Contract Staffing 2025: Navigating India’s New Labour Codes for Compliance & Cost Efficiency

India’s labour landscape is poised for significant transformation with the introduction of four new labour codes likely to be implemented in 2025. These codes—covering wages,industrial relations, social security, and occupational safety—will notably impact businesses employing contract staff. Understanding and preparing for these changes will not only ensure compliance but can significantly optimize your staffing costs.

Understanding the Four Labour Codes

1. Code on Wages, 2019

• Unified definition of wages.
• Implementation of a national floor wage.
• Higher base for Provident Fund (PF) and Employees’ State Insurance (ESI).

2. Industrial Relations Code, 2020

• Legitimizes fixed-term employment.
• Raises the threshold for standing orders from 100 to 300 workers.
• Requires equal benefits for temporary employees.

3. Code on Social Security, 2020

• Extends social security coverage to gig and temporary workers.
• Employers must enroll temporary staff in PF/ESI schemes.

4.OSH & Working Conditions Code, 2020

• Consolidates 13 safety laws.
• Introduces a single license for nationwide operations..

Why Contract Staffing Matters in This Transition

Contract staffing teams must be proactive:

• Equal benefits: Temporary staff must now receive gratuity and other statutory benefits.
• Gig-worker responsibilities: Employers must ensure social security contributions.
• Simplified licensing: A single pan-India license streamlines compliance.
• Increased penalties: Non-compliance penalties escalate, with fines up to ₹1 lakh.

Essential Compliance Checklist

Here’s a brief compliance checklist to get your preparations started:

• Update payroll systems for uniform wage definitions.
• Apply for the unified licence via the Shramsuvidha portal.
• Revise contracts to include gratuity and safety provisions.
• Digitize attendance and overtime tracking.

Calculating Cost Efficiency

Early compliance doesn't just mitigate risk—it saves money. For instance, consolidating multiple licenses and digitizing records can reduce administrative overhead by approximately ₹1,350 per month per employee. Over a year, a mid-sized company with 500 contract workers could save nearly ₹23 lakh.

Industry Insights

• Oil & Gas: Single licensing significantly reduces turnaround times.
• Pharma: Fixed-term clarity facilitates quick staffing during expansions.
• Renewables: Enhanced safety compliance is critical for winning project bids.

Building a Future-Ready Staffing Strategy

To remain competitive, businesses should:

• Adopt digital-first compliance systems.
• Consolidate vendor contracts under unified agreements.
• Utilize predictive analytics for compliance checks.
• Regularly train teams on updated compliance protocols.

Frequently Asked Questions (FAQs)

When do these codes take effect?

• Phased implementation starting FY 2026.

Do temporary workers receive gratuity?

• Yes, even short-term hires accrue gratuity.

Will staffing costs rise?

• Initially yes, but efficiencies from unified licensing and digitization offset most increases.

Next Steps

Engage with us!

• What challenges do you anticipate with these labour code changes? Share your thoughts in the comments or connect with our compliance experts today.