Labour Code Compliance Checklist 2026: The HR & CFO Blueprint

The complete 2026 statutory compliance checklist for Indian companies — EPF, ESI, PT, LWF, the four Labour Codes & contractor liability, mapped with risk levels and due dates

By Praans Consultech | Corporate Governance, Labour Law & Legal Tech | Last Updated: June 2026 | Next Review: December 2026 | Author: Senior Labour Law Compliance Advisor, 15+ Years in Corporate Labour Law

Key Takeaways

● India's four Labour Codes replace 29 laws — Code on Wages 2019, Industrial Relations Code 2020, Social Security Code 2020, OSH Code 2020.

● The 50% basic wage rule under Wages Code Section 2(y) will directly raise PF and gratuity costs for most companies.

● Principal employers are legally liable when contractors skip PF, ESI or minimum wages — no exceptions under OSH Code Section 45.

● This checklist covers 18 statutory requirements across EPF, ESI, PT, LWF, CLRA and the four codes.

● Manual spreadsheet tracking fails at multi-state scale — compliance software and vendor audits are now baseline requirements.

Table of Contents

Key Takeaways
Why Most Companies Think They're Compliant — And Aren't
What India's Four Labour Codes Require of Your Business in 2026
The 2026 Statutory Labour Code Compliance Checklist for Indian Companies
Principal Employer & Contractor Liability Under CLRA and OSH Code
Why Manual Compliance Tracking Breaks at Scale — And What Replaces It
How to Get Labour Code Compliance Ready: Your Next Steps
Labour Code Compliance FAQs: What CHROs and CFOs Ask Most

I'll be straight with you — most companies I talk to think they're compliant. And most of them aren't.

Not because they're lazy or careless. Their payroll team is hardworking, their HR head knows the law, and they file returns every single month without fail. The problem is that what "compliance" meant in 2018 is genuinely different from what it means today. And the gap between those two things is where the ₹23 lakh EPFO notice shows up.

That actually happened to a client of ours. Manufacturing company, 480 people, three states. Monthly PF filings were going out on time. What nobody caught was that their Pune branch had a wrong sub-code mapping, contributions quietly going into a suspended regional account for 14 months. Nobody flagged it. Not internally, not externally. Until the Section 7A inquiry landed.

That's the thing about compliance risk — it doesn't announce itself.

What India's Four Labour Codes Require of Your Business in 2026

Before we get to the checklist, let me explain what actually changed. Because "four codes replacing 29 laws" sounds like a simplification, and it is in some ways — but it also introduces obligations that didn't exist before, and redefines things your payroll system has been calculating for years.

Code on Wages, 2019 — Sections 2(y), 6, 9, 14, 17, 51

The wage definition. This is the one that will hit your finance team hardest and your payroll system most directly.

Under the old framework, different acts defined wages differently. Under the Code on Wages, Section 2(y) gives you one definition: basic pay, DA, retaining allowance. That's it. HRA doesn't count. Overtime doesn't count. Bonuses, commissions, conveyance — none of it counts as wages.

Now here's the part most CFOs miss when they first read this: the Code also says your excluded components — all those allowances — cannot together exceed 50% of total remuneration. Which means basic wages must be at least 50% of what you pay. So if someone earns ₹1 lakh a month and their basic is ₹12,000, that's illegal under the new framework. The excess allowances get dragged back into the wage base. PF recalculates. Gratuity recalculates. Bonus recalculates.

Run that across a 300-person workforce. The numbers move significantly.

Section 17 says wages must be paid by the 7th of the following month. Section 51 sets penalties for minimum wage violations at ₹50,000 for a first offence, doubled on repeat.

Industrial Relations Code, 2020 — Sections 2(o), 4, 29, 30, 31, 81, 86

Fixed-term employment now has formal legal standing under Section 2(o). A worker on a 12-month contract gets the same wages, PF, ESI, and benefits as someone on a permanent contract — pro-rata. And they're entitled to gratuity after one year, not five.

