Labour Codes move closer to full implementation: Takeaways from the newly notified Central Rules

The Central SS Rules primarily establish the institutional framework contemplated under the SS Code. They prescribe the composition, administration, duties, procedure and functioning of various social security institutions, such as the Central Board of Trustees of the Employees’ Provident Fund (EPF), the Employees’ State Insurance Corporation (ESIC), and National and State Social Security Boards.

Although much of the framework is administrative, several provisions have practical significance for employers and employees. Most notably, the Central SS Rules prescribe the form and manner in which appeals may be filed before the EPF Tribunal, including electronic filing of written submissions. This is part of the larger objective of modernising social security adjudication and improving accessibility.

The Central SS Rules also expand the health and welfare-oriented spending under the Employee’s State Insurance (ESI) scheme. The ESIC is now authorised to incur expenditure up to INR 1,000 crore annually (or such other amount notified by the central government) on welfare initiatives, including annual medical examinations for insured persons above 40 years of age and rehabilitation and re-employment of insured persons who suffered workplace injury or disability.

These rules also quantify certain benefits. For instance, a medical bonus of INR 15,000 is payable to women employees and wives of persons insured with the ESI for up to two births if the confinement occurs in a facility outside the ESI scheme.

A further clarification relates to maternity benefits. The SS Code permits denial of maternity benefits only where a woman employee is dismissed for ‘gross misconduct’. The Central SS Rules now define that expression exhaustively to mean:

• wilful destruction of employer’s goods or property,
• assaulting any superior or co-employee at the place of work,
• criminal offence involving moral turpitude resulting in conviction by a court,
• theft, fraud, or dishonesty in connection with the employer’s business or property; or
• wilful non-observance of safety measures/rules or wilful interference with safety devices or firefighting equipment.

The Central SS Rules also establish an appellate mechanism that permits an aggrieved woman to appeal the denial of a maternity benefit within 60 days and requires the relevant authority to decide the appeal within three months.

They further address a long-debated issue on gratuity for fixed-term employees by clarifying that gratuity becomes payable only upon completion of one year of service. This is likely to be particularly relevant for employers in sectors that rely on fixed-term employment arrangements.

The Central Wage Rules prescribe methodologies for calculating minimum wages, including daily and hourly wage rates, variable dearness allowance and floor wages. They also explain how to make permissible deductions from wages. These technical provisions are likely to reduce inconsistencies of interpretation in wage computation and compliance requirements.

The rules also prescribe the procedure for compounding offences not punishable with imprisonment or with imprisonment and fines, potentially reducing litigation exposure for employers in cases of procedural or technical non-compliance.

The Central OSH Rules provide operational measures and guidance for several employer obligations under the OSH Code relating to workplace health, safety and welfare. These include annual medical examinations, establishment of safety committees, and protocols for reporting incidents and diseases. These rules introduce a format for issuing appointment letters to all employees. Existing contracts must be updated to incorporate the mandatory terms within three months of the rules coming into force. Employers would be advised to review existing employment documentation and onboarding processes to ensure alignment.

The rules also prescribe detailed safeguards for the employment of women during night shifts (between 7.00 pm and 6.00 am). Employers seeking to engage women during these hours must satisfy multiple conditions, including obtaining written consent, providing transportation, ensuring adequate CCTV coverage in the premises, maintaining access to sanitation and drinking water facilities, and displaying contact information for emergencies.

The Central OSH Rules further simplify certain administrative requirements by consolidating multiple statutory registers into a single annual return filing system. They also create a formal grievance redressal mechanism for contract labour. Contract workers may raise concerns regarding health, working conditions and wages before a committee comprising representatives of the principal employer and the contractor. This expands accountability across the labour supply chain rather than being limited to the contractor level.

The Central IR Rules primarily operationalise the institutional mechanisms of the IR Code, intended to facilitate workplace dispute resolution and support workers affected by retrenchment. They provide the framework for the constitution and functioning of the works committee and grievance redressal committee. They also prescribe the manner of administering the worker re-skilling fund, including the collection of funds from employers and their onward transfer to the retrenched worker by the government. The worker re-skilling fund has since been notified by the central government separately.