India Labour Codes 2025: What Construction companies must do now
India’s labour landscape is transforming. With the government notifying the four Labour Codes to be enforced from 21 November 2025, we are entering one of the biggest regulatory shifts in decades.
For most industries, adaptation will be gradual.
For construction, change is immediate and deeper.
Why? Because construction is India’s second-largest employer with 71+ million workers, most of whom are informal, migratory, and hired on project-based contracts. For the first time, these workers will now fall under tightened wage definitions, formalized employment, digital compliance, PF/ESI coverage, and mandatory safety standards.
This blog explains:
- Key changes under Labour Codes 2025
- What construction companies and contractors must prepare for
- How this impacts owners, HR teams, and labour contractors
- Why digital tools like BuildSuite are becoming mandatory (not optional)
What Are India’s Four New Labour Codes?
To simplify and modernize labour laws, India merged 29 laws into 4 codes:
New Codes (2025) | Replaces | Main Impact |
Wage Code, 2019 | Minimum Wages Act, Payment of Wages Act, Bonus Act | Uniform wage definition, minimum wage for all |
Industrial Relations Code, 2020 | Industrial Disputes Act, Trade Union Act | Hiring/firing flexibility, fixed-term rules |
Social Security Code, 2020 | EPF, ESI, Maternity, Gratuity laws | Social security expanded to all workers, FTE gratuity |
Occupational Safety, Health & Working Conditions Code, 2020 | 13 laws including BOCW | Safety norms, health checkups, working hours |
Key Changes Impacting Construction in 2025
1) Minimum Wages + Standard Wage Definition
- Every worker gets minimum wage (even casual/contract labour).
- Basic wage must be at least 50% of CTC.
- PF, gratuity, and bonus will now calculate from a higher base, raising employer contribution.
Construction Impact: Expect a 10–18% rise in labour compliance cost depending on wage breakup today.
2) Appointment Letters Are Now Mandatory
Every worker—mason, helper, welder, carpenter, operator, or engineer—must receive a written appointment letter stating:
✔ wage details
✔ working hours
✔ benefits
✔ employer (contractor or principal employer)
Why it matters: Verbal hiring will be treated as non-compliance. Documented employment becomes mandatory even for short-term labour.
3) Safety & Health Compliance Is No Longer Optional
Construction sites must provide:
🔹 Free annual medical check-ups
🔹 Mandatory PPE usage
🔹 Grievance committees (with women members)
🔹 Strict overtime and shift rules
🔹 Safety Committee for 500+ workers
Commuting accidents (going to/from work) are now treated as workplace injuries.
4) 48-Hour Week + Double Overtime Pay
- 8 hours/day, 48 hours/week
- Overtime only with written consent
- Double wage rate for OT
Verbal OT orders = non-compliance
OT must be digitally traceable (attendance + wage slip)
5) Fixed-Term Employment (FTE)
Construction companies can now hire workers for project duration, but:
✔ Full PF/ESI
✔ Full benefits
✔ Gratuity after 1 year of work
Advantage for owners: No disputes on permanency claims after project completion.
6) Migrant Workers Get Welfare Rights
Construction sites must:
✔ Maintain migrant worker records
✔ Provide annual travel allowance to visit home state
✔ Facilitate e-Shram registration
This will affect budgeting and contractor payments.
7) Digital Compliance & e-Records
Registers, attendance, OT, wage slips, PF, and health check-ups must be digitally recorded and traceable.
Government aims for:
One Registration → One License → One Return
Paper registers and WhatsApp approvals won’t hold up legally anymore.
What Construction Business Owners Must Do
Priority | Action |
Wage Structure | Restructure salary with 50% basic rule |
Hiring | Issue appointment letters to every worker |
Contractors | Ensure subcontractors follow the codes |
Medical & Safety | Schedule check-ups, PPE, form committees |
Budgeting | Plan for increased PF/ESI/benefits |
Software | Digitize attendance, payroll, OT, and records |
What HR & Compliance Teams Must Change
✔ Update payroll templates
✔ Create FTE contract formats
✔ Maintain digital registers
✔ Track overtime consent
✔ Manage migrant welfare and travel allowance
✔ Verify contractor compliances every month
✔ Ensure annual health camps on large sites
Why Construction Needs HR Tech Tools Now
Legal Requirement | Proof Needed | Can Manual Work Survive? |
Minimum wage | Wage slip | ❌ |
Overtime | Digital attendance + consent | ❌ |
PF/ESI | Wage breakup & UAN/ESI logs | ❌ |
Appointment | Contract issued record | ❌ |
Safety compliance | Committees + health reports | ❌ |
Migrant allowance | Payment trail | ❌ |
Tools like BuildSuite make it possible to:
✔ Automate attendance & OT
✔ Generate compliant wage slips
✔ Maintain digital records for inspection
✔ Track contractor workforce & documents
✔ Manage FTE & migrant benefits
✔ Create reports for PF, ESI, gratuity
Result → Avoid penalties, disputes, and payroll errors.
In 2025, HR software isn’t a luxury for construction.
It’s becoming compliance infrastructure.
Conclusion: Construction Must Move from Informal to Formal
The 2025 Labour Codes are not just laws—they are a push to modernize India’s most unstructured industry.
Construction companies that formalize, digitize, and comply will survive and scale.
Those who continue WhatsApp instructions, cash payments, and verbal labour hiring will face penalties, delays, and legal risks.
The message is clear:
Compliance is no longer paperwork. It’s data. And data must be digital.
