Employment Law Consultancy | How India’s New Labour Codes Will Change the Work Culture in Bangalore

On November 21, 2025, India’s four labour codes officially became law, replacing 29 separate labour laws in the country’s biggest employment reform in 75 years. For Bangalore’s thriving tech ecosystem and its millions of workers, these changes will fundamentally reshape how companies operate and how employment relationships function, making informed employment law consultancy increasingly important for navigating compliance and workplace transitions.

This article examines what these new laws mean for workers and employers in Karnataka’s capital, and how the city’s unique work culture will need to adapt to the new legal framework through clearer policies, structured employment practices, and legally sound decision-making practices often guided by employment law consultancy.

Understanding the Four Labour Codes

India consolidated 29 different labour laws, many dating back to the 1940s and 1950s, into four comprehensive codes. These outdated laws often contradicted each other and left significant gaps in worker protection, especially for modern forms of employment.

The four new codes are the Code on Wages, the Industrial Relations Code, the Code on Social Security, and the Occupational Safety, Health and Working Conditions Code. Together, they create a unified framework that recognizes platform workers, remote employees, and the realities of 21st-century work.

For a city like Bangalore with 1.5 million people in IT and IT-enabled services, plus hundreds of thousands in the gig economy, these reforms address critical gaps that have existed for decades. The old laws were written before computers, smartphones, or app-based work platforms existed.

How Salary Structures Will Need to Change

The Code on Wages introduces a fundamental rule: allowances cannot exceed 50 percent of total compensation. This will force significant restructuring of how tech companies in Bangalore structure employee pay.

Currently, many companies pay employees with 40 percent as base salary and 60 percent as various allowances like travel allowance, communication allowance, and special allowances. This structure keeps Provident Fund contributions low since EPF only applies to base pay.

Under the new law, anything over 50 percent in allowances must be reclassified as wages. This means higher EPF contributions from both employers and employees. For a software engineer earning 100,000 rupees monthly with 40,000 as base and 60,000 as allowances, at least 50,000 will now need to count as wages for EPF purposes.

Companies will need to restructure compensation packages across their workforce. Employees may see slightly lower take-home pay initially, but their retirement benefits will increase substantially, a shift many organizations are reviewing with the support of employment law consultancy.

The codes also mandate that every worker receives a written appointment letter specifying designation, complete wage breakdown, and social security details. Verbal agreements and informal arrangements will no longer be acceptable. Contract workers must receive the same documentation as permanent employees.

Over time becomes more regulated too. Companies will need explicit written consent from employees for overtime work and must pay double the normal hourly rate. The informal expectation of working extra hours without proper compensation will have to end.

The 12 Hour Daily Limit and What It Means

The Occupational Safety, Health and Working Conditions Code sets clear boundaries: 12 hours maximum per day and 48 hours maximum per week. Companies can structure this as four 12-hour days or five shorter days, but these limits are absolute.

Quarterly overtime is capped at 125 hours beyond regular time. This works out to roughly 10 extra hours per week if spread evenly. Companies can request more during critical periods, but only with employee consent and within the quarterly cap.

For Bangalore’s global delivery centers that support clients in the US and Europe, this will require significant operational changes. The 14 or 15-hour days that sometimes occur during major product launches or urgent client deliverables will no longer be legally possible, regardless of employee willingness.

Project managers will need to plan team capacity around the 12-hour maximum. Companies may need to hire additional staff to cover work that previously extended beyond these limits. The always-on culture that characterizes much of Bangalore’s tech industry will face legal boundaries.

Women can now legally work night shifts (7 PM to 6 AM) with written consent and mandatory safety provisions. Companies must provide transportation, security personnel, and adequate workplace safety measures. What was previously an informal arrangement in many companies will now require formal policies and infrastructure.

What Changes for Gig Workers and Contract Staff

The Code on Social Security extends protections to gig workers and platform workers for the first time in Indian law. Delivery personnel, ride-share drivers, and freelancers working through platforms will gain access to social security benefits.

Platform companies (defined as aggregators in the code) must contribute between one and two percent of annual turnover toward social security for these workers, capped at five percent of payments made to workers. The government is designing the specific benefit schemes that will be funded.

This represents a major shift for Bangalore’s large gig economy. Companies like food delivery platforms, ride-sharing services, and freelance marketplaces will need to register workers, calculate contributions, and establish grievance mechanisms.

Contract labour rules have also changed fundamentally. Companies cannot use contractors for core business activities under the new framework. If work is central to what the business does, those positions must be permanent or fixed-term with full benefits.

For IT services companies in Bangalore that extensively use contractor models for software development roles, this will require a major restructuring. Writing software is clearly core work for a software company. These arrangements will need to shift toward permanent employment or properly structured fixed-term contracts with proportional benefits.

The distinction between core and peripheral work will certainly be contested in courts. But the legislative intent is clear: casual contract arrangements for essential business functions must end.

How Dispute Resolution Will Work

The Industrial Relations Code changes how workplace conflicts get resolved. Industrial Tribunals will have two members instead of three, potentially speeding up cases that previously took years to conclude.

A recent Supreme Court ruling (Shri Manohar Bande v Utkranti Mandal) established that companies must properly communicate all disciplinary charges to employees. Any procedural failure violates natural justice principles and can invalidate the entire disciplinary process.

