ELB E-Bulletin - December 2025 | Volume VII | Issue XII

Welcome to the twelfth edition of the e-Bulletin (Volume VII) brought to you by the Employment, Labour and Benefits practice group of Khaitan & Co. This e-Bulletin covers regulatory developments, case law updates and insights into industry practices that impact businesses from a sector agnostic standpoint.

Labour Codes: Story So Far

In this section, we help you in understanding the developments that have taken thus far on the implementation of the 4 labour codes on wages, social security, industrial relations, and occupational safety, health, and working conditions, which received the Presidential assent between the years 2019 and 2020.

The Government of India has, through a series of notifications dated 21 November 2025, brought into effect the 4 labour codes. We have covered this aspect in detail in our ERGO.

The codes consolidate and consequently replace 29 Central labour laws and bring about a more cohesive and modern framework for compliance. The consolidation exercise in the form of the labour codes does bring with it certain changes in the earlier labour law regime. The digitization of procedures (relating to registration and intimations) and the concept of deemed registration (in case authorities do not register the establishment within the specified timeline) are seen as a positive impact on the ease of commencing business as well as the ease of doing business. Similarly, the substitution of prosecution-oriented framework with facilitation process, whereby an employer would be given an opportunity to rectify any non-compliance, heralds an important change in the approach of the government.

While the Central Government has recently re-notified the draft Central rules under the 4 labour codes, in the absence of finalization and enforcement of Central / state rules, schemes, and notifications, the transition is still in the process of unfolding. Set out below are the updates that we have seen on the labour codes front, recently:

1. Issuance of FAQs: The Central Government has recently released the FAQs on labour codes, and we have covered this aspect in detail in our ERGO. Further, clarifications have been made by other authorities including the Employees' State Insurance Corporation (ESIC), through multiple circulars referring to the definition of 'wages' and emphasizing the requirement of the employers to register additional employees who may potentially be covered because of the revised definition of 'wages'.
2. Clarification on gratuity: The Institute of Chartered Accountants of India has released a set of FAQs addressing key accounting implications arising from the implementation of the new labour codes. These FAQs note that any increase in gratuity liability due to the new labour codes must be recognised as an expense in the profit and loss account for the interim financial statements/ results for the period ending 31 December 2025, in line with the applicable accounting standards.
3. Issuance of rules: In the past year, several key industrialised states such as Haryana, Delhi, Maharashtra, Gujarat, Andhra Pradesh, Telangana, Tamil Nadu, Bihar, and Karnataka released draft rules under some or all of the labour codes for public consultation. As of now, 2 out of a total of 36 states and union territories are yet to publish draft rules on the Code on Wages, 2019, Occupational Safety, Health and Working Conditions, 2020 (OSH Code), 3 have not released draft rules on Industrial Relations Code, 2020 (IR Code), and 1 has not released draft rules on Code on Social Security, 2020. Further, states such as Gujarat, Karnataka, Uttar Pradesh and Mizoram appear to have released final rules under some of the labour codes. In the month of December 2025, the governments of Punjab and Bihar have released the draft rules pursuant to the 4 labour codes.

Regulatory Updates

In this section, we bring to your attention, important regulatory developments in the form of notifications, orders, bills, amendments, etc. witnessed in the past one month in the context of employment and labour laws.

Madhya Pradesh introduces the Madhya Pradesh Labour Laws (Amendment) and Miscellaneous Provisions Act, 2025

The government of Madhya Pradesh has introduced the Madhya Pradesh Labour Laws (Amendment) and Miscellaneous Provisions Act, 2025 (MP Act), which was published in the Official Gazette on 27 November 2025. As per the MP Act,

• The threshold for applicability of the Contract Labour (Regulation and Abolition) Act, 1970 (now subsumed under the OSH Code) has been increased from 20 or more workers to 50 or more workers
• The definition of factory has been revised to be applicable from 10 or more workers to now 20 or more workers where power is used, and from 20 or more workers to now 40 or more workers where power is not used
• Inclusion of "or any industrial establishment" after "a public utility service" under Section 22 of the Industrial Disputes Act 1947 (ID Act) (now subsumed under the IR Code) which deals with the prohibition of strikes and lock-outs, among other aspects.

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