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India’s Labour Code 2025 marks one of the most significant shifts in employment regulation in decades. By consolidating 29 fragmented labour laws into a simplified framework, the new labour code in India fundamentally changes how startups hire, pay, protect, and support their workforce.
For startups, the challenge is not understanding the law in theory, it’s implementing it in practice without enterprise-level HR, legal, or compliance teams. The new labour codes make it clear that compliance, wage transparency, and employee wellbeing can no longer be deferred until scale. They must be built into operations from the very beginning.
To stay compliant and future-ready under the startup new labour law framework, startups should focus on:
- Structuring salaries correctly as per the new labour code definition of wages
- Issuing formal appointment letters and maintaining basic employment records
- Classifying employees, contractors, and gig workers accurately
- Preparing early for social security obligations such as PF, ESIC, and gratuity
- Embedding workforce wellbeing into policies around health, safety, and financial security
Taking these steps early helps startups avoid costly corrections while creating a more stable and transparent work environment. This guide breaks down the 4 new labour code framework into clear, startup-friendly insights, without legal jargon or enterprise complexity. You’ll learn:
- What Labour Code 2025 means for startups in simple, practical terms
- A stage-wise labour code compliance checklist for startups
- How to stay compliant without building large HR or legal teams
By the end of this guide, founders and HR leaders will have a clear roadmap to navigate the new labour law for startup ecosystems, confidently, compliantly, and without slowing down growth.
What is Labour Code 2025?
Labour Code 2025 refers to the implementation of India’s four consolidated labour codes, a landmark reform that replaces a fragmented system of 29 central labour laws with a simplified, unified framework.
For startups, this shift is less about new complexity and more about clarity, standardization, and scalability under the new labour code India now follows.
At its core, the new labour code is designed to make compliance easier to understand and enforce, especially for businesses that are small today but plan to scale quickly.
Instead of navigating multiple overlapping laws, startups now operate under four new labour code frameworks, each addressing a specific area of workforce regulation.
The 4 new labour code structures include:
- Code on Wages: Governs minimum wages, timely payment, and equal pay
- Industrial Relations Code: Covers hiring terms, contracts, dispute resolution, and separations
- Code on Social Security: Brings PF, ESIC, gratuity, and benefits under one umbrella, including for gig and platform workers
- Occupational Safety, Health and Working Conditions Code (OSH Code): Focuses on working hours, safety, and workplace wellbeing
Together, these new labour codes create a single compliance backbone for employers, regardless of industry or company size.
According to the Ministry of Labour and Employment, these codes aim to “reduce compliance burden, remove multiplicity of definitions, and promote ease of doing business while ensuring worker welfare.”
Labour Code compliance checklist for startups (by stage)
Labour Code 2025 does not follow a one-size-fits-all approach. Instead, the new labour code in India framework scales obligations based on employee count, nature of work, and operational complexity. For startups, this means compliance evolves as the business grows, provided the right foundations are in place early.
To make this practical, here’s a stage-wise compliance checklist aligned with the startup lifecycle.
1. Pre-revenue and early-stage startups (0–20 employees)
At this stage, most founders assume labour compliance is optional. Under the new labour codes, that assumption no longer holds true.
Key compliance requirements:
- Issue formal appointment letters defining wages, role, and terms of employment
- Ensure salaries meet minimum wage norms under the Code on Wages
- Follow the standardized definition of wages (basic + allowances) to avoid future restructuring
- Maintain records for attendance, wage payments, and deductions (digital records are acceptable)
- Ensure timely wage payment within prescribed timelines
Even at a small scale, wage transparency and documentation are mandatory under the new startup labour law framework.
The Ministry of Labour and Employment notes that the Code on Wages applies to all employees across sectors, removing earlier exemptions for unscheduled employment.
2. Growth-stage startups (20–100 employees)
As headcount grows, compliance shifts from documentation to statutory contributions and workforce classification.
Key compliance requirements:
- Register for Provident Fund (PF) and ESIC, where applicable
- Review employee vs contractor classifications under the Code on Social Security
- Extend statutory benefits, such as maternity benefits and gratuity eligibility tracking
- Comply with working hours, weekly offs, and leave norms under the OSH Code
- Prepare for inspector-cum-facilitator audits with centralized records
According to the International Labour Organization, misclassification of workers is one of the most common compliance risks for growing businesses globally.
3. Scaling startups (100+ employees)
Once startups cross higher thresholds, the focus shifts to institutional compliance and risk management.
Key compliance requirements:
- Draft and certify standing orders, where applicable
- Constitute internal committees related to safety and welfare
- Ensure compliance across multi-state operations
- Strengthen grievance redressal and dispute resolution mechanisms
- Prepare for structured inspections and reporting
The World Bank highlights that standardized labour compliance frameworks reduce regulatory friction for scaling enterprises.
As this checklist shows, Labour Code 2025 compliance is not about doing everything at once, it’s about doing the right things at the right stage. The challenge for most startups is achieving this without building enterprise-sized HR and legal teams.
