India’s four new Labour Codes, which replace 29 old labour laws, came into effect from November 21, 2025.
These include the Code on Wages, Industrial Relations Code, Code on Social Security, and the Occupational Safety, Health and Working Conditions Code.
While these laws are active at the central level, their real impact will be felt only after individual states notify their own rules.
Since labour is a concurrent subject, companies must fully comply only once state notifications are issued.
Once implemented, these changes will directly affect key job-related documents such as appointment letters, salary slips, working hours, leave rules, and retirement benefits.
Appointment Letter Will Become a Legal Document
Until now, appointment letters were mostly treated as internal HR documents, often written in broad terms.
That is set to change.
Experts say that after state-level implementation, appointment letters will become legally important compliance documents.
They will clearly spell out salary structure, working hours, holidays, and social security benefits.
In simple terms, the appointment letter will no longer be just an offer of employment. It will act as a legal record of an employee’s rights and entitlements.
Big Change in Salary Structure and Basic Pay
One of the biggest changes comes from the Code on Wages.
It mandates that at least 50% of an employee’s total salary must be classified as wages.
This means companies will have to increase basic pay and reduce excessive allowances that were earlier used to lower statutory payouts.
As a result, salary structures across companies are expected to be reworked.
While some employees may see a small dip in monthly take-home pay, the long-term benefits are significant.
Higher basic pay leads to higher PF contributions, gratuity, overtime pay, bonuses, and leave encashment.
Salary Slips Will Become Easier to Understand
Salary slips will also see a cleaner and more transparent format.
The number of allowances will reduce, and statutory deductions like PF and ESIC will be clearly shown.
This will help employees better understand how their salary is calculated and where their money is going each month.
Clear Rules on Working Hours and Overtime
The new labour laws officially recognise an 8-hour workday and a 48-hour workweek.
Any work beyond this limit will be treated as overtime and must be paid at double the normal rate, subject to state rules.
As a result, vague clauses such as “work as per business requirements” will no longer be enough.
Appointment letters will need to clearly mention working hours and overtime conditions.
Leave Policies Will Be Clearly Defined
Leave rules are also expected to become more transparent.
Details related to leave accrual, carry-forward, and encashment will likely be mentioned directly in appointment letters.
This will especially help employees working across multiple states and those who face confusion during job changes or final settlements.
Social Security Details Must Be Clearly Stated
The new Labour Codes strongly focus on social security.
Benefits such as PF, ESIC, gratuity, and other statutory coverages will be clearly mentioned in appointment letters.
Importantly, fixed-term and contract employees are now formally covered, ensuring their benefits and rights are documented in writing
Will Companies Need to Issue New Appointment Letters?
The new laws do not strictly require companies to issue fresh appointment letters to existing employees.
However, once state rules are notified, any clause that violates the new codes will become legally invalid.
To avoid compliance risks, inspections, or future disputes, companies are expected to issue revised appointment letters or official addendums as a practical step.
