AIFI Association of Indian Forging Industry
Synopsis of Session
Overview AIFI
The Government of India has announced nationwide implementation of Labour Codes replacing 29
central laws effective 21 November 2025.
The Ministry of Labour and Employment issued four separate gazette notifications on 21st
November 2025 as follows:
1) The Code on Wages, 2019
2) The Code on Social Security, 2020
3) The Occupational Safety, Health and Working Conditions Code, 2020
4) The Industrial Relations Code, 2020
While the above codes are now in force nationwide, supporting rules under both central and state
jurisdictions are still to be notified.
The new regime introduces revised definitions, expanded social security coverage, and changes
that will impact compensation structures, hiring models, and workplace policies.
Subsumed Acts AIFI
The Codes replace major earlier labour legislations: OSH Code
Factories Act, Mines Act
Code on Wages Contract Labour Act
Minimum Wages Act, Payment of Wages Act BOCW Regulation Act
Payment of Bonus Act Beedi and Cigar Act
Equal Remuneration Act Motor Transport Workers Act
Migrant Workers Act
Journalists Acts
Plantations Labour Act
Code on Social Security
Dock Workers Act
PF Act, ESI Act, Gratuity Act
Maternity Benefit Act
Employment Exchanges Act Industrial Relations Code
Cine Workers Acts Industrial Disputes Act
BOCW Cess Act Standing Orders Act
Unorganised Workers’ Social Security Act Trade Unions Act
Status of Rules AIFI
Central draft rules issued for all codes, but final rules not notified.
State rules:
Finalised by: Arunachal Pradesh, Gujarat, Karnataka, Uttar Pradesh (OSH only)
Draft rules issued by 35 states/UTs.
West Bengal, NCT Delhi, Tamil Nadu, Nagaland still pending in some areas.
Implementation Timeline
All Labour Codes effective from 21 November 2025, but enforcement depends on final rules.
Until notified, earlier laws continue unless they contradict the Codes.
Examples:
Minimum wages
Bonus eligibility
Gratuity limit (₹20 lakh)
Working hours & overtime
Key Changes & Employer Impact AIFI
Areas
A. Employee vs Worker Classification
Employee: Everyone, regardless of role/level/salary.
Worker: Manual, technical, clerical, operational work.
Supervisors > ₹18,000/month excluded.
Professionals with creative/decision roles may be disputable.
Impact areas:
Overtime
Leave encashment
Contract labour
Retrenchment/layoffs
Grievance committee requirements
B. New Definition of Wages AIFI
Wages = Basic + DA + Retaining allowance
(Exclusions capped at 50% of total remuneration)
Major exclusions: HRA, conveyance, overtime, commission, PF contributions, gratuity, reimbursements.
Impact:
Increases PF and gratuity contribution for employees whose Basic was kept low.
Affects bonus eligibility and leave encashment.
Case 1: Wages Case 2: Wages
Basic: 20,000 Basic: 20,000
HRA: 10,000 HRA: 14,000
Conveyance: 8,000 Conveyance: 14,000
Special allowance: 12,000 Special: 2,000
Total remuneration: 50,000 Total remuneration: 50,000
Exclusions = 18,000 Exclusions = 28,000
Permissible exclusion = 18,000 Permissible = 25,000
Wages = 32,000 Wages = 25,000
C. Gratuity AIFI
Eligibility: 5 years (same as before)
Fixed-term employees eligible after 1 year
Based on last drawn wages
Ceiling: ₹20 lakh (may be revised)
Retrospective changes possible
D. Provident Fund (EPF)
Applicable to all eligible employers
Threshold: ₹15,000 basic pay
If basic > ₹15,000 → contribution pattern unchanged
E. Other Employee Benefits AIFI
Leave Encashment ESI
Applicable only to workers Applicable as per new wage
1 leave per 20 days worked definition
Carry forward limit: 30 days; extra Contribution based on wages
encashed
Encashment based on “wages”
Statutory Bonus
Eligibility determined by new
Overtime wage definition
Consent mandatory Government to notify wage
8 hrs/day or >48 hrs/week ceiling
Payable at 2× wages
Max 125 hrs/quarter (draft rules)
Flexi Hiring Changes AIFI
Fixed-Term Employment
Equal pay & benefits as permanent employees
Entitled to gratuity after one year
No limit on number or duration of contracts
Contract Labour
Redefined under OSH Code
Prohibited in core activities (with exceptions)
Equal wages/benefits as permanent employees
Principal employer liable for wages & statutory benefits
Contractor to be paid before wage payment date
HR & Payroll Policy AIFI
Updates Needed
Payroll
Employers must update the following areas:
Wage payment timelines
Hiring & Documentation Fines & deductions
Advances/loans
Appointment letters
Full & final settlement
Reporting vacancies
Unpaid wage handling
Inter-state migrant worker rules
Equal remuneration compliance
Benefits
Working Time Committees Creche (50+ employees)
Hours of work Safety committee Canteen (100+ workers in
Weekly off Works committee factories)
Compensatory off Standing orders (300+ Journey allowance for migrant
Overtime workers) workers
Health & Safety Requirements AIFI
Annual Medical Examination
Mandatory for 45+ workers in high-risk industries
Free of cost
To be completed within first 120 days each year
Women Employees
Equal wages & opportunity
Eligible for night shifts (7 PM to 6 AM)
Requires consent
Employer must provide transport & safety
Safety Committee
Mandatory for establishments with 500+ workers
Safety officers required in factories with 500+ workers
Simplification of Compliance AIFI
Registrations
Unified registration for:
EPF
ESI
CLRA
ISMW
Gratuity
Existing establishments must update details on Shram Suvidha Portal within 6 months
PAN-India contractor license introduced
Returns & Registers
Single electronic return for all codes
Reduced number of registers
Enforcement Model AIFI
Online inspection scheme
Inspector-cum-facilitator role
Employer carries burden of proof
Second offence → prosecution
Courts act on employee complaints
Way Forward for Employers AIFI
(Action Plan)
Classify employees correctly → identify workers
Re-evaluate salary structure → align with new wage definition
Assess financial impact → PF, gratuity, bonus, overtime
Explore flexi hiring models → fixed-term roles
Strengthen compliance systems → internal controls, audit
Update HR policies → hiring, documentation, disciplinary actions
Review safety & welfare obligations
Educate managers & HR teams on new compliance rules
THANK YOU
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