The landscape of India’s working world is about to change completely. Effective November 21, 2025, four new labour codes have come into effect, consolidating 29 existing labour laws and creating a modern and transparent system. The introduction of the Wage Code, Industrial Relations Code, Social Security Code, and Occupational Safety Code will completely change the working rules between companies and employees.
Most importantly, your appointment letter will no longer be just a piece of paper, but a powerful legal document. In this article, we will delve deeper into the impact these historic changes will have on your take-home salary, PF, and working hours.
Appointment letter will become your legal weapon
Until now, companies considered the appointment letter merely an HR formality, but under the new labour codes, its importance has become paramount. It will now be mandatory for every company to clearly mention the salary structure, working hours, holidays, and social security benefits in the appointment letter.
This will directly benefit employees by enabling them to legally enforce their rights. As soon as state governments issue their notifications, companies will be required to immediately replace the old letters and implement the new rules. This will increase transparency in the workplace and strengthen the position of employees even more than before.
50% Basic Pay Now Mandatory
Under the new Code on Wages, your salary calculations will completely change. Basic pay will now be required to constitute at least 50% of your total CTC. This change will have far-reaching consequences. As basic pay increases, the PF contribution will also increase, which may slightly reduce your in-hand or take-home pay.
However, the other side of the coin is that the increase in basic pay will significantly increase your PF fund, gratuity, and bonus amount. In the long run, this change will be a jackpot for employees, as the retirement amount will be significantly larger.
New Working Hours and Overtime Law
The new rules bring greater clarity regarding working hours. The maximum duty limit is now set at 8 hours per day and 48 hours per week. If an employee works beyond this stipulated time, the company will be legally obligated to pay overtime.
Furthermore, leave regulations will now be completely transparent. Leave accrual, carry-forward, and leave encashment rules will now be directly mentioned in your appointment letter, eliminating any future disputes.
ESIC and Gratuity Now Accessible to All
With the introduction of the Social Security Code, benefits like PF, ESIC, and gratuity will no longer be limited to those in permanent positions. Now, fixed-term and contract employees will also have all these rights. Companies will be required to make their pay slips more transparent, clearly listing deductions and allowances. This will make it easier for employees to understand their salary and future savings. Benefits such as PF and gratuity will now be clearly listed within every employee’s purview.