If your company has been using rolling short-term contracts as a way to avoid gratuity and permanent liability, I'd strongly recommend reviewing that arrangement with a lawyer before the codes come fully into effect. The intent was to prevent exactly that.

At 20+ workers, Section 4 requires a Grievance Redressal Committee. At 300+ workers, Sections 29 to 31 require certified Standing Orders — the document that defines your service conditions, disciplinary procedures, working hours and termination processes. If yours was last certified under the old Industrial Employment (Standing Orders) Act and still references acts that have since been repealed, it needs to be redone and re-certified.

Section 86 penalty for Standing Orders non-compliance: ₹1 lakh.

Section 81 introduced a Reskilling Fund. When you retrench workers, you contribute 15 days of last-drawn wages per worker to this fund. The operational rules are still being finalised, but the obligation sits in the code.

Code on Social Security, 2020 — Sections 6, 8, 15, 17, 29, 53, 60, 99

EPF thresholds stay at 20+ workers under Section 6. ESI at 10+ under Section 15. Contributions due by the 15th under Section 8 — and no, portal downtime is not an accepted reason for a delay, which I'll come back to.

What's new here: gig workers and platform workers now have explicit social security coverage. If your business relies on delivery partners, freelancers, or app-based workers in any meaningful way, the contribution obligations under this code apply to you. The exact percentages are still being prescribed by the government but the framework is law.

Fixed-term employees get gratuity after one year under Section 53. Maternity leave stays at 26 weeks under Section 60. Section 99 penalties for PF or ESI non-payment: up to ₹1 lakh plus damages.

OSH Code, 2020 — Sections 4, 6, 7, 17, 19, 25–28, 32, 35, 45, 47, 49, 90–92

The OSH Code replaces 13 laws including the Factories Act and Contract Labour Act. One occupational licence under Section 4 instead of multiple state registrations. Appointment letters mandatory for every single worker under Section 6 — permanent, contractual, fixed-term, no carve-outs.

Working hours: 8 per day, 48 per week (Section 25). Rest day every week mandatory (Section 26). Spread-over including breaks capped at 12 hours (Section 27). Overtime only with written consent, paid at double rate (Section 28). Annual leave at 1 day for every 20 days worked (Section 32).

If you engage contractors, Section 45 requires you to register as a principal employer. Section 47 requires you to verify contractor licences. The word "verify" is doing a lot of work there — it means actually checking, not just collecting a certificate at onboarding.

Section 90 penalties for working hours and safety violations: ₹2 lakh. Section 91 for operating without a valid licence: same.

One thing I want to be clear about: the Factories Act 1948, CLRA Act 1970, EPF & MP Act 1952, ESI Act 1948 — these are still active. Until the pan-India switchover is complete, you are running compliance against both the old acts and the new codes simultaneously.

The 2026 Statutory Labour Code Compliance Checklist for Indian Companies

Frequency	What's Required	Act / Section	Risk if Missed
By 15th monthly	PF contribution deposit + ECR filing	EPF Act 1952 / SS Code Sec. 6, 8	CRITICAL — 12% interest p.a. + damages up to 25% under EPF Act Sec. 14B
By 15th monthly	ESI contribution deposit	ESI Act 1948 / SS Code Sec. 15, 17	HIGH — interest + prosecution under ESI Act Sec. 85
By 21st monthly	ESI monthly challan on ESIC portal	ESI Act / SS Code	MEDIUM
Monthly or quarterly	Professional Tax — state-specific	State PT Acts (MH, KA, TS, WB, AP)	MEDIUM-HIGH — state penalties compound fast
June 15 + Dec 15	Labour Welfare Fund contribution	State LWF Acts	MEDIUM — varies by state
By July 31	ESI half-yearly return Form 5 (Apr–Sep)	ESI Act	HIGH — triggers inspection
By January 31	ESI half-yearly return Form 5 (Oct–Mar)	ESI Act	HIGH
By April 30	EPF annual return, Forms 3A + 6A	EPF Act	HIGH — discrepancy = immediate audit
Before expiry	Factory licence renewal	Factories Act 1948 / OSH Code Sec. 7	CRITICAL — stop-work orders
Before expiry	Contractor licence renewal	CLRA Act 1970 / OSH Code Sec. 47	CRITICAL — principal employer liability
Annual	Shops & Establishments renewal	State S&E Acts	MEDIUM
Annual	CLRA principal employer registration (20+ contract workers)	CLRA Act 1970 / OSH Code Sec. 45	HIGH
Annual	POSH return with District Officer	POSH Act 2013, Sec. 21	MEDIUM — director-level liability
Within 8 months of FY close	Statutory bonus (8.33%–20% of wages)	Payment of Bonus Act / Wages Code Ch. VIII	HIGH — labour court exposure
Before first day	Appointment letter to every worker	OSH Code Sec. 6	HIGH — inspection failure
Ongoing	Standing Orders certified and displayed (300+ workers)	IR Code Sec. 29, 30, 31	HIGH — ₹1 lakh under Sec. 86
Ongoing	Grievance Redressal Committee (20+ workers)	IR Code Sec. 4	MEDIUM
Ongoing	Digital registers — muster roll, wages, OT, leave	OSH Code Sec. 35, 36	HIGH — must be instantly available

