Employment Law
Labour Codes and Employment Contracts: An MSME Checklist
By ATTPL Legal Editorial Team · · 2 min read
MSME checklist for India's four labour codes: appointment letters, wage structure, working hours, fixed-term staff, records and final settlement.
The four labour codes
India has consolidated many labour laws into four codes: the Code on Wages, the Industrial Relations Code, the Code on Social Security and the Occupational Safety, Health and Working Conditions Code. Both the central government and the states notify rules under these codes, so MSMEs should check the current central and Rajasthan rules that apply to them.
Checklist for employment contracts
- Issue a written appointment letter to every employee, stating designation, wages, and terms
- Define working hours, weekly off, overtime and leave clearly
- For fixed-term employees, state the term and give benefits on par with permanent staff, including gratuity as per the code
- Include notice period, confidentiality and grievance procedure
Wage structure
The codes use a uniform definition of wages. If allowances exceed the prescribed limit of total remuneration, the excess is added back to wages for calculating PF, gratuity and other benefits. Review salary structures with your payroll adviser.
Records, registers and returns
Keep attendance, wage and leave records — preferably digitally — and file returns as required. An HRMS makes this much easier.
Exit and full and final settlement
The Code on Wages requires dues to be paid within a short timeline when an employee leaves, is removed or resigns. Plan your full and final process accordingly.
Get help
ATTPL Legal can review employment contracts and policies. ATTPL HRMS helps manage attendance, payroll and records.
Frequently asked questions
Is an appointment letter mandatory?
Yes. Under the OSH Code, employers must issue appointment letters to employees.
Do fixed-term employees get gratuity?
Under the Code on Social Security, fixed-term employees are eligible for gratuity on a pro-rata basis after one year of service.
Sources and further reading
This article is general information, not legal advice. Rules may change; consult a qualified professional.
