State-Wise Implementation Guide

Labour is a subject on the Concurrent List of the Seventh Schedule to the Constitution of India (Entries 22, 23, and 24), meaning both Parliament and state legislatures have the power to legislate on labour matters. When the four labour codes received Presidential assent between 2019 and 2020, they established the central framework. However, for these codes to become operational in any state, that state must notify its own rules under each code. This is because labour law implementation, registration, inspection, and enforcement are carried out by state labour departments, not central agencies.

The result is a constitutional and practical patchwork: the central codes set the floor of worker protections and employer obligations, but states can enhance these standards (they cannot dilute them, per established constitutional doctrine). States may prescribe higher minimum wages, stricter registration requirements, additional reporting obligations, and more frequent inspection cycles than the central rules contemplate.

As of February 2026, different states are at vastly different stages of notification. Gujarat has notified final rules under all four codes. Karnataka and Maharashtra have notified rules under some codes with others in draft. Several major states including Delhi have not notified any final rules. This creates a compliance nightmare for multi-state employers: the same company may face fully operational new codes in Gujarat, partially operational codes in Karnataka, and the old regime entirely in Delhi. Applying a uniform national policy is not possible without risking non-compliance in at least some states.

The following summarises the notification status of state rules under the four labour codes as of February 2026. Note that status changes frequently as states publish gazette notifications.

Gujarat: All four codes (Wages, Industrial Relations, Social Security, OSH) have final rules notified. Gujarat is the first and only state to have completed rules under all four codes, making it the benchmark for compliance readiness.

Karnataka: Code on Wages and Industrial Relations Code have final rules notified. Social Security Code and OSH Code rules are in draft stage, with final notification expected in the first half of 2026. Karnataka has additionally enacted its own Platform-Based Gig Workers Act.

Maharashtra: Code on Wages has final rules notified. Industrial Relations Code, Social Security Code, and OSH Code rules are in draft or pending stage. Maharashtra's significance as India's largest industrial state means delayed notification affects a substantial portion of the national workforce.

Tamil Nadu: Code on Wages has final rules notified. Other three codes are pending notification. Tamil Nadu's plantation and manufacturing sectors are particularly affected by the delay in OSH Code rules.

Delhi: All four codes are pending notification of rules. The central government directly administers Delhi's labour laws, and the unique NCT governance structure has contributed to delays.

Uttar Pradesh and Madhya Pradesh: Both states enacted labour reform ordinances in 2020 that attempted to suspend certain labour laws. While those ordinances have lapsed, the states have been active in drafting rules under the new codes, with Code on Wages rules in advanced draft stages.

Rajasthan: Code on Wages rules in final stages. Additionally enacted the Platform-Based Gig Workers Act for gig economy regulation.

Gujarat's distinction as the first state to notify final rules under all four labour codes makes it the de facto testing ground for the new regime and the most important reference point for compliance teams. Understanding Gujarat's specific rules is essential for any employer with operations in the state and instructive for anticipating how other states may shape their rules.

Under Gujarat's Code on Wages rules, minimum wages are structured in a three-zone system (Zone I for metropolitan areas including Ahmedabad and Surat, Zone II for other municipal corporation areas, Zone III for rural areas) with rates varying by skill level (unskilled, semi-skilled, skilled, highly skilled). The revision cycle is set at five years with annual variable dearness allowance adjustments. Employers must maintain electronic registers and make them available for inspection through the state's online portal.

Under the Industrial Relations Code rules, Gujarat has set the factory threshold at 300 workers (up from the earlier 100) for prior government permission before retrenchment, closure, or layoff. This gives larger employers more flexibility in workforce restructuring. Standing orders must be filed electronically, and the industrial dispute resolution mechanism prioritises conciliation through the state's Conciliation Officer network.

Gujarat's OSH Code rules prescribe factory registration thresholds, inter-state migrant worker registration requirements, and building and construction worker welfare cess collection procedures. The Social Security Code rules address EPF and ESI applicability thresholds at the state level, platform worker registration (building on the central framework), and gig worker data reporting requirements.

Professional tax in Gujarat remains at the existing rates: INR 200/month for employees earning above INR 12,000/month, with the employer responsible for deduction and deposit.

Karnataka is a critical compliance jurisdiction, particularly for the technology sector. The state's IT/ITES sector has historically enjoyed exemptions from certain provisions of the Shops and Establishments Act and the Industrial Disputes Act, including exemptions from overtime restrictions and flexibility in shift timings. Under the new regime, Karnataka's Industrial Relations Code rules preserve some of this flexibility through sector-specific notifications, but employers should not assume all existing exemptions carry forward. Karnataka's Shops and Establishments Act provisions regarding working hours, leave, and women's employment during night shifts have been updated to reflect the OSH Code framework. Critically, Karnataka's Platform-Based Gig Workers Act creates obligations that exist independently of the four central codes.

Maharashtra, as India's largest industrial state by GDP and factory count, presents the most complex compliance landscape. The state's factory compliance requirements under the OSH Code are substantial given the concentration of manufacturing in the Mumbai-Pune industrial corridor, Nashik, and Aurangabad. Building and Other Construction Workers (BOCW) rules are particularly significant given the ongoing infrastructure development. Maharashtra's contract labour regime has specific threshold requirements that differ from the central framework. The state's minimum wage structure is among the most complex in India, with rates varying by industry, zone, and skill level across more than 40 scheduled employments.

