The first employee changes what the law expects of you

• India's four labour codes were made effective on 21 November 2025, and the government's own description is that appointment letters are now mandatory for workers
• A written appointment letter, setting out the role, pay, working hours, place of work, probation and notice, is good practice whatever your size
• Whether a person is an employee, a contractor or a freelancer depends on how the arrangement actually works; a label alone may not decide it
• Written confidentiality and conduct terms, and a record of the documents each employee has received

• The four labour 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
• State shops and establishments laws, which are state laws and vary by state; many require shops and commercial establishments to register with the state labour department
• The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, which places duties on employers of every size and requires an Internal Committee where there are ten or more employees
• Whether central or state government is the 'appropriate government' for your business, which affects which rules and forms apply

The new codes are being operationalised through rules; state-level rules are at different stages. Check what applies to you now.

• Under the Code on Wages, 2019, wages must be paid within the time limits for the wage period; for monthly wages, that is before the seventh day of the following month, as the Ministry of Labour and Employment's compliance handbook describes it
• Deductions are allowed only for the purposes the Code authorises, and are capped; unauthorised deductions are a risk
• Wage slips on or before payment, and registers of attendance, wages and deductions kept for the period the rules require
• Minimum wages apply to employees, and overtime for covered employees is paid at least at twice the normal rate
• Equal pay for the same or similar work, and no discrimination on grounds of gender in recruitment or pay
• Dues owed to a person who leaves are to be settled within two working days under the Code

Confirm timelines and rates for your state and sector with your CA or lawyer.

• Under the Code on Social Security, 2020, provident fund provisions apply to establishments with twenty or more employees
• Employees' State Insurance applies to establishments with ten or more persons, with some exceptions, and voluntarily to smaller ones in certain cases
• Gratuity applies to specified establishments including shops and establishments with ten or more employees; it is generally payable after five continuous years of service, and for a fixed-term employee after one year
• Maternity benefit for eligible women employees is 26 weeks under the Code
• Why your CA should confirm which of these apply and how wages are defined for them

• Working hours, rest and weekly holidays under the labour codes and state shops and establishments laws
• Leave and holidays you must give, and those you offer beyond the minimum
• Safe, hygienic premises, drinking water and toilets, with more duties for larger employers
• A free annual health check-up for workers above a stated age, as the Ministry describes the Occupational Safety, Health and Working Conditions Code
• Women working at night with their consent and safety measures in place

Hypothetical example: a small workshop owner tells a long-standing employee to stop coming to work, with no letter and no settlement. Months later the employee raises a claim for unpaid dues. A made-up case showing why a process and a paper trail help.

• Following the notice and process in the appointment letter and the law
• Hearing the employee and recording the reasons before a dismissal
• Settling final dues, including wages, leave and any gratuity, within the time the law allows
• Special rules on lay-off, retrenchment and closure depend on the type and size of establishment, so take advice before any group termination
• Getting company property back and recording the handover
• Not making statements or deductions you have not checked

• A written conduct policy that employees have actually received
• An Internal Committee under the POSH Act where there are ten or more employees; for smaller businesses, the Local Committee in the district can receive complaints
• A grievance route for complaints of every other kind
• Fair handling: listening, writing down, confidentiality and no retaliation
• Records of warnings, appraisals and agreed changes in terms