HR Compliance under New Labour code

If you’re managing HR for any business in Mumbai—whether you’re a startup with 10 employees or an established company with 500—November 2025 marked a watershed moment in Indian labour law. The New Labour Codes came into full effect, and they didn’t just tweak existing rules. They fundamentally restructured how HR compliance works in India.

The irony? Most HR teams are still operating with pre-2025 mindsets. They’re maintaining old registers, following outdated processes, and unknowingly exposing their companies to penalties that have increased 5-10 times under the new regime.

This isn’t about scaring you. It’s about preparing you. The New Labour Codes aren’t inherently bad—in many ways, they’ve simplified compliance by consolidating 29 scattered laws into just 4 comprehensive codes. But simplification doesn’t mean easy. It means different. And different requires learning, adapting, and sometimes completely overhauling your HR compliance systems.

Let’s walk through exactly what’s changed and what your HR department needs to do right now to stay compliant, HR Compliance under New Labour code

Digital-First Compliance - Everything Goes Online

The New Labour Codes mandate digital compliance for practically everything.

Shram Suvidha Portal—Your Single Window: Gone are the days of registering separately with EPF office, ESI office, labor department, and factories inspector. Now, most registrations happen through the unified Shram Suvidha Portal (shramsuvidha.gov.in).

What you register on Shram Suvidha:

Initial establishment registration
Annual returns for various compliances
Inspection requests and responses
Notice submissions and acknowledgments

Other mandatory portals:

EPFO Unified Portal: For monthly ECR filing, PF registrations, and employee claims
ESIC Portal: For ESI registrations, monthly returns, and medical benefits
Income Tax Portal: For TDS filings, Form 16 generation
State PT Portals: For Professional Tax (varies by state—Maharashtra uses MAITRI portal)

What this means for HR: Your HR team needs digital literacy. Staff members who've been filing paper returns for 20 years need training on navigating these portals. Budget for:

Digital signature certificates for authorized signatories (₹1,000-2,000/year)
Training for HR staff on portal usage
Reliable internet connectivity and computers
Password management systems (you'll have 5-10 portal logins to maintain)

Deadline compliance is stricter: Digital systems track everything with timestamps. You can't claim "the post was delayed" anymore. If the deadline is 15th and you file on 16th, the system automatically calculates penalties.

Privacy considerations: Store Aadhaar numbers securely with encryption. Under India's data protection regulations, unauthorized disclosure of Aadhaar information attracts penalties.

New Registers HR Must Maintain

The codes prescribe specific registers that must be maintained—digitally or physically.

Form IV - Wage Register (Code on Wages): Must contain for each employee:

Name, father's name, designation
Date of joining and leaving
Daily/monthly wages with breakup
Deductions itemized
Net wages paid with payment mode
Signature of employee receiving wages

Update frequency: Every pay cycle (monthly/weekly)

Muster Roll (Working Conditions Code): Daily attendance showing:

Employees present/absent
Overtime hours worked
Leave taken (with type—casual, sick, earned)

Update frequency: Daily

Leave Register: Track for each employee:

Earned leave balance
Casual leave balance
Sick leave balance
Leaves taken with dates and reasons
Leave encashment details

Maternity Benefit Register: For women employees:

Maternity leave applications
Medical certificates
Leave dates and duration
Benefits paid
Post-delivery joining dates

Bonus Register: If paying bonus:

Calculation basis
Eligible employees
Amount paid to each
Payment dates and mode

Inspection Book: Record of all labor department inspections:

Date of inspection
Inspector's name and designation
Observations made
Compliance certificates issued

Digital or Physical? The codes allow digital registers, but they must be:

Readily accessible during inspections
Backed up regularly
Printable on demand
Protected from unauthorized alterations

Most Mumbai companies now use HRMS software that maintains these registers automatically. If you're still using Excel sheets, consider upgrading.

Working Hours and Overtime: Stricter Limits

The Occupational Safety Code standardizes working hours across industries.

Standard limits:

Maximum 8 hours per day
Maximum 48 hours per week
One rest day per week (Sunday or rotational)

Overtime rules: Any work beyond 8 hours/day or 48 hours/week is overtime, which must be paid at double the regular rate.

