Labour codes: states have until 31 October. What employers should do now

The four labour codes have been in force since 21 November 2025. The central rules under them were notified on 8 May 2026. And yet, for most private employers, the codes have felt half-switched-on all year. The reason is simple: for most factories, shops, offices and service businesses, the "appropriate government" under the codes is the state, and a code without state rules leaves a lot of practical detail unanswered.

That gap should close soon. On 24 September 2026, Labour Secretary Chandra Bhushan Kumar said the Centre expects all states and Union Territories to publish their rules under the four codes by 31 October. Here is what that means for a small or mid-size employer, what is already settled, what is still open, and how to prepare without waiting for the last gazette.

Where things stand

A quick timeline, from the sources below:

• 21 November 2025: the Code on Wages, the Industrial Relations Code, the Code on Social Security and the Occupational Safety, Health and Working Conditions Code take effect, replacing 29 central labour laws.
• 8 May 2026: the Labour Ministry notifies the central rules under all four codes.
• 24 September 2026: speaking at a PHDCCI and Grant Thornton Bharat seminar, the Labour Secretary says ten states have published their rules, the rest have published drafts for consultation, and the Centre is hoping for state-level rules everywhere by 31 October.

Labour is on the concurrent list, so both the Centre and the states make rules. Which set applies to you depends on who the appropriate government is for your establishment. For most private businesses outside the central sphere, that is the state where the establishment sits. A company with offices in three states may end up working to three slightly different sets of rules.

Why the state rules matter so much

The codes set the frame; rules fill in the forms, registers, timelines and thresholds that payroll and HR actually operate. Until your state's rules are final, practical questions such as which register format to keep, how the single return is filed, and how some working-hour provisions apply in your state stay partly unanswered.

The Grant Thornton Bharat report launched at the same seminar, as reported by Business Standard, put numbers on the simplification the new framework is meant to deliver: rules down from 1,436 to 351, returns from 31 to a single consolidated return, forms from 181 to 73, and registers from 84 to eight. That is a genuinely lighter compliance load, but only once your state has told you what the eight registers and the one return look like.

What is already settled

Several things in the codes do not wait for your state, and you should be operating them now:

• The wage definition. Under the Code on Wages, "wages" are computed with certain allowances excluded only up to a limit: if the excluded parts exceed half of total remuneration, the excess is added back. This affects the base for PF, gratuity and other wage-linked payments. If your salary structure keeps basic artificially low, it is already out of step.
• Timely wages on exit. The Code on Wages requires wages to be paid within two working days when an employee is removed, dismissed, retrenched or resigns. More on the open question here below.
• Fixed-term employees and gratuity. According to the Labour Ministry, fixed-term employees become eligible for gratuity after one year of continuous service instead of five, and are entitled to benefits on par with permanent staff. If you hire on fixed-term contracts, your gratuity provisioning should already reflect this; our gratuity calculator shows the standard formula.
• Appointment letters. The codes require appointment letters, and the central rules prescribe a standardised format. Every new joiner should be getting one.
• The new EPF ceiling. Under the Social Security Code, the EPF wage ceiling rose to ₹25,000 a month from 17 September 2026. We cover that change in detail in what payroll must change for the ₹25,000 ceiling.

What is still open

The same report flagged areas where employers are still waiting for clarity. Three matter most for small and mid-size companies.

1. The two-day rule on separation. The codes say wages must be paid within two working days of certain separations. Employers want to know whether that means only the statutory wages due or the entire full-and-final settlement, including leave encashment, gratuity, bonus and reimbursements. Until that is clarified, the defensible position is to pay at least the wages due within two working days and settle everything else as fast as your process allows, with a written timeline. If your F&F currently takes 45 days, now is the time to shorten it; see our guide to offboarding and F&F settlement.

2. Who counts as managerial, administrative or supervisory. The codes do not define these categories, but the classification decides how provisions on working hours, overtime, leave and industrial relations apply. If your designations do not map cleanly to roles, expect questions. Document what each role actually does, not just its title.

3. Gig and platform workers. The report also called for further guidance on registration and contribution mechanisms for gig and platform workers. This mostly affects aggregators, but if you engage people through platforms, watch it.

Employer checklist for October

1. Map your establishments to states. List every location with employees and note which state's rules apply. Remote employees count; where they work from can matter.
2. Track each state's status. For each state on your list, find out whether rules are final, in draft, or not yet published. The state labour department website is the authoritative place to check.
3. Read the drafts now. If your state is still in draft, read it anyway. Final rules usually differ from drafts in detail, not direction, and you will be ready faster.
4. Fix the wage structure. Check every salary structure against the half-of-remuneration test. This is the single change with the biggest payroll impact, and it is in force already.
5. Shorten your exit process. Measure how long your current full-and-final settlement takes. Aim to pay wages due within two working days of separation regardless of how the open question is resolved.
6. Issue appointment letters to anyone who joined without one, using the prescribed format once your applicable rules confirm it.
7. Classify roles. Write down which roles you treat as managerial, administrative or supervisory and why. Review it once the guidance arrives.
8. Plan for the single return. Once your state's rules are final, find out which consolidated return replaces the ones you file today, and when it is due.
9. Budget for professional advice once. A one-time review by a labour law practitioner after your state's rules are final is much cheaper than a dispute later.

Where ZekoHR fits

The two-day rule is mostly a process problem. In ZekoHR, offboarding runs from the same employee record as payroll: you set the last working day, the exit checklist tracks handovers and clearances, and the final payroll can be run with one-off lines for encashment and recoveries instead of a spreadsheet passed between three people. Salary structures are built from components with percentage and balance lines, which makes the wage-definition check a review of a handful of structures rather than every employee. And when state rules change a form or a register, we would rather tell you plainly what changed than pretend software can make the law simpler than it is.

Sources

• Expects states, UTs to notify labour code rules by October 31: Centre (Business Standard, 24 September 2026)
• Government makes the four Labour Codes effective (Ministry of Labour and Employment, PIB, 21 November 2025)
• Key considerations of the notified Central Rules under India's Labour Codes (DLA Piper)
• Notification of final Rules on four Labour Codes (KPMG India flash news)

This article is general information, not legal advice. Which rules apply to your establishment depends on its location and type, and state rules are still being finalised; confirm your obligations with a qualified professional.