Labour and Industrial Laws: Termination, Wages, Gratuity, PF and POSH

What changed with the new Labour Codes in November 2025?

The four Labour Codes came into force on 21 November 2025 and replaced 29 older laws, including the Industrial Disputes Act 1947, the Payment of Wages Act, the Minimum Wages Act, the Payment of Gratuity Act, the EPF Act and the Factories Act. The substance of many rights is familiar. What changed is where those rights sit, some definitions, several thresholds and a number of time limits.

Four changes matter most to people who come to us. First, a single definition of 'wages' runs across the Codes, and allowances above half of total pay are added back to wages, which affects gratuity, PF and retrenchment compensation. Second, final dues must now be paid within two working days of resignation, dismissal or retrenchment. Third, fixed-term employees get gratuity after one year instead of five. Fourth, the threshold for needing government permission before a layoff, retrenchment or closure went up from 100 to 300 workers, and states can raise it further.

One practical warning: labour is a concurrent subject, and both the Centre and the states make rules under the Codes. Delhi and Uttar Pradesh are still notifying or revising their rules, forms and authorities. For any step with a deadline, we check the current state rules before advising, and you should treat older articles online, written under the repealed Acts, with some caution.

Which Labour Code covers your problem?

Start by placing your problem under the right Code. It decides the forum, the form of the claim and the time limit.

Am I a 'worker' or an employee on contract? Why it decides everything

The Industrial Relations Code protects a 'worker'. That covers people doing manual, unskilled, skilled, technical, operational, clerical or supervisory work, but not those employed mainly in a managerial or administrative capacity, and not supervisors drawing wages above ₹18,000 a month (or the figure later notified). Job titles do not decide the question; the actual duties do. A 'manager' who has no power to hire, discipline or sanction leave may still be a worker in law.

If you are a worker, you can raise an industrial dispute and ask the Industrial Tribunal for reinstatement with back wages or for compensation. If you are managerial staff, you generally cannot. Your remedy lies in the employment contract: a claim for notice pay, unpaid salary, bonus or damages in the civil court, or before an arbitrator if the contract has an arbitration clause. Reinstatement is rarely available in a civil suit, because courts do not usually force personal service contracts on unwilling parties.

When Advocate B.K. Singh reads a termination file, this is the first thing he settles, often from the appointment letter, the job description and a few weeks of emails showing what the person actually did. Getting it wrong means filing in the wrong forum and losing months.

Can my employer terminate me without notice or reason?

For a worker, no, not lawfully, unless the termination falls under a recognised exception. Retrenchment of a worker with one year of continuous service needs one month's written notice with reasons (or wages in lieu), retrenchment compensation of 15 days' average pay for every completed year of service, and notice to the government in the prescribed form. The IR Code also requires the employer to contribute 15 days' last drawn wages per worker to a reskilling fund. Where the establishment has 300 or more workers, prior permission of the government is needed.

Dismissal for misconduct is different. It needs a charge-sheet, a fair domestic inquiry with a chance to reply and cross-examine, and a decision that follows from the findings. A dismissal without an inquiry, or after a sham one, is the most common ground on which workers succeed. The non-renewal of a genuine fixed-term contract on expiry is not retrenchment, but a chain of artificial short contracts used to avoid permanent status can be challenged.

For managerial staff, the contract governs. Most appointment letters allow termination by either side on one to three months' notice or pay in lieu. If the employer pays that and all accrued dues, there is usually little to claim, whatever the hurt. If it terminates 'for cause' to avoid paying, or alleges misconduct to deny bonus or stock options, that can be contested.

How a wrongful termination case moves in Delhi, Noida and Ghaziabad

This is the usual path for a worker. Managerial employees skip to a legal notice and then a civil suit or arbitration.

1. Write to the employer

   Send a written representation or a legal notice asking for reinstatement or the dues, with a copy of the termination letter. It records your objection early and often brings a settlement offer. Keep the reply, or the absence of one.

2. Grievance Redressal Committee

   Establishments with 20 or more workers must have a Grievance Redressal Committee. A grievance can be raised there within one year of the cause of action, and the committee should finish within 30 days. You are not forced to wait for it if conciliation is the faster route.

