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Introduction

The Labour Codes 2025, effective from 21 November 2025, consolidate and modernise India’s employment, wages, social security, and working conditions regulations. These reforms impact how organisations manage employment documentation, salary structures, statutory coverage, working hours, overtime, and more. For a detailed overview of the new labour law policies, please click the link- India’s Labour Reforms: Simplification, Security, and Sustainable Growth

This guide explains:

  • What the new law requires

  • What you should review or update in your Keka setup

  • Where exactly to make those updates in Keka

Table of Contents

Formalisation of Employment

What the Law Says (Industrial Relations Code, 2020)
Every employee across full-time, fixed-term, contractual, and other categories must receive a formal appointment letter clearly stating employment terms.

What You Should Review in Keka

  • If Preboarding is enabled:

    • You can continue issuing appointment letters through offer templates.

  • Paths in Keka
    Org → Onboarding → Settings → Offer Templates

  • If Preboarding is not enabled:

    • You can opt for Keka’s Preboarding module to configure and issue appointment letters for all new hires as mandated.

    Note: To learn how to create offer templates click on the link.

Salary Structure and Wage Definition

What the Law Says (Code on Wages, 2019) wages must be at least 50% of total remuneration, calculated as:

  • Basic Pay + Dearness Allowance + Retaining Allowance

  • Other components like HRA, bonuses, overtime, commission, gratuity, etc., together cannot exceed 50%.

  • Any excess beyond 50% must be added back to wages.

  • This directly impacts:

    • Provident Fund

    • Gratuity

    • Overtime

    • Bonus

    • Leave encashment

Deduction Limits

  • Total wage deductions cannot exceed 50% of wages in most cases.

  • Certain permitted recoveries may go up to 75%.

What You Should Review in Keka

  • Validate whether your salary structures follow the 50% wage rule.

  • Recheck:

    • Basic & Allowances

    • CTC templates

    • PF, gratuity, and leave encashment calculations

  • Ensure total payroll deductions stay within permissible limits.

Paths in Keka

  1. Payroll → Settings → Pay Groups → Configure 

  2. Go to Salary Structures→ Edit Salary structures

  3. For Bulk Updates navigate Payroll → Payroll Admin → Operations 

 4.Go to Payroll Imports→ Import Salaries with Effective dates

Social Security Coverage

What the law says:
Under the Code on Social Security, 2020, PF and ESI coverage extends to:

  • Full-time employees

  • Fixed-term workers

  • Contract staff

  • Gig and platform workers

Key mandates:

  • PF continues based on eligibility rules

  • ESI applies nationally, generally for establishments with 10+ employees

  • Mandatory ESI even if one employee is in hazardous work

In Keka:

  • Confirm PF eligibility and enrolment for all applicable employees

  • Reassess ESI applicability, especially after workforce changes

  • Ensure compliance for hazardous roles

  • Validate wage ceilings and employer/employee contributions

Paths in Keka:

  1. Employee Statutory Info: Go to Employee Profile 

  2. Then navigate to Finances → Summary → Statutory Info

  3. Statutory Settings: Payroll → Settings → Pay Groups

     

  4. Go to Contribution→ Click on three dots →Update the required Statutory Info 

  5. Bulk Import: Payroll → Payroll Admin → Operations

  6. Scroll down to Payroll status, Tax Regime and Financial Details → Employee Statutory Info 

Note: Click the link to learn how to easily create salary structures in Keka.

Minimum Wages

What the law says:
Minimum wages now apply to all employees, not just those in scheduled employment.

  • States cannot set wages below the Central floor wage

  • Central Government will revise the floor wage periodically

What to do:

  • Ensure all employee salaries meet or exceed the latest Central or State minimum wage, whichever is higher—even if previously exempt

Working Hours and Overtime

What the law says:
The OSH Code, 2020 mandates:

  • Max 8 hours/day or 48 hours/week

  • 4-day workweeks allowed, up to 12 hours/day

  • Mandatory rest intervals

  • Overtime pay at 2× normal hourly wage

Overtime calculation:
Normal Hourly Wage = Wages ÷ Normal working hours

In Keka:

  • Review shift configurations

  • Check weekly working limits

  • Ensure 2× multiplier for overtime is applied

  • Adjust attendance policies for flexible or compressed workweeks

Path in Keka:

  1. Time & Attendance → Overtime → Pay codes

2. A new screen will pop uo, fill in the necessary details to customize it according to the new labor law policy

Timely Wage Payments

What the law says:
For IT & ITES sectors, wages must be paid on or before the 7th of each month

In Keka:

  • If your current pay cycle ends after the 7th (e.g., 11th–10th), revise the schedule.

Path in Keka: 

  1. Navigate to  Payroll → Settings → Pay Group → Configure

     

  2. Go to Pay Schedule → Three dots → Update setting

Women Workforce Participation and Pay Parity

Night Shifts:
Women can work night shifts based on state-specific conditions (OSH Code, 2020)

In Keka:

  • Assign fixed or rotational shifts

  • Use automated shift scheduling (if enabled)

Equal Pay:
Under the Code on Wages, 2019, women must receive equal pay for equal work, based on:

  • Role

  • Skill

  • Experience

In Keka:

  • Use the Compa Ratio report to check for pay parity

  • Review night shift assignments and compliance settings

Paths in Keka:

  1. Shift Assignments:
    Time Attend → Assignments → Select the employee → Update Shift

  2. A pop up will appear on the screen to update the shift of the particular employee

  3. Pay Parity Review:
    Payroll → Analytics → Employee Competitiveness

Fixed-term Employment

What the law says:
Under the Industrial Relations Code, 2020, fixed-term employees are entitled to:

  • Same wages as permanent employees for similar roles

  • Gratuity after 1 year of continuous service

In Keka:

  • Use Compa Ratio reports to ensure wage parity

  • Monitor service duration for gratuity eligibility

    System Update: Keka will soon automate gratuity eligibility for fixed-term employees after 1 year (launch expected by December)

Gig and Platform Workers

What the law says:
The Code on Social Security, 2020 includes gig and platform workers under social security, funded by aggregators and tracked using Aadhaar-linked identifiers

In Keka:

  • Maintain accurate worker records

  • Ensure all statutory fields and identifiers are updated for reporting

Industry-Specific Provisions

Hazardous Work & Dock Labour:

  • ESI is mandatory even for a single worker

  • Additional safety, welfare, and work-hour rules may apply

IT & ITES:

  • Wages must be paid by the 7th

  • Special rules apply for:

    • Documentation

    • Shift assignments

    • Work schedules

Other Key Provisions

  • Preventive Healthcare:
    Some states require free annual health check-ups for workers aged 40+

  • Standing Orders:
    Firms with 300+ employees must define and publish formal standing orders outlining employment conditions

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