From 2026, the Government of India is planning to implement the Four Labor Codes, - The code on wages (2019), Industrial relations code (2020), Code on social security (2020) and Occupational safety health and working conditions code (2020) - consolidating 29 existing labor laws into a modern, unified framework.
This is the most significant workforce reform in India, since independence and it reshapes how foreign companies hire in India through an Employer of Record (EOR). Rather than viewing this as a compliance burden, the right EOR partner converts these changes into an advantage.
The reform strengthens workforce protections across wages, social security, workplace safety, benefits, and dispute resolution. In practical business terms, the new rules mean:
Expanded PF/ESI and social security coverage to gig, platform, contract, and MSME workers
Gender-pay and equal opportunities for women, including in night shifts and hazardous work
Mandatory health check-ups, preventive healthcare and welfare benefits across sectors
Universal national minimum wages and mandatory timely salary payments
Mandatory appointment letters for all employees
Expanded gratuity eligibility, including fixed-term and gig workers
Simplified compliance under a single registration, single license and single return
The business impact of these are:
More predictable and transparent compensation structures
Easier cost forecasting for talent planning
Reduced compliance ambiguity across states
Stronger retention and employer brand for foreign companies hiring in India
Does this increase the cost of hiring in India?
Not necessarily and this is where the EOR partner matters. Some benefit obligations expand under the new Codes, but risk and overhead reduce significantly when:
Compliance is proactively implemented
Benefits parity is ensured to protect employee morale
Payroll + tax treatment is structured to avoid double taxation
Under the Labor Codes, foreign employers face exposure if:
Benefits differ between EOR-managed employees and direct employees
Payroll tax treatment results in permanent establishment risk
Disputes are mishandled between EOR vs. client responsibility
A globally experienced EOR removes these risks entirely
P.R.GLOLINKS safeguards global employers as our frameworks continue to be upgraded as new rules come in, As a result our clients experience:
Zero deviation from the Labor Codes
Correct tax and social security structuring to prevent double taxation
Complete benefit parity benchmarking for talent retention
Data-secure HR and payroll aligned to India’s Digital Personal Data Protection Act 2023
The Labor Codes make India more attractive when supported by the right partner
With P.R.GLOLINKS, global employers gain:
Compliance without fear
Predictable talent cost modelling
Seamless payroll + HR integration with global systems
A high-retention workforce that protects employer brand
Irrespective of the number of hires, if you are looking to scale talent in India smoothly, compliantly and cost-efficiently, schedulea 15-minute call with one of our experts.
