India's four labour codes were brought into force on 21 November 2025, replacing 29 central labour laws. The final central rules followed on 8 May 2026. For an employee, the four changes that matter most are a statutory definition of "wages" that must be at least half of total pay, gratuity for fixed-term employees after one year instead of five, a written appointment letter as a right rather than a courtesy, and a much shorter deadline for paying final dues after employment ends.
If you work in Pune's IT corridor, your offer letter, your notice-period clause and your full-and-final settlement are all now read against a different statute than the one they were drafted under. Most employees have not been told this, and a fair number of employers are still operating on the old framework while their contracts quietly fall out of step.
What actually changed, and when
The Code on Wages, the Industrial Relations Code, the Code on Social Security and the Occupational Safety, Health and Working Conditions Code together replace 29 separate central labour laws, some dating to the 1930s and 1940s. They were notified with effect from 21 November 2025. The central rules that make them operational were notified on 8 May 2026.
Labour is a Concurrent List subject, so each state must also notify its own rules. Maharashtra is among the states that have done so. That matters for anyone working in Pune: the transition here is further along than in much of the country, and "the codes are not in force yet" is no longer a safe assumption to work from.
The 50% wage rule — the change with the widest reach
Under the old framework, employers could keep "basic salary" low and load the rest of your pay into allowances. Because gratuity, provident fund and retrenchment compensation are all calculated on basic, a low basic meant lower statutory entitlements — and lower employer cost.
The codes close that gap. "Wages" is now defined so that the excluded allowances cannot exceed half of your total remuneration. In practice this raises the base on which your gratuity, PF and any retrenchment compensation are calculated.
Gratuity: five years is no longer the only route
Permanent employees still qualify for gratuity after five years of continuous service. The significant change is for fixed-term employees, who now become eligible on a pro-rata basis after one year.
This closes a long-standing gap. Fixed-term contracts renewed annually were a common way of keeping employees permanently short of the five-year threshold. If you have worked on rolling fixed-term contracts, your position on gratuity is worth re-examining.
Your appointment letter is now a statutory right
Every employee is entitled to a written appointment letter setting out the terms of employment. This sounds procedural. It is not.
The single most common problem we see in employment disputes is an employee who cannot produce a document stating their designation, salary structure, notice period or reporting line — and who therefore cannot prove what was agreed. An offer email and a payslip are not a substitute. If you do not have a proper appointment letter, ask for one in writing, and keep the request.
Notice period and final settlement
India does not permit at-will termination. An employer ending your employment without cause must give the notice your contract specifies, or pay wages in lieu of it. That principle has not changed.
What has changed is the pace of payment afterwards. The codes require final dues to be settled within a very short window after employment ends — a substantial tightening on the old practice of settlements drifting for weeks or months. If your final settlement is being held back, the delay itself is now a compliance failure, separate from any dispute about the amount.
Where employees most often go wrong
- Signing a revised CTC structure without asking what changed in the break-up or why.
- Accepting a fixed-term renewal without checking whether continuous service is being reset.
- Treating a notice-period buyout demand as non-negotiable — it is a contractual term, not a statutory one, and unreasonable terms have been read down.
- Serving notice by email only, with no acknowledgement kept.
- Waiting months for a settlement rather than sending one written demand that starts a record.
A caution about timing
This is a transition, not a clean switch. Central rules are notified, state rules are at different stages across the country, and some operational machinery is still being built. Commentary online is contradictory, with credible sources describing the codes as both in force and not yet enforceable — because both are partly true, depending on which provision and which state you are asking about.
The practical consequence for an individual employee is simple: do not assume your entitlements are what they were in 2024, and do not assume every provision is fully operational either. Check the specific point that affects you.
The bottom line
Get your appointment letter in writing, read your salary break-up against the new wage definition, and treat a delayed final settlement as a live issue rather than an administrative wait. If you are being asked to sign a release as a condition of receiving dues you are already owed, that is the point to take advice — before you sign, not after.