New Labour Codes: 5 Payroll Changes Your HRMS Must Handle

Labour Codes payroll and HRMS checklist

India's four Labour Codes, effective from 21 November 2025 with central rules notified on 8 May 2026, replace 29 older labour laws. For HR and finance teams, the biggest impact lands in payroll. Here is a quick overview of what your HRMS needs to handle.

The five changes that matter most

  1. The 50% wage rule. If allowances excluded from "wages" (such as HRA and conveyance) exceed 50% of total pay, the excess counts as wages. This affects PF and other contributions.
  2. Gratuity for fixed-term staff. Fixed-term employees now qualify after one year.
  3. Final settlement in two working days. Exit workflows must calculate and pay final dues quickly.
  4. Working hours and overtime. A 48-hour normal week, with overtime paid at twice the ordinary rate.
  5. State-specific rules. Professional tax and labour welfare fund rules vary by state, so multi-state teams need location-based settings.

The Codes also favour electronic registers with time-stamped audit trails, so manual spreadsheets become a real risk as teams grow.

Use the full 8-point HRMS readiness checklist here: Labour Codes and Payroll: What Your HRMS Must Handle

Published by Affix Center, a Mumbai-based IT services company working with government bodies, enterprises and SMEs. Learn more about our HRMS and business software services.

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