It's My Right: What Employees Need To Know About Wages, Gratuity And Legal Action For Disputes Under New Labour Codes

It’s My Right: As India moves closer to implementing the newly announced Labour Codes, employees across sectors are closely watching how the changes in India’s regulatory and workforce framework will reshape their rights at the workplace.

The Government of India announced the four Labour Codes on November 21, 2025, rationalising 29 existing labour laws. The four codes include 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.

What Is A Labour Code?

A labour code brings together a wide range of regulations that define how employees, employers, and the state interact. It addresses key areas such as pay standards, hours of work, workplace safety, social protection, and the rights of trade unions, creating a structured framework for employment relations.

The Daily Jagran spoke to Supreme Court Advocate Aseem Mehrotra, who specialises in Civil and Criminal Litigation, to understand questions around wages, gratuity, dispute resolution and enforcement mechanisms related to the new Labour Codes.

One of the most common concerns among employees is related to delayed or unpaid full and final settlements under the new Labour Codes. Fixed-Term Employees (FTEs) will have to be given full and final settlements within two working days of exit (resignation/termination). The new Labour Codes replace the old 30-45 day norms.

Mehrotra highlights,

-If payment is not being made, then as per Section 45 of the Code on Wages, 2019, an employee can approach the authority to be notified for referring their claim.

-After determination, the authority will issue a certification of recovery to the District Collector for the recovery of money as per the procedure for recovery of arrears.

Gratuity Benefit For Fixed-Term Employees

The new framework also brings a significant shift for fixed-term employees. Mehrotra explained that the Industrial Relations Code, 2020, now entitles fixed-term workers to gratuity after just one year of service.

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Will Taxable Income Increase Under New Labour Codes?

As per the new Labour Code, wages must now be 50 per cent of the CTC (cost to company). This means that basic pay will now be increased if allowances constituted for more than 50 per cent of the CTC. The companies cannot change CTC legally, so they are most likely to adjust the components to be in line with the new law.

As per a government press release, "Wages now include basic pay, dearness allowance, and retaining allowance; 50 per cent of the total remuneration (or such percentage as may be notified) shall be added back to compute wages, ensuring consistency in calculating gratuity, pension, and social security benefits."

A higher basic pay leads to increased contributions toward PF, NPS, and gratuity. Although this may reduce your immediate take-home salary, it enhances long-term savings and can still offer income tax benefits, even under the new tax regime.

Legal Options For Discrepancies In CTC And Salary

Concerns have been raised about opaque or misleading CTC structures that companies offer. Mehrotra said employees are no longer without remedies if promised salary components do not reflect in actual payments.

“If the cost-to-company structure is unclear or misleading, the employee can approach the gazetted officer under Section 45 of the code on wages, 2019,” he explained. “In addition, a complaint can be filed before the Inspector-cum-Facilitator under Section 51, highlighting any shortcomings or violations.”

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Procedure For Employees To Approach Labour Court

-For raising an 'Industrial Dispute', the employee has to approach the Labour Officer.

-The Labour Officer, after hearing, refers the matter to the appropriate Government for referring the matter to the Labour Court/Industrial Tribunal for deciding the dispute.

Most Frequent Labour Law Violations

Drawing from his experience in court, Mehrotra noted that termination-related disputes dominate labour litigation. “By and large, the majority of industrial disputes that come before courts are in respect of termination of services of employees,” he said.

(Disclaimer: This article is part of the series 'It's My Right'. The views expressed in the article are for informational purposes only and do not constitute legal advice. To read more articles in the series, click here)