Core compliance building blocks for startups (Minimum viable compliance)
With thresholds clarified by startup size, the new labour code India framework emphasizes practical, scalable compliance through four core pillars that even bootstrapped teams can implement using free templates and SaaS tools, avoiding the need for enterprise-level legal overhead.
These building blocks, drawn from the 4 new labour code, focus on documentation, payments, benefits, and safety, ensuring startups meet obligations without derailing growth.
1. Contracts & documentation
- Mandatory appointment letters under the Code on Wages, 2019, must include designation, wages, working hours, leave entitlements, and social security details for every employee—replacing informal offers and providing proof against disputes for startup new labour law adherence.
- Distinguish fixed-term employment (FTEs get equal benefits to permanents, gratuity after one year) from contractors to avoid misclassification penalties; use digital e-sign tools for quick onboarding under the new labour codes.
- A one-page policy handbook covering code of conduct and termination notice periods satisfies Industrial Relations Code basics for teams under 100.
2. Wages & working time
- The new labour code India mandates timely wages (by the 7th of the next month), adherence to state minimum or national floor wages, and double pay for overtime beyond 48 hours weekly under the OSH Code—track via payroll apps to automate compliance.
- Structure CTC transparently to avoid unauthorized deductions, issuing digital payslips with breakdowns; this applies universally, regardless of size, in the 4 new labour code regime.
- For hybrid teams, log remote hours simply to defend against claims and align with startup new labour law requirements.
3. Social security & benefits
- Register for EPF (20+ employees or wage thresholds) and ESIC (10+ in non-factories, 1+ in hazardous) under the Code on Social Security, 2020, with contributions due monthly—portable Aadhaar-linked benefits now cover gig workers too.
- Startups can handle interns or part-timers via e-Shram portal without full registration if under thresholds, but issue appointment letters to formalize under the new labour law for startup operations.
4. Health, safety & POSH
- Basic OSH requirements include free annual health check-ups for workers over 40, safe drinking water, and rest areas; for POSH, form an internal committee with 50%+ women representation once at 10+ employees.
- Remote policies should outline ergonomics and mental health support to align with the new labour codes in India.
How startups can stay compliant without enterprise overhead
For many founders, the biggest concern around the new labour code is not intent, it’s capacity. Startups rarely have large HR teams or in-house legal counsel, yet the new labour codes expect consistency, accuracy, and traceability from day one. The good news is that Labour Code 2025 is designed to support simplified, digital-first compliance, making it achievable even for lean teams.
The key is to shift from reactive compliance to built-in operational discipline.
1. Build compliance into hiring and onboarding workflows
The most effective way to manage startup new labour law requirements is to embed them directly into hiring processes rather than treating compliance as a separate task.
This includes:
- Issuing standardized appointment letters aligned with the Code on Wages
- Clearly defining wage components using the new labour code wage structure
- Capturing employee data required for future social security registrations
- Documenting employment terms for fixed-term and contractual hires
According to the Ministry of Labour and Employment, digitized records and standardized documentation are central to reducing compliance friction under the new labour codes.
By making onboarding compliance-ready, startups reduce the risk of retroactive corrections as they scale.
2. Centralize payroll, attendance, and statutory records
One of the biggest operational advantages of the new labour code India framework is the move toward single registration, single return, and electronic filings.
To stay compliant without enterprise overhead, startups should:
- Use a centralized payroll system that aligns with the new labour code definition of wages
- Maintain digital attendance and leave records
- Track statutory deductions and contributions in one place
- Store compliance documents securely for inspections and audits
The World Bank has consistently highlighted that digital compliance systems significantly reduce administrative burden for small and medium enterprises.
This approach minimizes manual effort while improving accuracy and audit readiness.
3. Automate compliance instead of scaling headcount
Rather than hiring compliance specialists early, startups can rely on automation-first tools to manage recurring obligations.
This includes automation for:
- Wage calculations and statutory deductions
- PF and ESIC contribution tracking
- Compliance alerts for filing deadlines
- Employee benefit eligibility monitoring
The International Labour Organization notes that automation and simplification are key enablers for small businesses adapting to modern labour regulation.
Automation allows startups to meet new labour code requirements without increasing fixed operational costs.
Special situations startups usually ignore (but shouldn’t)
While core compliance handles the basics, startups often trip over these overlooked scenarios under the new labour code India rules, where missteps can lead to fines, disputes, or investor red flags despite lean operations. Addressing them proactively with simple policies ensures the 4 new labour code framework supports growth rather than hinders it.
- Night shifts, women employees, and remote workers across states: Women can now work night shifts or hazardous roles with consent and safety measures (e.g., transport, CCTV), but startups must document agreement and provide equivalent pay opportunities under the OSH Code; for interstate remote teams, use portable social security via e-Shram to comply with the startup new labour law without state-by-state filings.
