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The four labour codes came into force on 21 November 2025. The change small employers feel first is the two working day deadline for final wages under section 17(2) of the Code on Wages, which replaced settlement practices that ran to 30 or 45 days.
The second is the definition of wages. Where allowances excluded from wages exceed half of total remuneration, the excess is added back for statutory purposes, so salary structures built to keep basic pay thin no longer reduce provident fund or gratuity.
The date the probation started, the date confirmation takes effect, the designation on confirmation, any change in salary, and the notice period that now applies. That last line is the one most often left out, and it is the one that gets quoted at exit.
Issuing it on time is a calendar problem more than a writing problem. A company in India with twenty people has a confirmation due most months, and they are easy to miss.
The Payment of Gratuity Act applies to establishments with ten or more employees, and once it applies it continues to apply. Below that threshold gratuity is not a statutory obligation, though it can be offered contractually and many employers in India do.
Where it applies, the calculation is not the hard part. Fixing the wage base and rounding the final part year correctly is where settlements go wrong.
The Payment of Bonus Act, 1965 applies to establishments with twenty or more employees. An employee who has worked at least thirty days in the accounting year and whose wages do not exceed 21,000 rupees a month is eligible. The minimum is 8.33 percent of wages and the maximum is 20 percent.
Where wages exceed 7,000 rupees a month, the bonus is calculated on 7,000 rupees or the applicable minimum wage for the work, whichever is higher, rather than on actual wages.
The existing Acts and rules continue in force while the codes settle in, and the government transition note says so. The practical answer for a small employer is to follow the state numbers today and expect them to move toward the codes over time.
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Last updated 12 September 2026