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From CTC restructuring to statutory payroll, PF/ESI compliance to Labour Code alignment — one team managing the complete payroll and employment law lifecycle for your Global Capability Center.
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Labour Codes Compliance Services for GCC in India
India's labor law framework changed fundamentally on 21 November 2025, when the Government notified the Code on Wages 2019, the Industrial Relations Code 2020, the Code on Social Security 2020, and the Occupational Safety, Health and Working Conditions Code 2020, consolidating 29 existing central labor laws into a single framework. This isn't a future reform GCCs can plan around at leisure — the Codes are already in force, and Labour Codes payroll compliance for GCC in India now means actively restructuring compensation, not just filing returns on the old template.
Every GCC with India-based employees falls under this new framework, enforced jointly by the Ministry of Labor & Employment, EPFO, ESIC, and State Labor Departments. Labour Codes compliance for Global Capability Centers in India hinges on three things: correct wage structuring under the new Code on Wages definition, updated social security and gratuity treatment, and contract labor management within the revised OSH Code thresholds.
The consequence of getting this wrong runs in both directions. Continuing to run payroll on a pre-Code wage structure means non-compliant CTC bands that need retrospective correction once rules are finalised, along with potential back-payment exposure. Ignoring the revised gratuity timeline for fixed-term staff means undercounted liability sitting on the books. Addressing wage restructuring and gratuity recalculation early keeps the GCC's payroll position clean as rules are finalized.
Labour Codes Compliance Requirements for GCC India: The Six Filing Categories
Labour code compliance for GCC-owned entities in India spans six core filing categories, covering everything from establishment registration to periodic returns under the consolidated labour codes.
| Sub-Category | Form / Requirement | Trigger / Deadline | Authority |
|---|---|---|---|
| Wage Code & CTC Restructuring | Basic pay at minimum 50% of gross wages; allowances capped at 50%, excess reclassified as wages | In force from 21 Nov 2025; restructuring needed before FY2026-27 payroll cycle | |
| Social Security Code — PF, ESI, Gratuity | Gratuity eligibility for fixed-term employees reduced from 5 years to 1 year; social security extended to gig and platform workers | Certain provisions live; full rollout pending rules | |
| Industrial Relations Code | All provisions already in effect, including fixed-term employment recognition and revised dispute resolution | Live from 21 Nov 2025 | |
| OSH Code — Contract Labor & Working Conditions | Contract labor provisions apply at 50+ contract workers (raised from 20); mandatory appointment letters; free annual health checkups above age 40 | Live; state OSH rules pending in several states | |
| Statutory Filings (Transition Period) | PF/ESI returns, Professional Tax, registers of wages and attendance | Ongoing, monthly/quarterly under existing acts | |
| State Rules Monitoring | Tracking state-by-state notification of Labour Code rules | Continuous through FY2026-27 |
*Social Security Code provisions on gig and platform workers are subject to ongoing rule notifications; the core PF/ESI obligations continue under existing EPFO/ESIC rules in the interim.
CTC Restructuring Under New Labour Codes India 2026: Why Timing Matters
Employers must structure basic pay at a minimum of 50% of gross wages, which means any compensation band built on the old wage definition needs to be rebuilt before the rules are finalised. CTC restructuring under the new Labour Codes is the most comprehensive payroll update existing GCCs will undertake in 2026, because it applies across every employee band simultaneously.
A few things worth flagging:
- Draft Central Rules were issued on 30 December 2025, with final rules expected around 1 April 2026 — restructuring done before this window closes avoids a retrospective scramble.
- Gratuity eligibility for fixed-term employees now kicks in after 1 year instead of 5, which changes accrued liability calculations immediately for project-based hires.
- Existing labor acts continue to apply wherever Code-specific rules haven't yet been notified, but this transitional relief disappears the moment rules are finalised.
Labour Codes & Payroll Compliance by Entity Structure
The four new Labour Codes reshape payroll obligations differently across Private Limited Companies, LLPs, Branch Offices, and Liaison Offices, with compliance scope tied directly to entity type and employee headcount. Here's how these requirements apply across each structure relevant to GCC-owned businesses in India.
| Requirement | Pvt Ltd (Subsidiary) | LLP | Branch Office | Liaison Office |
|---|---|---|---|---|
| CTC Restructuring (Wage Code) | Applicable | Applicable | Applicable for India-payroll staff | Applicable for India-payroll staff |
| Social Security Code (PF/ESI/Gratuity) | Applicable | Applicable | Applicable | Applicable if employees on local payroll |
| Industrial Relations Code | Applicable | Applicable | Applicable | Applicable if employees on local payroll |
| OSH Code Contract Labor Threshold | Applicable at 50+ contract workers | Applicable at 50+ contract workers | Case-specific | Rarely applicable |
| Appointment Letters | Applicable | Applicable | Applicable | Applicable |
Labour Codes Compliance Consultant for GCC India: Why Outsource to Xpansa
Labour Codes & Payroll is managed with a deliberate focus on getting CTC structures compliant before rules are finalised, not reacting after a penalty notice. Companies that outsource Labour Codes payroll compliance for GCC in India get a team actively restructuring compensation and tracking liability with CTC compliance treated as a priority workstream, not a background process. What this includes:
CTC restructuring audits
Every compensation band reviewed against the new 50% basic-pay rule, with restructuring recommendations ahead of the FY2026-27 cycle.
Gratuity and fixed-term liability assessment
Recalculating accrued gratuity exposure under the revised one-year eligibility rule.
Contract labor threshold monitoring
Tracking headcount against the 50-worker OSH threshold and advising on compliant engagement models.
State rules tracking
Monitoring Central and State rule notifications as they're finalised, so payroll isn't caught by a retrospective gap.
Cross-pillar visibility
Wage restructuring connects to Direct Tax (TDS recalculation) and Corporate & Secretarial (board-level policy updates), tracked under one accountable partner.
Make Labour Code Compliance a Business Advantage
As a Labour Codes compliance partner working with GCC structures across entity types, Xpansa manages wage restructuring, statutory payroll, and employment law alignment as a connected obligation, updated continuously as Central and State rules are finalized .
FAQs
Everything you need to know. Can't find the answer? Get in touch.
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All four Labour Codes became effective on 21 November 2025, though Central and State rules are still being finalised, with full implementation expected around 1 April 2026.
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The Code on Wages requires basic pay to be at least 50% of gross wages, so any CTC structure built on the older wage definition falls out of compliance and needs to be rebuilt.
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Gratuity eligibility for fixed-term employees now applies after one year of service instead of five, increasing accrued liability for project-based hires.
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It applies once an establishment engages 50 or more contract workers in the preceding 12 months, up from the earlier threshold of 20.
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Repeal and savings provisions offer temporary relief from penalties where rules haven't yet been notified, but non-compliant structures will need retrospective correction once rules are finalised, making early action the lower-risk path.
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CTC restructuring, gratuity recalculation, and contract labour threshold tracking require coordinated payroll and legal review. A dedicated partner ensures these are managed proactively and updated as rules are finalised.
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Yes. While the four Labour Codes are central legislation, State Governments notify their own rules, and implementation timelines differ. Xpansa tracks both Central and State rule notifications across the states where your GCC operates, ensuring your compliance position stays updated as rules come into force.
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