3. Conciliation officer

   Apply to the conciliation officer of the labour department with jurisdiction over the workplace: a district office of the Delhi Labour Department for Delhi, and the UP labour department offices covering Gautam Buddh Nagar and Ghaziabad. The officer calls both sides and tries for a settlement. A settlement signed before the officer binds both parties.

4. Industrial Tribunal

   If conciliation fails, or 45 days pass after your application, an individual worker can apply directly to the Industrial Tribunal on discharge, dismissal, retrenchment or termination. The tribunal has a judicial and an administrative member and takes pleadings and evidence much like a court.

5. Award and challenge

   The tribunal passes an award. Either side can challenge it in a writ petition before the High Court, the Delhi High Court for Delhi establishments and the Allahabad High Court for those in UP. Writ courts do not rehear evidence; they look for errors of law and jurisdiction.

Industrial litigation is slow. A contested termination case can run for a few years at the tribunal level alone. That is one reason most cases settle at conciliation or shortly after the employer files its written statement, once both sides see the papers.

What can the tribunal give you: reinstatement, back wages or compensation?

In law, a worker whose termination is held illegal can be reinstated with continuity of service and back wages. In practice, reinstatement with full back wages has become less common. Tribunals and High Courts look at how long the person worked, whether the job still exists, whether trust has broken down and whether the worker found other employment in the meantime.

Where reinstatement is not practical, tribunals often award a lump sum in lieu of reinstatement and back wages. The figure depends on length of service, last drawn wages, the conduct of both sides and how long the case took. A worker with eight years of service has a much stronger claim than one with eleven months.

Be honest with yourself and with your lawyer about what you want. Some people genuinely want the job back. Most want a fair sum and a clean relieving letter so they can move on. The strategy, the tone of the notice and even the choice of forum change depending on which it is.

My salary has not been paid. What can I do?

Under the Code on Wages, monthly wages must be paid before the seventh day of the following month, weekly wages on the last working day of the week, and daily wages at the end of the shift. Deductions are allowed only on permitted grounds, such as tax, PF, advances and fines imposed in the lawful way, and total deductions cannot exceed half of the wages. Withholding salary as a 'penalty' for resigning or for a target shortfall is not a permitted deduction.

An employee covered by the Code can file a claim before the authority appointed under it, generally within three years. The authority can order payment of the amount due and compensation. For managerial staff or higher earners outside the claim mechanism, the usual route is a legal notice followed by a recovery suit, and where the claim rests on a written contract or an acknowledgement, a summary suit under Order 37 of the Code of Civil Procedure. Our page on civil law practice explains how recovery suits run.

If the employer gave you a salary or settlement cheque that bounced, you have a separate criminal remedy under section 138 of the Negotiable Instruments Act, with its own strict deadlines, explained on our cheque bounce page. A bounced cheque often moves a stalled settlement faster than anything else.

Full and final settlement delayed after resignation: is there a deadline?

Yes. The Code on Wages requires wages payable on removal, dismissal, retrenchment or resignation to be paid within two working days. Many companies still run a 45 or 60 day 'F&F cycle' out of habit. That habit does not override the Code, though the employer can still adjust lawful recoveries such as an unpaid notice period that the contract permits it to recover.

Disputes around exit usually involve one of four things: a demand for notice period pay when the employee left early, withholding of the relieving or experience letter, recovery under a training or service bond, and threats over a non-compete clause. Section 27 of the Indian Contract Act makes post-employment non-compete clauses largely unenforceable, though confidentiality and non-solicitation of clients can be protected. Training bonds are enforced only up to a genuine, reasonable loss, not as a penalty, under section 74 of the same Act.

Withholding a relieving letter to force someone to drop a claim is a poor tactic for an employer and a common one. A firm legal notice, setting out the Code and the facts, resolves most of these within a few weeks. If it does not, the claim goes to the authority or the civil court as above.

How is gratuity calculated, and what if the employer refuses to pay?

