The Ministry of Labour and Employment has issued additional FAQs to clarify the implementation of Labour Codes effective from November 21, 2025. Earlier FAQs dated December 30, 2025 had addressed initial interpretational issues, and the present document provides further clarifications on wage computation, gratuity applicability, social security contributions, and leave provisions. These clarifications apply to employers and employees across establishments governed by the Labour Codes.

Code on Wages, 2019

• Overtime allowance forms part of the 50 percent wage calculation.
• Statutory components such as employer PF/pension contributions and statutory bonus are included for calculating the 50 percent threshold; gratuity, ESI, and other retirement benefits are excluded.
• Excess of excluded components beyond 50 percent of total remuneration is added back to wages as per first proviso to Section 2(y).
• Annual performance-based incentives are excluded from the definition of wages.
• Overtime eligibility applies to all employees whose minimum wages are fixed under the Code.
• Revised definition of wages is applicable for gratuity calculation from November 21, 2025.
• Definition of wages under the Code is effective from November 21, 2025.

Code on Social Security, 2020

• Fixed Term Employment applies only to employees directly engaged by the employer.
• Gratuity provisions apply from November 21, 2025.
• ESI coverage continues at ₹21,000 monthly wage threshold until rules are finalized.
• Only components specified under Section 2(88) are considered for gratuity calculation.
• Fixed Term Employees are eligible for gratuity upon completion of one year of service.
• Contribution for gig and platform workers will be notified by the Central Government and credited to the Social Security Fund.
• In case of contract labour, gratuity liability rests with the contractor (employer).

Industrial Relations Code, 2020

• Fixed Term Employees are eligible for gratuity only upon completion of one year of service.

OSH&WC Code, 2020

• Leave provisions apply to workers and supervisors earning up to ₹18,000 per month.
• Maximum carry forward of leave is 30 days; refused leave can be carried forward without limit.
• Leave encashment is applicable only to workers.
• Creche facility is applicable irrespective of gender.
• Overtime is payable beyond 8 hours per day or 48 hours per week at twice the normal wage rate.
• No maximum limit prescribed for leave encashment; unavailed leave can be encashed at separation.
• Central or State rules apply depending on the appropriate government jurisdiction.

Where State law provides more favourable benefits, employees are entitled to such benefits.