The four labour codes: what NGOs must know as employers

India’s four labour codes are its new labour law. Since 21 November 2025 they have replaced 29 central labour laws, and they apply to NGOs much as they apply to companies: if you pay people to work for you, the rules on wages, social security and working conditions apply to you.

The codes were meant to simplify, and in many ways they do: one definition of wages, appointment letters for everyone, social security that reaches more workers. But the rules beneath them are still settling, especially in the states. This guide explains what the codes mean for an NGO as an employer: who counts as an employee, what you must pay and record, how fixed-term and project staff are treated, where consultants and volunteers fit, and what to do now. It is general information: for decisions about your own staff, take advice from a labour law professional.

The four codes and where they stand

All four took effect on 21 November 2025, replacing laws such as the Minimum Wages Act, 1948, the Payment of Gratuity Act, 1972 and the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. For the change-over, the government said the relevant parts of the old Acts and their rules would stay in force until new ones replaced them. Final central rules under the codes were notified in May 2026.

Do the codes apply to NGOs?

Generally, yes. The codes work through “establishments” and “employees”, and an NGO office or project that employs people will usually count as an establishment. The Code on Wages, the Code on Social Security and the OSH Code have no general exemption for charities.

The exception is the Industrial Relations Code. Its definition of “industry” leaves out institutions owned or managed by organisations wholly or substantially engaged in charitable, social or philanthropic service. So the parts of that code that depend on there being an industry, such as industrial disputes, standing orders, lay-off and retrenchment, may not apply to many NGOs. Whether yours falls within the exclusion depends on what it actually does, so take advice before relying on it.

Your state’s own laws, such as its shops and establishments Act, still sit alongside the codes: check whether yours covers your office.

Wages: one definition, minimum wages and paying on time

One definition of wages. Wages are basic pay, dearness allowance and retaining allowance. Some payments are left out, such as bonus, house rent allowance, conveyance allowance, overtime allowance and commission. But if the left-out payments come to more than 50% of total pay, the excess is added back to wages. This matters because provident fund, gratuity and other dues are worked out on wages.

Minimum wages now apply to all employees. The central government sets a national floor wage, and state minimum wages, which vary by skill and area, can’t be lower. Check your state’s current rates for each kind of role you employ.

Paying on time. Under Section 17 of the Code on Wages, monthly wages must be paid by the seventh day of the following month. When someone resigns, or is removed, dismissed or retrenched, what they are owed must be paid within two working days.

Appointment letters are now compulsory for every worker. Give each new employee one, and issue letters to existing staff who never had them.

Provident fund, ESI, gratuity and maternity benefit

A woman who adopts a child under three months old, or a commissioning mother, is entitled to 12 weeks’ maternity benefit from the day the child is handed over. After maternity leave, an employer may agree to let her work from home if the work allows it.

Fixed-term staff, project contracts and consultants

Many NGOs hire for the length of a grant. Under the Code on Social Security, fixed-term employees get the same benefits as permanent staff, and gratuity after one year of continuous service instead of five, in proportion to their service (Section 53).

Plan for these costs when you price a project: see budgeting a proposal.

Consultants. Calling someone a consultant doesn’t make them one. What matters is the reality of the work: whether you control how, when and where they work, whether they work fixed hours for you alone over a long period, whether they sit in your team’s structure, and whether they are paid like staff. A “consultant” who works full-time under a manager for years may well be an employee in law, with back-dated provident fund, ESI and gratuity at stake. Tax deduction differs too, because salaries and professional fees are treated differently: see TDS for NGOs.

Volunteers, interns and fellows

Unpaid volunteers generally aren’t employees under the codes, which are about people who work for wages. But don’t generalise across laws:

• the POSH Act counts volunteers and interns as employees, so they can complain to your Internal Committee and its rules apply to their conduct: see POSH for NGOs;
• a “volunteer” paid a regular monthly sum for fixed hours under your direction can look like an employee, whatever you call them;
• paying back a volunteer’s actual costs, such as travel and meals, is different from paying them for their work.

Stipends for interns and fellows sit in between. If you pay them regularly for set hours, take advice on how the codes and tax law treat them. Our guide to working with volunteers covers the rest of volunteer management.

Working hours, overtime and records

• Hours: working time is capped at 8 to 12 hours a day and 48 hours a week.
• Overtime needs the worker’s consent and is paid at no less than twice the normal rate.
• Women may work night shifts and in all kinds of work, with their consent and proper safety measures.
• Records: keep appointment letters, attendance, wage and leave records, and proof of provident fund and ESI contributions where they apply, so that you can show what you paid and when.
• Leave: annual leave comes from the OSH Code for the establishments it covers and from state law; write your leave rules into your HR policy and check them against both.

What to do now

1. Count your people: permanent, fixed-term, part-time and daily-wage staff, consultants, interns and volunteers.
2. Check the thresholds: 10 employees for ESI and a POSH Internal Committee, 20 for provident fund.
3. Check pay structures against the 50% rule, and work out provident fund and gratuity on the new wage figure.
4. Issue appointment letters to everyone who doesn’t have one.
5. Check your state’s minimum wages and your pay dates.
6. Review fixed-term contracts, and budget for gratuity after one year in project proposals.
7. Review long-running consultant contracts against the reality of the work.
8. Write down your volunteer terms: unpaid, with genuine expenses reimbursed.
9. Update your HR policies alongside your other policies every NGO should have.
10. Check your state’s rules, and take professional advice where you are unsure.