India's Four Labour Codes And Hybrid Work For IT And Global Capacity Employers

The commencement of all four Labour Codes with effect from 21 November 2025 marks the single biggest change to India's employment law framework in decades, replacing 29 central laws with a unified structure. For IT/ITES companies, Global Capability Centres (GCCs) and other white‑collar employers that rely heavily on hybrid work and extended service windows, the new regime is not just a legal development but an operational reset.

1. A new baseline for White‑collar employment

The four Codes - the Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020 and the Occupational Safety, Health and Working Conditions Code, 2020, now operate nationally, subject to supporting Central and State Rules being notified and phased in. Together they introduce harmonised definitions of wages and workers, expand social security coverage, update industrial relations processes and extend safety and welfare obligations to a wider range of establishments, including commercial offices. For services sector employers that had previously treated much of this framework as primarily factory oriented, the Codes bring IT campuses, back‑office hubs and GCCs clearly within their scope.

Hybrid and remote work have been mainstream in the IT and GCC ecosystem for several years, but India's legacy labour laws were never designed around such models. The new Codes and emerging rules explicitly contemplate flexible work arrangements, digital records, and tech enabled compliance interfaces, giving employers a chance to align their HR structures with how work is actually organised in 24×7, distributed teams. The opportunity now is to use implementation as a moment to rationalise contracts, policies and time tracking practices, rather than simply "porting" old templates into the new legal regime.

2. Wage Structure and Hybrid‑work payroll

The most immediate impact for IT and GCC employers comes from the new definition of "wages" under the Wage Code, which caps exclusions such as allowances at a percentage of total remuneration. Any excess must be added back for statutory purposes. In practice, this will compress basic pay and allowances into a narrower band, increasing the base for contributions such as provident fund and gratuity, and may raise total statutory costs for mid‑salary bands that previously relied on large, excluded allowances. Salary structures for employees on flexible or remote arrangements will need particular scrutiny, because variable pay and location linked allowances often sit at the margins of what can be excluded under the new formula.

Hybrid work also challenges traditional payroll cut‑offs and overtime assumptions. While managerial and supervisory staff may remain outside some working time protections, a significant number of IT/BPO employees fall within the protections on hours of work, overtime and weekly rest under the Codes and State Rules. For GCCs and ITES providers that run night shifts and weekend rotations, time‑tracking systems must reliably capture actual hours worked, breaks and overtime for on‑site and remote employees alike, so that statutory caps such as 48 hours per week and overtime at twice the normal wage rate can be honoured. Payroll and HRIS (Human Resource Information System) platforms will have to integrate attendance systems, project tracking tools and work from home logs to avoid both under and over compliance.

3. Social Security for Distributed and Gig‑like workforces

The Social Security Code extends and consolidates benefits such as provident fund, state insurance and gratuity, while also explicitly addressing gig, platform and contract workers. For IT and GCC employers, the most significant shift lies in the breadth of coverage rather than the existence of the schemes themselves. Employee categories that were historically kept just outside formal benefit thresholds may now come into the net through revised wage definitions and coverage rules.

Hybrid work arrangements often blur the distinction between employees, consultants and vendor personnel who are functionally embedded in project teams. Under the new regime, misclassification risks carry sharper consequences, because a wider group of individuals may be entitled to social‑security benefits, and principal employers may be held responsible for shortfalls where contractors fail to comply. GCCs that rely heavily on third‑party staffing, facility management and IT support vendors across multiple locations will need to review contracts, onboarding practices and vendor monitoring mechanisms to ensure that social security contributions are properly discharged and documented. This is especially important where remote workers are formally engaged through intermediaries but work under the effective direction and control of the GCC entity.

4. Industrial Relations in a white‑collar setting

The Industrial Relations Code modernises rules on standing orders, layoffs, retrenchment and dispute resolution, and creates a framework for recognition of trade unions and negotiation councils. Even where unionisation levels in IT and GCC sectors remain modest, the Code's processes around handling grievances, notice periods and dispute mechanisms will indirectly shape how these employers design exit processes, restructuring projects and performance management frameworks.

Hybrid workforces can make early‑warning signals of unrest or dissatisfaction harder to detect, because physical presence in offices is intermittent and informal interactions are reduced. The Codes, combined with state level rules, may push employers towards more formalised communication channels, written policies and digital grievance mechanisms that are accessible to employees working remotely. For larger IT parks and multi-tenant campuses, the threshold based application of certain IR provisions may also require coordination between anchor tenants, facility managers and local authorities when dealing with safety incidents, protests or disruptions that cut across establishments.

