The Labour Codes Came Into Force in November 2025. Is Your Offer Letter Updated?
If it still names the Industrial Disputes Act or the Payment of Gratuity Act, it is out of date. The four Labour Codes came into force on 21 November 2025 and subsumed 29 central Acts, so those statutes no longer exist to be cited.
On 21 November 2025 the four Labour Codes came into force and replaced twenty-nine central labour statutes. Employment templates across the country were written against the old law, and most have not been revisited. If you are issuing offer letters, or reading one, this is the single most consequential change in recent Indian employment law.
Key takeaways
- The four Codes came into force on 21 November 2025 and subsumed 29 central Acts.
- Appointment letters became a statutory requirement for all workers.
- Gratuity for fixed-term employees now begins at one year of service rather than five.
- A uniform definition of wages applies across labour law, which affects CTC structuring.
- Contracts still naming the Industrial Disputes Act or the Payment of Gratuity Act are citing repealed statutes.
- State rules under the Codes are still being notified, so some positions remain in transition.
What the four Codes are
The Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020, and the Occupational Safety, Health and Working Conditions Code, 2020 together replaced twenty-nine central Acts. The consolidation was substantial rather than cosmetic: definitions changed, thresholds moved, and obligations that previously sat in separate statutes now sit together.
Among the Acts subsumed are the Industrial Disputes Act 1947, the Payment of Gratuity Act 1972, the Employees Provident Funds Act 1952, the Employees State Insurance Act 1948, the Maternity Benefit Act 1961, the Contract Labour Act 1970, the Factories Act 1948, the Minimum Wages Act 1948 and the Industrial Employment (Standing Orders) Act 1946.
Appointment letters are now mandatory
The Occupational Safety, Health and Working Conditions Code requires employers to issue appointment letters to workers. For a large part of the Indian workforce this was previously a matter of practice rather than obligation, and plenty of engagements ran on an offer letter and nothing further, or on nothing written at all.
For employers this is the most immediate compliance item, because it applies to the whole workforce rather than to a category. For employees it means the absence of a proper appointment letter is now a gap against a statutory requirement rather than merely untidy administration. Required particulars are set out in rules, and Central rules were gazetted in draft form on 30 December 2025 with State rules following at different speeds, so the detail is worth checking for your state.
Fixed-term gratuity dropped from five years to one
Under the Code on Social Security, the qualifying service for gratuity for fixed-term employees is one year rather than the five that applied previously. This is a significant change for any organisation that uses fixed-term contracts at scale, and for any employee on one.
The practical consequence for contracts is specific: templates drafted before the change frequently state that gratuity accrues after five years of continuous service. Applied to a fixed-term employee, that statement no longer reflects the position. It is one of the clearest examples of a clause that is not merely outdated in style but incorrect on its face.
The uniform wage definition
The Code on Wages introduced a uniform statutory definition of wages that applies across labour law. Indian CTC structures have historically been built with a small basic component and a large allowance component, which reduced the base for provident fund, gratuity and other calculations.
This is the area where caution is most warranted. Central and State rules are still being notified, and the practical application to a specific salary structure is not settled uniformly across the country. The honest position is that a CTC with a disproportionately small basic component is worth examining against the new definition, and that anyone giving you a precise numerical verdict today is ahead of where the rules currently are.
Contracts citing repealed statutes
This is the easiest thing to check in your own document and the most common finding. If your contract says your employment is governed by the Industrial Disputes Act, or that gratuity is payable under the Payment of Gratuity Act 1972, or refers to the Factories Act or the Standing Orders Act by name, it is citing law that was repealed in November 2025.
A stale citation does not by itself void a contract. It does tell you the document has not been reviewed since the Codes came into force, which raises a fair question about what else in it reflects the previous regime. For an employer, it is also the kind of thing that surfaces during funding diligence or an acquisition.
What is not covered by the Codes
One point worth noting because it is frequently misunderstood. The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, generally called the POSH Act, was not subsumed by the Codes and continues to apply as a standalone statute. Workplaces at the prescribed employee threshold still need an Internal Committee and a policy.
The Rights of Persons with Disabilities Act, 2016 and the Apprentices Act, 1961 similarly stand on their own. Consolidation of twenty-nine Acts does not mean everything is now in one place.
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Review your employment contractCommon questions
Do the Labour Codes apply to my existing contract, or only to new hires?
The Codes are the operative law from 21 November 2025 onward. Statutory obligations such as issuing appointment letters do not wait for a contract to be renewed. What a specific pre-existing contract term means in light of the Codes depends on the term and the facts, which is worth checking with an advocate.
My offer letter cites the Payment of Gratuity Act. Is my contract invalid?
No. A reference to a repealed statute does not void a contract. It indicates the document predates the Codes or has not been reviewed since, and it is worth asking your employer to reissue an updated version, particularly if the surrounding terms also reflect the old regime.
Have all the state rules been notified?
Not uniformly. Central rules were gazetted in draft on 30 December 2025 and states have progressed at different speeds. Until a state notifies its rules, legacy state legislation continues to apply alongside the central Codes, which creates a transitional period where the position depends partly on where you work.
Related guides
This article is general information about Indian law as of 2026-07-26, not legal advice, and reading it does not create an advocate–client relationship. Statutes and rules change, particularly under the Labour Codes where State rules are still being notified. Consult a qualified advocate about your own situation.