Fines and penalties under the new Labour Codes for Indian small and medium enterprises
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The 4 Labour Codes are now in effect at central level. This page gives a central view of penalty ranges and explains in plain language what they can mean for small and medium enterprises and for their wage and payroll records.
Information here is summarised from provisions in Code on Wages, Occupational Safety Health and Working Conditions Code, Code on Social Security and Industrial Relations Code that have been notified by central government. It is an awareness note and not a legal opinion.
Penalty picture at a glance
General safety non compliance under the safety Code can invite a penalty in the range of ₹2,00,000 to ₹3,00,000 at central level, with extra amount for each day if the issue continues after conviction.
Non payment of social security contribution that is already deducted from salary can lead to compulsory jail term along with fine.
Under payment of wages and repeat record keeping failures can raise risk from smaller fines to higher amounts and criminal exposure.
Most daily inspection questions still start with simple things such as wage slips, attendance data, salary registers and proof of social security deposits.
Central communication on the Labour Codes has focused on simpler compliance and fewer criminal parts for minor issues. At the same time, there is clearer cost for gaps that are repeated or linked to safety and social security.
Official source for overall Labour Codes
Ministry of Labour and Employment Labour Codes information page.
Session covers how your current letters, attendance, payroll and registers map to the central Code requirements that have started in 2025.
Where Offrd sits in this picture
✓Offer letter and HR letter templates that keep salary and role data in a consistent format.
✓Attendance and payroll records that support the wage clarity that Code on Wages expects.
✓Digital salary registers and wage slips that can be retrieved quickly during any review.
✓Organisation, location and employee view that makes it easier to check social security applicability with your advisor.
Offrd is not a law firm. The platform aims to keep core HR and payroll records clean and complete so that your CA or labour law specialist can give focused advice on the new Codes.
Central government has brought 29 earlier labour laws into 4 Labour Codes. These Codes have been notified to come into effect at central level from 21 November 2025. State rules will be framed under these Codes, but the base penalty structure sits in the central text.
For owners and HR teams, the impact is that fines are now set in clear ranges in each Code and repeat non compliance is treated more seriously than a one time slip. At the same time, many issues can be addressed by simple discipline in wage, attendance and social security records.
If you have not seen the broader picture of how the Codes work, you can read the main explainer on the Offrd Labour Code hub
here.
Official notifications
Government overview and text of all 4 Labour Codes:
This Code covers minimum wages, payment of wages, bonus and related records. Most organisations that pay salaries will touch this Code. The penalty ranges below are from the central Code text.
Trigger
First offence at central level
Repeat offence at central level
Paying less than the amount that is due under the Code
Fine up to ₹50,000
Fine up to ₹1,00,000 with possible jail up to 3 months
Other contravention of the Code or rules
Fine up to ₹20,000
Fine up to ₹40,000 with possible jail up to 1 month
Missing or improper maintenance of wage and record registers
Fine up to ₹10,000
If pattern continues, it can be treated as a wider contravention of the Code
For a typical small or medium enterprise, clean payroll structure, correct wage slips and digital registers are the main defence under this Code. Offrd payroll and payslip modules can support this and you can see a simple payslip flow on the
payslip generator page.
Official source for Code on Wages
Full text of Code on Wages 2019 as published by Ministry of Labour and Employment.
Occupational Safety Health and Working Conditions Code 2020
This Code covers safety and work conditions in factories, offices, warehouses, stores and similar workplaces. Penalties here are higher, as they relate to safety and health of workers.
Trigger
Penalty range at central level
Extra impact
General contravention of safety provisions under the Code
Penalty between ₹2,00,000 and ₹3,00,000
Extra penalty up to ₹2,000 per day if the contravention continues after conviction
Obstructing inspector or giving false records or information
Fine that can go up to ₹1,00,000 and possible jail term for serious or repeat situations
Higher fine and longer jail range can apply for repeat offence
Failure of duties that leads to death or serious injury
For death, minimum fine of ₹5,00,000. For serious injury, fine can reach ₹4,00,000
Part of the fine is to be paid to affected worker or family. Repeat offence can face higher cost
Even a service company with office workers should have basic safety checks and documentation. Plants, depots and stores will usually need a deeper review with safety professionals.
Official source for OSH Code
Full text of Occupational Safety, Health and Working Conditions Code 2020.
This Code brings together provident fund, state insurance, gratuity, maternity benefit and other social security parts. Penalties here are strict, especially where money is deducted from salary and not deposited.
Trigger
First offence at central level
Repeat offence at central level
Failure to pay social security contribution, including cases where amount is deducted from wages but not deposited
Jail term with fine. Central Code sets higher minimum jail and fine where deduction is made but deposit is not done
Jail term can go up to 3 years with higher fine for repeated failure to pay contribution
Non payment of gratuity where payable
Fine that can reach ₹50,000 and possible jail up to 1 year
Can be treated as repeat offence with higher exposure
Obstruction, false returns, failure to provide maternity benefit or pay cess in the situations covered by the Code
Fine that can go up to ₹50,000 with possible jail depending on clause
Higher jail and fine ranges apply for repeated offence
For most small and medium enterprises, the practical step is clear. Any rupee deducted from salary toward social security should be deposited fully and on time and proof of deposit should be easy to show.
This Code is more visible for larger teams. It covers matters such as layoff, retrenchment, closure, strikes, lockouts and unfair labour practice for categories of establishment set in the Code.
Trigger
Fine range at central level
When it usually becomes relevant
Closure or retrenchment without following provisions where relevant sections apply
Fine not less than ₹1,00,000 and can go up to ₹20,00,000
Usually relevant after the company reaches employee thresholds given in the Code
Violation of strike or lockout provisions for covered establishments
Fine from ₹50,000 up to ₹5,00,000, with higher levels for repeat offence
Applies to specific categories of establishment that are listed in the Code
Unfair labour practice by employer, worker or union as listed in the schedule
Fine that starts at ₹10,000 and can reach ₹5,00,000 for repeat offence
Based on conduct that is listed as unfair in the schedule to the Code
High growth companies that are restructuring teams, closing units or working with many contract staff should discuss this Code specifically with a labour law advisor.
