A month after introducing four new labour codes, the Indian government has revealed draft rules aimed at their implementation. These rules detail the calculation of minimum wages, establish weekly working hours, and set procedures for recognizing trade union memberships. Additionally, they propose the formation of a National Social Security Board to oversee the welfare of gig and platform workers. The government invites public comments on these draft rules within the next 30 to 45 days.
Minimum Wage Calculation
The newly proposed rules state that minimum daily wages will be calculated based on the needs of a standard working-class family, comprising a worker, a spouse, and two children. Guidelines dictate a daily intake of 2,700 calories for each family member. Clothing needs are set at 66 meters per year per family, while housing costs will be calculated as 10% of food and clothing expenses. An allocation of 20% of wages will be designated for fuel, electricity, and other essentials, with an additional 25% reserved for education, healthcare, recreation, and unforeseen expenses. An official noted that this wage calculation aligns with principles established in the Reptakos Brett judgment, emphasizing the socio-economic aspects of wage structures. An upward revision of minimum wages is anticipated once the new codes are put into effect.
Working Hours and Social Security
The draft rules propose a cap on weekly working hours, limiting them to 48. Specific guidelines concerning daily working hours, rest intervals, and spread-over time will be announced separately. A significant development for gig workers is the proposed National Social Security Board, which will include lawmakers, state representatives, and members from both worker and employer organizations, along with nominees from the central government. This board aims to ensure that gig and platform workers receive adequate social security benefits, reflecting the evolving nature of work in the modern economy.
Gratuity and Wage Definitions
Regarding gratuity, the government clarified that the provisions will take effect from November 21, 2025, coinciding with the implementation of the new labour codes. Fixed-term employees will now be eligible for gratuity after one year of continuous service, a significant reduction from the previous five-year requirement for permanent workers. Additionally, the labour ministry has reiterated the definition of wages under the new codes. If components other than basic pay, dearness allowance, and retaining allowance exceed 50% of the total pay, the excess will be classified as wages. Notably, performance-linked incentives, Employee Stock Ownership Plans (ESOPs), variable payments, and leave encashment will not be included in this calculation.
Transition Period and State Regulations
During the transition period, the old labour rules will remain in effect until the new regulations are finalized. The labour ministry has indicated that states will need to draft their own rules in accordance with the new labour codes. This collaborative approach aims to ensure consistent implementation of the new codes across the country while allowing for necessary regional adaptations. The government’s initiative to seek public feedback on these draft rules demonstrates its commitment to fostering a more equitable and transparent labour market in India.
Digihunt is not a financial advisor and this is not investment advice.