Tamil Nadu has a distinctive labour law landscape shaped by its strong trade union movement and significant plantation sector. The state's minimum wage zone structure follows a district-based classification rather than the metropolitan/non-metropolitan model used by Gujarat. Plantation-specific rules under the OSH Code address unique requirements for tea, coffee, and rubber estates. Tamil Nadu's industrial dispute resolution mechanism has historically been among the fastest in India, with the labour courts and industrial tribunals maintaining relatively current dockets. Employers should note that Tamil Nadu's professional tax structure differs from other southern states.

For enterprises operating across multiple Indian states, the patchwork of notification timelines and state-specific variations demands a structured compliance strategy. The most robust approach is the "worst-case-scenario" or "highest-standard" method: identify the strictest standard among all operational states for each compliance parameter and apply that standard nationally. This ensures compliance everywhere, though it may result in over-compliance in less restrictive states.

A more nuanced approach is the "central policy plus state supplements" model. Draft a central compliance policy based on the central codes and rules, then create state-specific addenda that address only the parameters where a particular state's rules differ from or exceed the central framework. This allows a uniform national policy while accommodating state variations. The compliance matrix approach maps every obligation (registration, returns filing, contribution rates, threshold applicability) against each operational state, creating a visual grid that identifies gaps and overlaps.

Single-window registration strategy: several states are implementing online portals for unified registration under the new codes, replacing the earlier requirement of separate registrations under each repealed Act. Employers should register through these portals where available (Gujarat's Shram Suvidha portal, Karnataka's e-Shram integration) rather than filing separate applications. For states where portals are not yet operational, maintain registration under the existing Acts until the new regime is formally notified.

Organisational structure matters: centralise compliance oversight under a Chief Compliance Officer or Head of HR Compliance who maintains visibility across all states, but deploy state-level compliance coordinators who understand local labour department practices, inspection patterns, and informal requirements. Technology platforms for compliance tracking are essential for any employer operating in more than five states.

Understanding where states commonly diverge from central rules helps compliance teams anticipate issues and build flexibility into their policies. The most frequent areas of variation are as follows.

Registration thresholds: The central codes set baseline thresholds for applicability (e.g., factories with 10+ workers with power or 20+ without power). States can set lower thresholds, bringing smaller establishments into the regulatory net. Gujarat and Maharashtra have aligned with central thresholds, while some states apply lower thresholds for shops and commercial establishments, capturing businesses with as few as 10 workers.

Minimum wages: This is the area of greatest state-level variation. Minimum wages differ by state, zone within the state (metropolitan, urban, semi-urban, rural), industry/scheduled employment, and skill level (unskilled, semi-skilled, skilled, highly skilled). Delhi typically has among the highest minimum wages in India, while states like Bihar and Jharkhand have among the lowest. The Code on Wages introduces a national floor wage below which no state can set its minimum wage, but the floor has not yet been notified.

Working hours and overtime: While the central codes prescribe a maximum of 48 hours per week and 8 hours per day, states may permit flexibility in distribution (e.g., four-day work weeks with longer daily hours, as Karnataka has explored for IT/ITES). Overtime rates are universally twice the ordinary rate, but the maximum permissible overtime hours per quarter vary by state.

Shop and establishment rules: Opening and closing hours, mandatory weekly holidays (some states mandate specific days), festival holidays (state-specific lists), leave entitlements (annual leave, sick leave, casual leave quotas vary), and women's employment during night shifts (most states now permit this with safety conditions, but the specific conditions differ).

Professional tax: Not all states levy professional tax. Among those that do, the rates and slab structures vary significantly. Maharashtra has the highest rate at INR 2,500 per annum for higher earners, while Gujarat caps at INR 2,400. Karnataka, Andhra Pradesh, Telangana, and West Bengal each have their own structures.

Staying current with state-level labour law changes requires a proactive monitoring system, as gazette notifications can be published with little advance notice and take immediate or near-immediate effect. The primary source is the state gazette (Rajpatra in Hindi-speaking states), published by each state's Department of Publication. Key gazettes to monitor include the extraordinary gazette issues, which are used for urgent notifications including labour rule notifications.

The Ministry of Labour and Employment's website publishes central-level notifications and maintains a dashboard of state-wise progress on labour code implementation. The Central Labour Commissioner (CLC) office issues periodic circulars and clarifications that, while not binding, indicate enforcement intent. The Directorate General of Factory Advice Service and Labour Institutes (DGFASLI) publishes technical guidance relevant to OSH Code compliance.

Industry associations provide a valuable early-warning function. The Confederation of Indian Industry (CII), Federation of Indian Chambers of Commerce and Industry (FICCI), National Association of Software and Service Companies (NASSCOM), and sector-specific bodies like the Indian Staffing Federation regularly track regulatory developments and issue member advisories. These associations also participate in pre-notification consultations with state governments, providing advance visibility into proposed rules.

For systematic internal monitoring, establish a compliance calendar that maps all recurring filing obligations by state and frequency (monthly, quarterly, annual). Subscribe to legal databases such as SCC Online, Manupatra, or AIR Online that provide gazette notification alerts. Designate a compliance team member to review state labour department websites weekly for the states where you have operations. Set up Google Alerts for key terms like "[state name] labour rules notification" and "labour code gazette notification". Attend quarterly industry compliance webinars and CII/FICCI labour law forums where state labour secretaries often preview upcoming regulatory actions. Finally, engage external labour law counsel for an annual compliance audit across all operational states to catch any changes that internal monitoring may have missed.