व्याख्या
Explainers
Plain-language summaries of the laws employers ask us about most.
The four Labour Codes
Since 21 November 2025, four Codes replace the older central labour Acts: the Code on Wages, the Industrial Relations Code, the Code on Social Security and the OSH & Working Conditions Code. Final Central Rules were notified on 8 May 2026. Many states, including Karnataka (drafts of 23 Jan 2026), have not finalised their rules, so older state forms continue meanwhile. A single "wages" definition, with excluded items above 50% added back, now sets the base for PF, gratuity and bonus.
EPF & ESI basics
EPF applies to establishments with 20 or more employees; employer and employee each contribute 12% of wages, and 8.33% of the employer's share goes to EPS. Membership is compulsory up to the ₹25,000 ceiling from 17 Sep 2026. ESI applies at 10 or more employees and covers those earning up to ₹21,000: employee 0.75%, employer 3.25%. Both are due by the 15th. ESI coverage is fixed per contribution period (Apr–Sep, Oct–Mar).
Professional Tax
A state tax on employment, capped at ₹2,500 per person per year (Article 276). The employer deducts it by the employee's work location and deposits it with that state. Karnataka charges ₹200 a month at ₹25,000 or more (₹300 in February), due by the 20th. Delhi, Haryana and Uttar Pradesh levy no PT; Odisha abolished it from 1 April 2026; West Bengal adopts new slabs from 1 October 2026.
Labour Welfare Fund
A small employee and employer contribution to state welfare boards, applicable in 16 States/UTs with varying amounts and frequency. Karnataka: ₹50 employee + ₹100 employer per year for each employee on the rolls on 31 December, payable online by 15 January; establishments with 10+ persons are covered from 7 January 2026. Maharashtra: ₹25 + ₹75 every half-year, due 15 July and 15 January.
Shops & Establishments
Every shop, office, IT/ITES unit or hotel follows its state's S&E Act on registration, hours, leave, holidays and registers. In Karnataka, apply in Form A on e-Karmika within 30 days of starting. Since 4 September 2026, registration is valid until closure, with no renewal; 10+ worker establishments registered under the OSH Code are exempt. Form U is due by 31 January. Maharashtra requires full registration from 20 workers.
Contract labour
Contract labour now falls under the OSH & Working Conditions Code, which replaced the CLRA Act on 21 November 2025. Principal employers with 10+ workers must register; contractors need a licence at 50+ contract workers, and contract labour in core activities is restricted. Contractors pay within 7 days of the wage period and file half-yearly returns by 30 July and 30 January. If a contractor defaults, the principal employer must pay.
POSH compliance
The Sexual Harassment of Women at Workplace Act, 2013 applies to every workplace. Employers with 10+ employees must set up an Internal Committee and reconstitute it before its three-year tenure ends or when a vacancy arises, display its details, run awareness sessions and complete inquiries within 90 days. Companies disclose POSH cases in the Board's report. The annual report is commonly called for by 31 January; dates vary by state and district.
Payroll & payslips
Pay monthly wages by the 7th and issue wage slips on or before pay day. Deductions cannot exceed 50% of wages; overtime is paid at twice the ordinary rate. Payroll must apply the Code wages definition, PF ceiling rules (₹25,000 from 17 Sep 2026), ESI contribution periods, and PT and LWF for each employee's work state. Salary TDS under s.392 is deposited by the 7th, reported quarterly in Form 138 and certified yearly in Form 130.
Full & Final settlement
On resignation, removal, dismissal or retrenchment, wages due must be paid within two working days (Code on Wages s.17(2)). F&F usually covers unpaid salary, leave encashment, notice pay or recovery, bonus, loan recovery and TDS. Gratuity is due after five years, or one year for fixed-term employees, within 30 days. Record the exit date on the EPFO portal and the reason code in the next ESI contribution file.
Statutory registers & returns
Every law requires registers such as wages, attendance, deductions, overtime, leave and contractors; they may be kept electronically, and each law sets its own retention period. For central-sphere establishments, a single unified annual return, Form XVII under the OSH & Working Conditions Code, is due by 28/29 February for the previous calendar year, the first by 28 February 2027. Karnataka establishments continue state returns: Form U by 31 January and Factories Form 20 by 1 February. Notices and abstracts must be displayed at the workplace.
Questions about your situation?
Our labour-law and payroll desks can review your set-up and tell you what applies.