🚨 Multi-state? Multiple vendors? Deadlines across 5 different state portals? We built the 2026 PAN India Statutory Compliance Calendar exactly for this — mapped state by state, with alert templates baked in. [Download free — name, work email, headcount and it's yours.]

Principal Employer & Contractor Liability Under CLRA and OSH Code

This is the section where most compliance guides spend two paragraphs and move on. I want to spend more time here because it's where we see the biggest financial surprises.

Under Section 20 of the CLRA Act — and this position is reinforced word for word in OSH Code Section 45 — if your contractor does not pay minimum wages, does not deposit PF or ESI, does not maintain records: the principal employer pays. Not jointly. You pay.

Last year we sat down with a manufacturing client, fourteen active contractors, looked perfectly fine on paper. Three weeks into the audit this is what we actually found: three of the fourteen had valid unexpired CLRA licences. Six were depositing PF — for about 60% of the workers they were actually deploying. Two had zero ESI registration despite putting workers on this company's factory floor every single day.

The client had done onboarding properly — collected certificates, filed them, moved on. Nobody had looked again.

PF arrears exposure we calculated: ₹31 lakh. Before interest and before damages.

A proper contractor audit — not a self-declaration form, an actual audit — checks CLRA licence validity against the state register directly. PF registration number verified live against EPFO database. ESI code verified against ESIC. Wage register cross-referenced against the current state minimum wage notification, because those get revised and companies miss it. Muster roll checked against actual deployed headcount, not what the contractor reports.

This needs to happen every year minimum. For logistics, warehousing, and construction where worker numbers move around, every six months.

And for CFOs specifically: unresolved contractor PF liability shows up in due diligence. We've seen it complicate fundraising rounds and acquisition discussions. The time to find it is before a transaction, not during one.

Why Manual Compliance Tracking Breaks at Scale — And What Replaces It

I'll describe a situation I've watched play out more than once.

A compliance team, good people, maybe four of them. They're managing monthly PF and ESI filings across six states, PT returns in five of those states, LWF in three, factory licence renewals, contractor document tracking, and everything else that comes with a 400-person multi-site company. They have a shared Excel file and they are genuinely on top of it.

Then one quarter, the EPFO Unified Portal throws ECR errors on the 13th. Takes three days to resolve. The 15th comes and goes. Interest starts. Nobody's fault — the portal genuinely went down — but the interest clock doesn't care.

Or Karnataka's Professional Tax portal silently changes its login protocol in October. Nobody got a notification. The person who normally handles it is on leave. The filing misses.

Or someone joins the team, the Excel file has columns nobody explained, and the LWF entry for the Pune office falls through.

None of these are incompetence. They're the natural result of asking humans to manually track dozens of deadlines across systems that change without warning.

