The New Labour Codes—Code on Wages (2019), Industrial Relations Code (2020), Code on Social Security (2020), and the OSHWC Code (2020)—have consolidated India’s labour laws into a streamlined framework. But with simplification comes stricter enforcement. Employers who fail to comply face heavy fines, prosecution, and reputational damage.
This guide breaks down the most common defaults, the applicable codes, and the penalties you must avoid.
1. Wage & Payment Compliance (Code on Wages, 2019)
- Paying Less than Minimum Wages → Fine up to ₹50,000
- Salary Payment Delayed (after 7th of the month) → ₹50,000 fine + legal case
- Gender-Based Pay Discrimination → Fine + legal proceedings
- Overtime Not Paid at Double Rate → Fine + arrears payable
Compliance Tip: Always issue appointment letters, maintain wage registers, and ensure timely salary disbursement to avoid inspection objections.
2. Social Security Obligations (Code on Social Security, 2020)
- PF Not Deposited / Delayed → Interest + heavy fine
- ESIC Applicable but Not Provided → Fine + prosecution
- Gratuity Denied to Eligible Employee → Fine + payment with interest
- PF/ESI Ignored for Contract Workers → Principal employer liable
Compliance Tip: Contract workers are now explicitly covered. Employers must ensure PF/ESI contributions even for outsourced staff.
3. Employment & Termination Risks (Industrial Relations Code, 2020)
- Illegal Termination → Reinstatement + back wages
- Standing Orders Not Prepared → Penalty + industrial disputes
- Delay in Full & Final Settlement → Penalty + labour claim
Compliance Tip: Terminating employees at 230–239 days to avoid the 240-day rule is flagged as an Unfair Labour Practice. Maintain transparent digital muster rolls.
4. Workplace Safety & Health (OSHWC Code, 2020)
- Violation of Safety Rules → Fine ₹2–5 lakh
- Accident Not Reported → Imprisonment + fine
- Health Check-up Not Done (40+ workers) → Fine
- Missing Safety for Women Night Shift → Penalty + prohibition
Compliance Tip: Employers must conduct periodic medical check-ups, ensure safe transport for women on night shifts, and report accidents promptly.
Compliance Risk Matrix
| Default / Non-Compliance | Applicable Code | Penalty / Risk |
| Minimum wage violation | Code on Wages | Fine up to ₹50,000 |
| PF/ESI default | Social Security Code | Interest + prosecution |
| Illegal termination | IR Code 2020 | Reinstatement + back wages |
| Safety violation | OSHWC Code | Fine ₹2–5 lakh / imprisonment |
Strategic Advice for Employers & HR Managers
- Digital Enforcement: With Aadhaar-linked attendance and the Shram Suvidha Portal, hiding defaults is impossible.
- Inspector-cum-Facilitator Role: Inspectors now use data analytics to flag high-risk employers.
- Proactive Audits: Conduct internal compliance audits using checklists (wages, PF/ESI, gratuity, safety) to avoid tribunal exposure.
Disclaimer: This blog is for educational purposes only. Labour law compliance may vary based on state-specific rules and judicial precedents. For case-specific advice, consult a certified Labour Law Consultant or practicing advocate.