Gratuity is payable on leaving after five years of continuous service, and for fixed-term employees after one year, on a pro rata basis. The five-year condition does not apply on death or disablement. The usual formula is 15 days' wages for each completed year, worked out as last drawn wages multiplied by 15, divided by 26, multiplied by the number of years. A part year of more than six months counts as a full year. The total is subject to a ceiling notified by the Central Government, so check the current figure.

Because of the new definition of wages, an employer can no longer keep basic pay artificially low and push most of the salary into allowances. Where allowances exceed half of total pay, the excess is added back to wages, which raises gratuity for many employees who left after November 2025.

Gratuity can be forfeited only on narrow grounds, such as termination for violence, riotous or disorderly conduct, or an offence involving moral turpitude committed in the course of employment, and in some cases only to the extent of the loss caused. An employer who simply refuses, or sits on the claim, can be taken before the controlling authority, which can order payment with interest. Its order can be appealed, but the employer usually has to deposit the amount to do so.

Common money claims at a glance

A quick reference for the dues most often disputed when someone leaves a job. State rules can add detail, so treat this as a starting point.

PF problems: deducted from salary but not deposited

Check your UAN passbook on the EPFO member portal. If the salary slip shows a PF deduction and the passbook shows nothing for those months, the employer has kept money that belongs to you. Start with a grievance on the EPFO portal, attaching salary slips. If that produces nothing, the EPFO can hold an inquiry, determine the dues and recover them from the employer with damages and interest.

Non-deposit of deducted contributions is also an offence under the Social Security Code, and complaints of criminal breach of trust are sometimes filed where the amounts are large. We usually advise using the EPFO process first. It is cheaper, it reaches the money, and a criminal complaint can always follow if the employer stays silent.

Other common PF issues are transfer from an old employer's account that was never closed, mismatched date of birth or name blocking a withdrawal, and an employer refusing to verify a claim. Most of these are administrative and are fixed through the portal and the regional office, not litigation. ESIC disputes for lower-wage workers follow a similar path through ESIC and then the tribunal.

Strikes, layoffs and closures: what the IR Code means for employers

Employers face more structure under the IR Code than many expected. Industrial establishments with 300 or more workers need certified standing orders on conditions of service and discipline, and the same threshold applies for prior government permission before layoff, retrenchment or closure. Below that, the employer must still give notice and pay compensation, but does not need permission.

Strikes and lockouts in any industrial establishment now need 60 days' notice, and cannot happen within 14 days of the notice or while conciliation or tribunal proceedings are pending. A union with 51 percent of workers on the muster roll can be recognised as the sole negotiating union; otherwise a negotiating council is formed. Fixed-term employment is allowed in all sectors, with the same hours, wages and benefits as permanent staff doing similar work.

For a business, the risk is less a dramatic strike and more a set of claims that arrive together after a badly handled downsizing. If you are planning to close a unit or reduce staff in Delhi or the NCR, take advice before the first letter goes out. The order of steps, the notice to the government and the calculation of dues can be planned. Cleaning up afterwards costs far more.

The provisions people ask about most

Section numbers under the new Codes are still unfamiliar even to many HR teams, so we name the rule as well as the source.

POSH complaints at work: what the Internal Committee does and does not do

Every workplace with 10 or more employees must have an Internal Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013, headed by a senior woman employee and including an external member. Where there is no Internal Committee, or the complaint is against the employer, the complaint goes to the Local Committee set up by the District Officer. A complaint should be made within three months of the incident, extendable by three months for sufficient reason.

The committee can try conciliation if the complainant asks for it, but not a monetary settlement. Otherwise it holds an inquiry, gives both sides a hearing, and must finish within 90 days. While the inquiry is on, it can recommend interim measures such as a transfer or leave. Its recommendations go to the employer, who must act on them within 60 days, and either side can appeal within 90 days. A POSH inquiry is a civil, workplace process; it does not stop a complainant from filing a police complaint.

We act for complainants, for employees facing complaints, and for employers setting up or reviewing their committees. Each needs something different: a clear written complaint, a fair chance to answer, or a process that will survive a challenge. Where the facts also involve a criminal offence, see our page on sexual harassment and rape cases.