Companies will need to ensure their HR departments follow rigorous documentation procedures. Every step of a disciplinary action must be recorded and properly communicated. A single procedural mistake can render a termination legally invalid. Seeking workplace grievance redressal legal support will become important for companies to avoid costly errors.

The Sexual Harassment of Women at Workplace Amendment Bill, currently pending in Parliament, proposes extending complaint-filing periods from three months to one year. While not yet law, it indicates the direction of policy.

What Companies Need to Know About Layoffs

The threshold for requiring government approval before layoffs increased from 100 employees to 300. Companies with 150 or 200 employees will have more operational flexibility compared to the old system.

However, there is a new financial obligation. For every employee retrenched, companies must contribute 15 days of that person’s wages to a Reskilling Fund. This money is intended to help laid-off workers acquire new skills, though the fund’s operational structure is still being established.

The Supreme Court ruling in Mahanadi Coalfields Ltd. established that workers performing permanent tasks cannot be kept as contract labour indefinitely. If someone does permanent work, they must receive permanent benefits. Companies that have maintained employees on rolling six-month contracts for years will face legal challenges under this precedent. If facing potential layoffs or if a company plans workforce reductions, obtaining employment termination legal advice from professionals who understand the new codes will be essential. Previous approaches and precedents may not apply under the new legal framework.

Different Timelines for Different Company Sizes

The implementation follows a phased approach based on company size. Large enterprises with 500 or more employees must comply immediately. Medium enterprises with 100 to 500 employees receive additional transition time. Small enterprises with fewer than 100 employees have up to two years for full implementation.

This matters significantly for Bangalore’s startup ecosystem. A 50-person startup does not need full compliance immediately. However, they are not exempt, just given more time. Even during grace periods, fundamental provisions around wage definitions and basic safety standards apply to all companies.

The phased approach recognizes that smaller companies lack dedicated HR and legal departments. But workers at smaller companies will wait longer to receive full protections under the new system.

Getting Help With The Transition

States provide legal services through legal aid authorities for workers who cannot afford private representation. Companies typically engage professionals offering employment law consultancy to audit their current practices and develop compliance roadmaps.

For workers, understanding new rights is as important as knowing salary details. The new laws establish that companies cannot require more than 12-hour workdays, cannot structure pay with more than 50 percent allowances, and must obtain consent and pay double for overtime work.

For employers, compliance is mandatory. Violations carry financial penalties and potential prosecution of company officers. Getting professional guidance, especially in tech-heavy states like Karnataka, helps avoid expensive mistakes during the transition.

The codes promise unified registration, licensing, and return filing to simplify long-term compliance. But during the transition period, companies may face dual obligations under both old rules (for provisions where state implementation rules are pending) and new codes. This makes expert guidance particularly valuable.

What the Coming Months Will Bring: From an Employment Law Consultancy Perspective

While the four codes became law on November 21, 2025, states still need to finalize detailed implementation rules for various provisions. These state-level rules are expected in the coming weeks and months. Until state rules are notified, existing labour laws remain in force for those specific provisions.

This creates a temporary dual compliance environment. Companies must follow new code provisions where active, and continue following old laws where state rules under the codes are still pending. Karnataka is working on completing its implementation framework along with other states.

The government has committed to single registration, single licensing, and single return filing across all four codes. Whether this actually reduces compliance burden or merely redistributes it differently will become clearer as states build digital infrastructure and test systems.

Trade unions have opposed several provisions as weakening worker protections compared to the old laws. Industry groups welcome simplification but worry about implementation complexity. The ultimate measure of success will be whether this framework encourages the formalization of India’s informal sector, where 85 percent of workers currently operate without legal protections.

Frequently Asked Questions

Q1. When do companies need to comply with these laws?

Ans. The four labour codes became law on November 21, 2025. Large companies with 500 or more employees must comply immediately. Medium-sized companies (100 to 500 employees) have additional transition time. Small companies (under 100 employees) have up to two years. However, some core provisions apply to all companies regardless of size.

Q2. What happens if a company does not comply?

Ans. The codes establish financial penalties for violations and allow for the prosecution of company officers in serious cases. Workers can file complaints with state labour departments. Companies that fail to restructure salary packages, obtain overtime consent, or respect working hour limits face legal consequences.

Q3. Do these laws apply to remote workers in Bangalore?

Ans. Yes. The codes apply based on where work is performed. If someone works from Bangalore, they are covered under these laws as implemented in Karnataka, regardless of where their employer is headquartered. Physical work location determines jurisdiction.

Q4. Are foreign companies exempt from these rules?

Ans. No. Any company with employees working in India must comply with Indian labour laws, regardless of where the company is incorporated. All multinational corporations with Bangalore offices must follow these codes. There are no exemptions for foreign companies operating in India.

Q5. Where can people get reliable information about specific situations?

Ans. The Ministry of Labour and Employment publishes official guidance and documentation. Workers can access legal services through state legal aid authorities for personalized advice. Companies should consult professionals offering employment law consultancy who understand provisions relevant to their industry and workforce composition, as ongoing employment law consultancy becomes critical under the evolving labour code framework.