Preparing HR Systems for India's New Labour Codes: Dual Compliance and Redefined Data Boundaries

Starting from August 1, 2025, India will implement its four consolidated labour codes—wages, industrial relations, social security, and OHS—allowing 12-hour workdays, 4-day workweek options, and defined gig/social security. While these are intended to simplify compliance, they pose critical deadlines and data tracking demands for payroll and HR teams, particularly during the transition phases of the labour codes.

How can HR prepare existing systems for dual compliance under both the legacy and new code structures?

Which data boundaries need to be redefined (for example, the share of basic pay, overtime tracking) under this new framework?

Preparing for the transition to India's new labour codes involves a two-fold strategy: ensuring dual compliance and redefining data boundaries.

1. Dual Compliance: HR teams should start by understanding the key differences between the old and new labour codes. This will help identify the areas that require changes in the current HR systems. Once these areas are identified, HR should work with their IT teams to update the systems to accommodate both the old and new codes during the transition phase. This might involve creating new fields, updating calculation formulas, or developing new modules. Regular testing should be carried out to ensure the system is functioning correctly under both sets of rules.

2. Redefining Data Boundaries: The new labour codes might require redefining certain data boundaries. For instance, the share of basic pay might need to be recalculated based on the new rules. Similarly, the method of tracking overtime might need to be updated. HR should work closely with the payroll team to ensure these changes are accurately reflected in the system.

Remember, communication is key during this transition phase. HR should keep all stakeholders informed about the changes and provide training to employees to help them understand the new codes and how they affect their pay and working conditions.

Lastly, HR should also consider seeking external help from HR consulting firms or legal experts, especially in the initial stages of the transition. They can provide valuable insights and help avoid potential pitfalls.