5. Safety, Health and Welfare in the hybrid office

The Occupational Safety, Health and Working Conditions Code consolidates 13 laws and clearly extends safety and welfare obligations to commercial establishments, not only factories and construction sites. For IT and GCC employers, this means that "office work" is firmly within the regulatory perimeter, with expectations around workplace safety, health checks, canteen and rest facilities, and documentation even when the bulk of work involves desks and screens.

Where operations run 24×7, the OSH framework interacts directly with hybrid and night‑shift arrangements. Employers will need to revisit policies on night‑shift work, especially for women employees, taking into account consent requirements, transport and security arrangements, rest periods and safe return protocols that satisfy both the Code and state specific rules. Facilities related functions such as security, housekeeping, catering and shuttle services are often outsourced, but principal employers remain exposed if contractor operated services fail to meet safety, welfare or licensing norms. As hybrid work reduces on‑site headcount on many days, employers may be tempted to scale back physical facilities, but must do so carefully to ensure that statutory minima for welfare and amenities are still met across all operating patterns.

6. Managing Contractors, Vendors and Global policies

IT and GCC employers rarely operate in isolation, they sit within complex ecosystems of staffing providers, managed‑service vendors, cloud and data‑centre operators, and global group entities. The Codes make it more important to map exactly how labour is supplied and supervised across this ecosystem, because liability for non‑compliance can flow up to the principal employer in many scenarios, particularly under social‑security and OSH provisions.

Global compliance and HR policies may need careful localisation. Many GCCs operate under group‑wide handbooks that assume EU or US style working time directives, overtime rules and exemption categories, which will not always track Indian thresholds or definitions under the Codes and state rules. Aligning global policies with the Indian Codes will require a line by line review of working hours expectations, on‑call arrangements, remote work guidelines and benefits structures, as well as training for overseas managers who supervise Indian teams.

7. A Practical Roadmap for IT and GCC employers

For most IT and GCC employers, compliance with the Labour Codes will be a staged exercise rather than a single day switch. Over the next four to six months, organisations should focus on diagnostic work such as mapping workforce categories, reviewing salary structures against the new wage definition, identifying hybrid‑eligible roles, and cataloguing all third‑party staffing and facility management relationships. This assessment phase should end with a clear view of where statutory cost increases are likely, where misclassification risks lie, and which state‑level rules will apply to each location.

The next stage involves updating contracts, policies and systems. Employment and consultant agreements may need revised clauses on hours of work, overtime, leave, remote work expectations and social security contributions, while HR and employee handbooks must be re‑written to explain the new framework in accessible language. Payroll and HRIS tools will require configuration changes to accommodate the wage definition, overtime calculations and multiple State Rule parameter. For many employers, this will be the lengthiest part of the transition. Vendor contracts should be renegotiated to include explicit representations and indemnities on statutory compliance, rights to audit and remedial measures where contractor provided staff trigger liabilities.

Finally, implementation must be reinforced through training, monitoring and course correction. Team leads and line managers, especially those supervising remote and night‑shift teams, should be trained on the practical implications of working time caps, overtime approvals and rest requirements, so that they do not inadvertently create non‑compliant schedules. Internal audit or compliance teams should build labour code metrics into their reviews, tracking indicators such as overtime patterns, vendor compliance findings, incident reports and attrition linked to policy changes. Treated in this way, the Codes can become a framework for more predictable, transparent and ESG aligned employment practices in India's white‑collar economy, rather than a purely regulatory burden.

8. Conclusion

The new Labour Codes bring GCCs and BPOs squarely into a full‑scale regulatory framework on wages, working time, social security and workplace safety, ending the era in which large white‑collar hubs could treat much of this law as factory centric. Hybrid and night‑shift models remain viable, but only if employers upgrade salary structures, time tracking, vendor governance and State specific compliance across all locations where staff actually work. Misclassification of staff and fragmented contracting with staffing and facilities vendors now translate into direct statutory and reputational risk, rather than merely tax or HR friction, which means contracts and governance structures must be re‑engineered over 2025–26. Employers that use this transition window to redesign policies, systems and global playbooks for the Indian context will be better placed not just for enforcement, but also for investor ESG expectations and employee trust in a permanently hybrid workplace.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.