Even as India’s four central labour codes are formally in force, companies and legal experts say ambiguities in definitions, uneven state-level rulemaking, and higher transition costs are complicating compliance for employers operating across jurisdictions.
One of the most contested issues is the scope of the term ‘industry’ and the extent of worker protection under the new framework. “There is still a lack of clarity on the definition of industry. Whether corporate offices of manufacturing companies fall under the definition of industry or not? If not, where is the protection of workers employed in corporate offices covered?” said Nidhi Minocha, Group General Counsel, JK Cement Limited to ETLegalWorld.
“Whether the expansive definition of workmen given under the Bangalore water supply case, which is the basis of the definition in the new code, covers KPOs, etc., as opposed to the corporate office,” Nidhi argues.
Legal experts point out that while the codes aim to simplify and unify labour regulation, the absence of finalised state rules has created a fragmented implementation landscape. “Although the central labour codes are in force, final state rules are still being notified by states. Labour is a concurrent subject in the constitution; hence, states are responsible for framing their own rules on operational details such as forms, timelines, thresholds etc. This is creating uncertainty in implementation for employers operating across multiple jurisdictions,” said Apeksha Lodha, Partner, Singhania & Co..
Until state rules are notified, employers are being forced to rely on older regulations so long as they do not conflict with the new codes, increasing the risk of inadvertent non-compliance. “This transition is causing compliance risk,” Lodha added.
Beyond legal uncertainty, companies are also grappling with the cost implications of deploying the new regime. Lodha noted that uneven rule notification has already translated into higher advisory and transition expenses. “Deploying new codes requires legal opinions, company policy redrafting, internal training of HR and management,” she said.
From an operational standpoint, the shift is proving even more complex. Pranav Bhaskar, Senior Partner, SKV Law Offices, said the biggest challenge lies in moving from informal, contract-driven workforce models to a more structured compliance framework. Businesses are facing friction around worker classification, documentation of employment terms, wage structures, and record-keeping, all of which were previously handled with greater flexibility.
Bhaskar added that staggered implementation across states has created uncertainty around wage structuring, gratuity eligibility, and computation thresholds, forcing companies to take conservative positions that may inflate compliance costs. Aligning working hours with statutory limits, particularly in sectors dependent on extended shifts or project-based timelines, is also prompting changes to staffing and scheduling models.
“The cost impact is expected to be most visible in workforce and payroll structures,” Bhaskar said, pointing to wider social security coverage and wage restructuring requirements. In the near term, many organisations are building financial buffers to account for regulatory uncertainty, pushing up the effective cost of compliance.
With state notifications still a work in progress, industry stakeholders say greater clarity and coordination will be key to ensuring the labour codes deliver on their promise of simplification without adding to regulatory and cost pressures for businesses.