- ESOPs, variable pay, and clawback clauses: Variable incentives count toward minimum/floor wages if below thresholds, and clawbacks must not violate timely payment rules—structure as post-tax bonuses to align with Code on Wages, 2019, avoiding disputes in high-growth SaaS or D2C startups.
- Using agencies/freelancers: Principal employer liability kicks in for contract workers' wages and safety under the Industrial Relations Code; verify agency compliance and issue direct appointment letters for freelancers to prevent misclassification under the new labour codes.
- Startups using gig/platform models: Aggregators contribute 1-2% of turnover to a Social Security Fund for gig workers, with Aadhaar-linked portability—register on e-Shram and track contributions to meet Code on Social Security obligations without enterprise-scale HR.
These edge cases bridge everyday compliance with real-world scaling challenges, but true success under the new labour law for startup teams lies in embedding worker wellbeing into operations. The next section shows how to operationalize that without added costs.
How can startups operationalize workforce wellbeing under the new labour laws in India with Xoxoday?
As organizations transition to the Labour Code 2025, the expectations from HR teams go beyond compliance under the new labour code India framework.
Employee wellbeing, financial security, and inclusive benefits now sit at the center of workforce policy, and companies need tools that simplify execution without adding administrative overhead. This is where future-ready platforms become essential.
Built in India and built for Indian companies, Xoxoday has always taken a tech-first approach to solving operational challenges for HR, compensation, and business leaders.
Designed to anticipate regulatory and workforce shifts well ahead of time, like the four new labour code mandates on health check-ups, timely wages, and social security, Xoxoday equips organizations with the infrastructure needed to support employees holistically, across physical, emotional, financial, and occupational wellbeing.
Xoxoday’s employee perks and benefits solution supports this shift through a comprehensive benefits marketplace designed for mid-market and enterprise organizations, aligning seamlessly with startup new labour law requirements.
The platform enables HR teams to configure, deploy, and track wellness programs across four key dimensions: physical, emotional, financial, and occupational, helping companies transition smoothly into the new regime.
What the platform enables for HR teams
- Xoxoday’s perks and benefits dashboard: Centralized view to manage, track, and report on all wellbeing initiatives, ensuring audit-ready proof of compliance with OSH and Social Security Code obligations like preventive healthcare and portable benefits.
- Financial wellness: Early wage access and tax-saving multi-benefit cards covering meals, fuel, telecom, and books allowances—directly supporting Code on Wages timely payment and floor wage rules without payroll overhauls.
- Health & preventive care: Annual health check-ups, teleconsultations, OPD services, dental and vision care, and insurance support, meeting the new labour codes' mandates for workers over 40 and ESIC expansions.
- Physical wellness: Fitness memberships, step challenges, sports clubs, hobby groups, and nutrition consultations, enhancing OSH Code facilities like rest areas and work-life balance for hybrid startup teams.
- Mental wellbeing: Counselling services, mental health journals, stress management programs, and 24/7 support access, addressing grievance redressal and inclusive policies under the Industrial Relations Code.
- Lifestyle benefits: Learning, childcare, senior care, fertility support, and professional development through flexible spending accounts, extending family definitions and women’s welfare provisions in the 4 new labour code.
- Exclusive savings: Discounts across 6,000+ brands in 30+ categories, with savings ranging from 5% to 50%—boosting retention and aligning with gig worker portability for scaling startups.
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Wrapping up
The new labour code India rollout through the 4 new labour code marks a pivotal shift for startups, blending expanded worker protections with simplified compliance pathways that lean teams can adopt without enterprise-scale resources.
From mandatory appointment letters and timely wages to wellbeing initiatives via platforms like Xoxoday, founders now have clear tools to build resilient, future-proof operations under the startup new labour law landscape.
With minimum viable compliance, proactive policies for special situations, and tech-enabled wellbeing, scaling compliantly becomes a strategic advantage rather than a burden.
FAQs
What is the new labour code implementation date?
India’s new labour codes do not have a single nationwide implementation date. While all four codes have been passed by Parliament, they will come into force only after states notify their respective rules. The central government has indicated a phased implementation, making it important for startups to prepare in advance rather than wait for a final enforcement date.
What is the new labour reform code bill?
The new labour reform code bill refers to four labour laws passed between 2019 and 2020 to replace 29 existing central labour laws. These include the Code on Wages, Industrial Relations Code, Code on Social Security, and the OSH Code. Together, they simplify compliance, standardize definitions, and strengthen worker protections under the new labour code India framework.
Does the new labour law for startup apply to teams under 10 people?
Yes, basics like appointment letters, timely wages, and minimum wage rules apply universally; EPF/ESIC triggers at 10-20 employees or hazardous work, but small teams stay lean with digital records.
How do startups handle gig workers under the new labour codes?
Register on e-Shram for portable benefits; aggregators contribute 1-2% turnover to a Social Security Fund, ensuring compliance without full-time HR overhead.
