the Ministry's FAQ says hours can be extended with workers' consent on payment of overtime at twice the rate. The overtime calculator works out both rates.
The 50% wage rule. If allowances (the excluded items in the definition of wages) are more than half of total pay, the excess is added back into "wages". This raises the base for PF, ESI and other benefits when pay is split into large allowances.

What changes in registers?

The central rules replace the long list of old forms with three registers (an employee register, an attendance register-cum-muster roll, and a register of wages, overtime and deductions), which can be kept electronically and must be kept for five years. Our guide to contractor registers covers the new and old form numbers side by side.

HaazriPro works this out every month from your attendance, for every staff member and site. Start 30-day free trial

What changes in PF and ESI?

PF and ESI now sit in the Code on Social Security, 2020. The thresholds are unchanged in substance: the PF chapter applies to establishments with 20 or more employees and the ESI chapter to those with 10 or more. Two figures moved recently: the EPF wage ceiling went from ₹15,000 to ₹25,000 a month from 17 September 2026, while the Ministry says the ₹21,000 ESI coverage limit continues for now. See PF and ESI registration for contractors.

What does the principal employer now carry?

The OSH Code makes the principal employer provide welfare facilities (such as drinking water, toilets and first aid) to the contract labour at its premises. If you do not pay wages on time, or pay short, the principal employer must pay the balance and recover it from you, from your bills or as a debt (section 55). Using an unlicensed contractor where a licence is needed is itself a contravention by the principal employer (section 54). Expect clients to ask for more proof every month. See what the principal employer can ask you for.

Worked example: what changes for a 70-person agency

Item	Before (old Acts)	After (Codes and 2026 central rules)
Contractor licence	Needed (20 or more)	Needed (50 or more), online, five-year validity
Security for the licence	As per old rules	Bank guarantee of ₹1,000 × 70 = ₹70,000 (central rules)
Registers	Separate forms for workmen, muster roll, wages, deductions, fines, advances, overtime	Three registers, electronic allowed, kept five years
Pay day	By the 7th (under 1,000 staff) or the 10th (old CLRA Central Rules, rule 65)	By the 7th of the next month
EPF ceiling	₹15,000	₹25,000 (from 17 September 2026)

The figures in the "after" column are from the central rules; your state's rules may differ. Treat this as a checklist to take to your labour consultant, not as a final answer.

Where does good attendance fit in?

Every one of these changes leans on the same record: who worked, on which day, at which site, for how many hours. Wage dates, overtime at double rate, the muster roll and the principal employer's checks all start there. HaazriPro does not file statutory returns, but it keeps that daily attendance (marked by tapping each person's face photo), the monthly salary sheet with advances, and the site bill, so the numbers your consultant needs are ready. More in our contractor compliance checklist.

Sources

This guide explains the rules in plain language. It is not legal or tax advice. Laws and rates change, so check which rules apply to your establishment with your labour consultant, CA or lawyer before you act on it.

Turn daily attendance into salary sheets and client bills

Supervisors mark attendance by tapping each staff member's face photo, even offline. The salary sheet and the client bill are ready at month end.

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