New Labour Code

What HR must track

Actual hours worked by each employee daily
Overtime hours separately recorded
Overtime wages calculated at 2x normal hourly rate
Overtime limits not exceeded (generally 50 hours overtime per quarter)

For IT and other exempt sectors: While some exemptions exist for managerial and supervisory staff, these are narrower than before. Don't assume your entire IT company is exempt. Only specific roles qualify.

Flexi-time and work-from-home: The codes allow flexible working arrangements but require proper policies documenting:

Core hours when employees must be available
How working hours are tracked for remote workers
Overtime approval processes for flexible arrangements

Enhanced Penalties - What Non-Compliance Now Costs

The penalty structure under the new codes has teeth.

For wage-related violations:

Delayed wage payment: ₹20,000 to ₹50,000 per violation
Wrong deductions from wages: ₹10,000 to ₹40,000
Non-maintenance of wage registers: ₹20,000 to ₹50,000

For social security violations:

Delayed PF deposit: 12% annual interest plus damages up to 100% of contribution amount
Non-registration under ESI: ₹10,000 to ₹1,00,000
False information in statutory returns: ₹50,000 to ₹1,50,000

For working conditions violations:

Exceeding working hour limits: ₹50,000 to ₹1,50,000
Non-compliance with safety standards: ₹2,00,000 to ₹3,00,000
Employment of children: ₹50,000 to ₹1,00,000 plus imprisonment up to 3 years

Repeat offenses: Penalties double or triple for repeat violations within 5 years.

Criminal liability: For willful violations, fraud, or violations causing safety hazards, imprisonment provisions range from 3 months to 3 years.

The bottom line: The "chalta hai" approach to compliance that many Mumbai businesses followed pre-2025 is now financially suicidal.

The Compliance Calendar - What's Due When

HR must track multiple compliance deadlines every month, quarter, and year.

Monthly (by 15th):

EPF challan deposit and ECR filing
ESI contribution payment

Monthly (by 7th):

TDS deposit and challan filing

Monthly (by last day):

Professional Tax deposit and return (varies by state)

Quarterly:

TDS return filing (Form 24Q)
ESI return filing (half-yearly now, but quarterly planning needed)

Annually:

Form 16 issuance to employees (by June 15)
PF annual returns (Forms 3A, 5, 6A by April 30)
Bonus calculations and payments (if applicable)
Income tax return filing

Ongoing:

Daily wage register updates
Daily muster roll maintenance
Monthly leave register updates
Immediate reporting of workplace accidents

Pro tip: Create a compliance calendar in Excel or use HR software with automatic deadline reminders. Missing even one deadline can trigger penalties.

Maternity Benefits - Extended and Enhanced

The Code on Social Security maintains the enhanced maternity benefits introduced in 2017 amendments.

26 weeks paid maternity leave: For women with less than two children, maternity benefit is 26 weeks at full wages.

12 weeks for third child onwards: Women with two or more existing children get 12 weeks.

Adoption and surrogacy: Commissioning mothers and adoptive mothers get 12 weeks from the date the child is handed over.

Work from home option: After the mandatory post-delivery leave period, women can request work-from-home for the remaining period if job nature permits.

Nursing breaks: Post-return, two paid breaks per day for nursing the child until 15 months of age.

Creche facilities: Establishments with 50+ employees must provide creche facilities (this is often overlooked in Mumbai offices).

Contractor and Gig Worker Compliance

The Code on Social Security extends social security to gig workers and platform workers for the first time.

If you engage contractors: You're a "principal employer" with joint liability for statutory compliance. Even if the contractor defaults, you're liable for workers' PF, ESI, and wages.

HR must:

Verify contractor's license and registrations before engagement
Collect monthly proof of PF/ESI deposits for contract workers
Maintain register of contract workers on premises
Ensure minimum wage compliance even for contract workers

If you use gig workers/freelancers: Depending on nature of engagement, you might need to provide social security benefits. The rules are still evolving, but if freelancers work exclusively for you with regular monthly payments, they might be deemed employees.

Safe harbour approach:

Use clear contractor agreements specifying they're independent
Pay per project/invoice, not monthly salaries
Don't provide employee-like benefits
Don't exercise employee-like control over their work methods

Notice Period and Termination Rules

The Industrial Relations Code standardizes notice periods and retrenchment processes.