Documents to collect before you meet a labour lawyer

Collect what you can before the meeting. Copies are fine at this stage. Screenshots of emails and WhatsApp messages help, as long as you keep the originals on the phone.

Government employees, contract workers and gig workers: different routes

Central Government employees take service disputes to the Central Administrative Tribunal, not the Industrial Tribunal. Delhi Government and UP Government employees generally go to the Delhi High Court or the UP State Public Services Tribunal. Employees of public sector undertakings can sometimes be workers under the IR Code and sometimes go by writ; it depends on their post. Our page on service law and CAT practice covers those disputes.

Workers engaged through a contractor, common in security, housekeeping and factory work across the NCR, can claim unpaid wages from the principal employer if the contractor defaults. The principal employer then recovers from the contractor. Whether the contract arrangement is genuine or a cover for direct employment is a factual question that tribunals examine closely.

Gig and platform workers, such as delivery partners and cab drivers working through apps, are recognised for the first time under the Social Security Code, which provides for schemes funded partly by aggregators. These are welfare schemes, not employment rights. A delivery partner deactivated by an app usually does not have an industrial dispute in the classic sense, and the remedy, if any, lies in the platform contract.

Mistakes that weaken a labour case

• Signing a 'full and final' release under pressure. Read anything HR hands you on the last day. Once you sign a release accepting a sum in full settlement, reopening it is hard unless you can show coercion or fraud.
• Waiting too long. Grievance and dispute routes have time limits, and tribunals look at delay when deciding relief. A strong case filed two years late can be worth far less.
• Resigning when you mean to say you were pushed out. A resignation letter is read as a resignation. If you were forced, say so in writing at the time, not months later.
• Deleting messages or losing the work phone. Forward important emails to a personal address before you leave, within your confidentiality obligations, and keep WhatsApp chats backed up.
• Employers skipping the inquiry. A dismissal for real misconduct can still be set aside if there was no charge-sheet or fair hearing. The inquiry is cheaper than the litigation.
• Treating every manager as outside labour law. Designations do not decide status. An employer that assumes a 'team lead' cannot go to the tribunal is sometimes surprised.

What employers in Delhi NCR should update this year

If your appointment letters, salary structures and HR policies were written before November 2025, they probably need revision. Check that every employee has an appointment letter in the required form, that basic pay and dearness allowance are at least half of total remuneration or that you have priced in the effect on gratuity and PF, and that final settlements can actually be processed within two working days.

Review whether your establishment crosses the 20-worker threshold for a Grievance Redressal Committee, the 300-worker threshold for standing orders and retrenchment permission, and the 10-employee threshold for a POSH Internal Committee. Fixed-term contracts should state the term, the work and the equal benefits the law now requires. Contractor agreements should give you records of wage payments so that you are not paying twice.

We do this work on a project basis or as part of a retainer through our corporate law consultancy. A short review now, against the current Delhi or UP rules, is far cheaper than defending a batch of claims after an inspection or a downsizing.

How we handle labour matters, and what it costs

Advocate Sadhna Singh usually takes the first call, reads the papers and works out the numbers: what is owed, under which Code, and by when the next step must be taken. Advocate B.K. Singh then advises on strategy, especially on the worker or manager question and on whether the case belongs before the conciliation officer, the tribunal, a civil court or an arbitrator. We appear before the labour authorities and tribunals in Delhi and the NCR and in writ petitions in the Delhi High Court; where a matter must be heard in another state, we work with associate counsel there.

Fees are discussed at the first meeting and agreed in writing, stage by stage, so you know the cost of a notice, of conciliation and of tribunal proceedings separately. Court fees, typing and other out-of-pocket costs are separate. We will also tell you when a claim is too small or too weak to justify the cost of litigation, and when a well-drafted notice or a conciliation meeting is the better course.

If your problem is urgent, such as a termination letter received this week or a POSH inquiry starting in days, send the papers through our online enquiry page. You can read about Advocate B.K. Singh and Advocate Sadhna Singh on their profile pages, and about settling disputes without court on our page on alternate dispute resolution.