Our platform at Praans maintains a live regulatory feed that updates your compliance parameters when state rules change — not after you notice something broke, before. Contractor licence expiry tracked automatically against a vendor dashboard, not against a column someone has to remember to update. Filing evidence stored with proper audit trails. Deadline alerts that fire before the deadline, not the day after.

This is not about replacing your compliance team. It is about not asking four people to do what a properly configured system does without breaking a sweat.

How to Get Labour Code Compliance Ready: Your Next Steps

Go through the checklist table above with your HR lead and finance team together. Not separately — together, because the wage structure implications sit at the intersection of both their work and they need to see the same numbers at the same time.

Be honest about what's actually being tracked versus what's assumed to be running fine. Then specifically look at your contractor base — when did someone last verify PF deposits against actual deployed headcount? Not collected challans. Verified.

If you find gaps, deal with them now. A lapsed registration corrected today is two weeks of paperwork. The same issue found during a Section 7A inquiry is months of management time and a number your board didn't expect.

We run compliance health checks across all four Labour Codes, all active legacy acts, and your full contractor base. We tell you what we find, straight.

Book a Corporate Compliance Health Check

Get a live demo of our Labour Code Compliance Tracking Software, or let our experts review all four Labour Codes, your active legacy acts, and your full contractor base — and tell you exactly where you stand.

🌐 www.praansconsultech.com

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Labour Code Compliance FAQs: What CHROs and CFOs Ask Most

These answers are kept concise so they can be used directly by voice assistants, AI search engines, and Google's Featured Snippets.

We already use an external compliance vendor. Why is this still our problem?

Your vendor files returns. They don't audit your contractors, model your wage structure risk, or catch that your Pune branch is mapped to a suspended PF account. Filing on time and actually being compliant are two different things.

Which Labour Code change hits the bottom line hardest?

Wages Code Section 2(y) — the 50% basic wage rule. If your CTC structures run low basic and high allowances, your PF base is about to correct itself significantly. Model it on actual payroll data before your CFO finds out another way.

How do we handle Professional Tax across multiple states?

Separately, for each state. No central PT filing exists. Maharashtra, Karnataka, Telangana, West Bengal — different slabs, different portals, different late-payment penalty rules. You need a state-specific tracker per location.

Our EPFO filing was rejected because the portal crashed. Are we still liable?

Yes. Portal errors don't pause the interest calculation. Pay before the 12th, keep your NEFT reference number, document the portal failure with screenshots. That paper trail matters if you ever face an inquiry.

A contractor says their PF registration is "in process." Can we deploy their workers?

No. Check the registration number against the EPFO database before a single worker steps onto your premises. "In process" sometimes means they filed years ago and never followed up. Your liability starts at deployment.

We're a 40-person startup. Does this really apply to us?

Wages Code from day one, regardless of headcount. ESI from 10 workers. PF and the IR Code grievance committee from 20. Compliance gaps found during Series A or B due diligence have derailed funding conversations. Cheaper to fix now.

What's the single biggest contractor compliance mistake you see?

Treating onboarding documents as permanent. A vendor compliant in January may have a lapsed licence and under-reported headcount by July. One-time collection is not ongoing monitoring.

How long does remediation actually take?

A missed registration: two to four weeks. A formal PF arrears dispute under Section 7A with a contested headcount: four to six months minimum. The longer you wait, the more it costs.

Should HR or Legal own labour compliance?

Neither exclusively, which is exactly how things fall through. HR handles day-to-day filings. Legal handles disputes. Nobody owns systematic audit oversight. That gap is where the exposure lives.

What parts of this can genuinely be automated?

Deadline tracking, regulatory updates, vendor monitoring, audit trails — all of it. Reading a show-cause notice, modelling wage restructuring conversations, managing how you communicate changes to employees — those need people. Automate the noise, keep humans on the judgment calls.

Written June 2026. All code sections, penalty figures and contribution rates reflect current enforcement positions. State-specific rules vary — get advice specific to your state footprint before changing payroll structures or employment arrangements.

© 2026 Praans Consultech. All rights reserved.

Labour Code Compliance Checklist 2026: The HR & CFO Blueprint

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