Termination notice periods:

Workmen: 30 days' notice or wages in lieu
Non-workmen: As per employment contract (typically 30-90 days)

Retrenchment compensation: Workers with 1+ year of continuous service get:

15 days' wages for every completed year of service
Notice period wages or notice in writing
This is in addition to gratuity

Layoff provisions: Temporary suspension of workers requires:

Prior permission from government if establishment has 300+ workers
Layoff compensation (50% of wages) if layoff exceeds specified periods

Principal Employer risk explained under New labour code

What HR must document

Valid reasons for termination (performance issues, misconduct, redundancy)
Progressive discipline records (warnings, show-cause notices, replies)
Termination letters with clear reasons
Full and final settlement within prescribed timelines (typically 2-10 days depending on type of employment)

Wrongful termination risks: Under the new code, wrongful termination can result in:

Reinstatement orders from labour courts
Back wages for the entire period of dispute
Compensation for harassment

Fixed-Term Employment - New Flexibility

The codes introduce clear provisions for fixed-term employment—a major change for industries with project-based or seasonal work.

What's allowed: Employers can hire workers on fixed-term contracts for specific projects, seasons, or durations.

Employee rights: Fixed-term employees get same benefits as permanent employees:

Pro-rata gratuity (even if less than 5 years)
PF, ESI, and other statutory benefits
Earned leave proportionate to service period
Working conditions at par with permanent staff

What HR must do:

Clear employment contracts specifying fixed term and project
Same wage scales as permanent employees doing similar work
Pro-rata gratuity calculation at contract end
Proper documentation if contracts are renewed

Benefits: This gives Mumbai businesses flexibility to hire for specific projects without permanent liability, while still ensuring worker protection.

HR Compliance Audit - What to do Now

If you haven't already, conduct an immediate HR compliance audit against the new codes.

Salary restructuring check: ✓ Have all salaries been restructured to 50% basic minimum?

✓ Are revised contracts/letters issued to all employees?

✓ Is your payroll system updated with new structures?

Digital portal compliance:

✓ Are you registered on Shram Suvidha Portal?

✓ Do you have valid digital signatures for all authorized persons?

✓ Are login credentials documented and backed up?

Register maintenance:

✓ Are all prescribed registers being maintained?

✓ Are they updated as per prescribed frequency?

✓ Are digital backups taken regularly?

Aadhaar seeding:

✓ Have you collected Aadhaar from all employees?

✓ Is Aadhaar linked with UAN for all employees?

✓ Is Aadhaar data stored securely?

Statutory payment compliance:

✓ Are all monthly PF/ESI payments happening by 15th deadline?

✓ Is TDS being deposited by 7th?

✓ Are payment records maintained and accessible?

Working hours tracking:

✓ Do you have systems to track actual hours worked?

✓ Is overtime being calculated and paid correctly?

✓ Are rest day requirements being met?

Contractor management:

✓ Have you verified all contractors' licenses and registrations?

✓ Are you collecting monthly compliance proofs?

✓ Is the contract labour register maintained?

Get Expert Help from Kaizen Consultancy Services

The New Labour Codes represent the most significant change in Indian labour law in 50 years. For HR departments trying to stay compliant while handling recruitment, payroll, employee relations, and daily operations, it's overwhelming.

Kaizen Consultancy Services has been Mumbai's trusted labour law advisor for 18+ years. We've helped hundreds of companies transition smoothly to the new compliance framework.

Our HR Compliance Services Under New Labour Codes:

✅ Salary Restructuring: We audit your entire salary structure and restructure it for 50% basic compliance with minimal tax impact.

✅ Digital Portal Setup: We register your business on all required portals and train your team on usage.

✅ Statutory Compliance Management: We handle all monthly filings—PF, ESI, PT, TDS—ensuring zero missed deadlines.

✅ Register Maintenance: We maintain all prescribed registers digitally with secure backups.

✅ Compliance Calendar: You get automated reminders for every deadline so nothing slips through.

✅ Audit Support: When inspections happen, we provide all documentation and represent you.

✅ Policy Drafting: We create compliant HR policies for working hours, leave, maternity, contractor management, etc.

✅ Training: We train your HR team on new code requirements and best practices.

Schedule your free contractor liability Audit

Get your free HR compliance audit under the New Labour Codes—we'll identify gaps and provide a clear action plan. Because HR compliance isn't just about avoiding penalties—it's about building a sustainable, legally sound organization ready for growth.