An Exclusive Conversation with
Dr. Onkar Sharma,
Former Chief Labour Commissioner,
Government of India.
Few individuals in India’s labour administration ecosystem command the level of respect and institutional authority that Dr. Onkar Sharma does. Dr. Sharma served as Chief Labour Commissioner, Government of India, during one of the most transformative periods in India’s labour law history — the drafting and transition of the New Labour Codes. As the senior-most enforcement and labour administration authority in the country at the time, he played a pivotal role in the implementation framework and operationalization of the four landmark Labour Codes that consolidated 29 labour laws into a modern unified compliance regime for India.
Over his distinguished career in labour administration, Dr. Sharma also served as Dy. Director General (Labour Welfare), CEO & Welfare Commissioner of the Delhi Labour Welfare Board, and Fellow at the VV Giri National Labour Institute. He holds M.Com., LL.M., Ph.D. & Post graduate degree in Labour Laws.
In this exclusive interview with SECURITY TODAY, Dr. Sharma discusses the implementation of the New Labour Codes, the growing accountability of principal employers, and why industries dependent on outsourced manpower may face a major compliance reset.
There is still confusion across industries regarding the effective date of the New Labour Codes. Many companies believe the Codes are yet to be implemented. What is the reality?
The confusion is unfortunate because the legal position is very clear. The four Labour Codes were notified effective 21st November 2025. In addition, the Model Rules have also now been notified by the Central Government on 8th May 2026. From a legal and governance standpoint, the framework is enforced.
Businesses must understand that the Government of India is now extremely serious about ensuring social security inclusion, statutory protection, and dignified working conditions for every category of worker, whether organized, unorganized, contractual, gig, platform-based, or outsourced.
The clear policy direction under the New Labour Codes is toward universal workforce formalization and there will be increasingly little tolerance for practices that deny workers their rightful wages, social security benefits, welfare protections, or statutory entitlements through gaps in compliance or convenient interpretation of labour laws. Organizations that delay preparation until the first inspection notice arrives will already be too late.
But several State Rules are still awaited. Many companies are therefore taking a “wait and watch” approach. What would happen in this case?
Companies which are taking the “wait and watch” approach are setting themselves up for future compliance issues. In the new Labour Codes, there is a clause which states that all previous rules, regulations, notifications under the earlier laws are valid during the transition period. Same is also provided in the Section 6 of the General Clauses Act. Thus, the new Codes are enforceable with the earlier Rules till the States notify their Rules.
All States are expected to notify their final rules over the next one to two months. In fact, some progressive states have already moved ahead aggressively. Haryana, for example, has already published draft rules for public comments as part of the mandatory 30-day consultation process, which ends on 4th June. Businesses should not misread this transition period as regulatory relaxation. There is now a very clear policy intent to eliminate workforce exploitation arising from gaps in compliance, fragmented accountability structures, or convenient interpretation of labour laws.
This seriousness is reflected in the enforcement architecture now being created through the Shram Suvidha Portal, Labour Identification Number (LIN), unified registrations, online inspections, and integrated compliance systems. Establishments, contractors, wage payments, workforce records, PF/ESI remittances, and statutory filings will increasingly become digitally traceable and cross-verifiable. The window for operating through informal structures or selective compliance will reduce substantially.
What, according to you, is the single biggest change under the New Labour Codes that businesses still do not fully understand?
Contrary to popular discussion around gratuity, wage hikes, or the possibility of a four-day work week, I believe the single biggest change under the New Labour Codes is the standardization and strengthening of the definition of “Employer” — especially in the case of outsourced workforce arrangements.
For years, many organizations operated under the assumption that labour compliance responsibility could be shifted entirely to the contractor once services were outsourced. The New Labour Codes significantly tighten this position. The Section 2(y) of the Code on Wages clearly states:
“Employer means a person who employs, whether directly or through any person, or on his behalf or on behalf of any person, one or more employees in his establishment, and includes,—
(i) in relation to an establishment which is a factory, the occupier of the factory as defined in clause (n) of section 2 of the Factories Act, 1948 and, where a person has been named as a manager of the factory under clause (f) of sub-section (1) of section 7 of the said Act, the person so named;
(ii) in relation to any other establishment, the person who, or the authority which, has ultimate control over the affairs of the establishment and where the said affairs is entrusted to a manager or managing director, such manager or managing director;
(iii) contractor; and
(iv) legal representative of a deceased employer;”The words “through any person” are extremely significant. Whether it is security services, facility management, staffing or manufacturing support — principal employers can no longer distance themselves from wage compliance, social security obligations, overtime liabilities, or labour welfare responsibilities merely by saying that the workers belong to a contractor.
The law now recognizes the economic reality of outsourced workforce ecosystems. If the workforce is deployed for your establishment and your operations, accountability cannot simply be contractually transferred away. This is perhaps the strongest structural message embedded within the New Labour Codes and will fundamentally change how businesses engage and monitor outsourced workforce partners going forward.
There is widespread concern around minimum wages under the New Labour Codes. Is there likely to be a significant change in wage categorization for security personnel?
Yes, organizations must prepare for structural changes. The new wage framework focuses heavily on skill classification and scientific wage determination principles. One important point that many companies may not have thought of, is this: Security Guards trained under PSARA norms cannot realistically continue to be treated as unskilled labour. In fact, Haryana’s draft rules have already indicated security guards under the skilled category. Similar approaches are expected across other states as well.
The New Labour Codes are intended to formalize labour economics and ensure dignified wage structures linked to skills and employability. Companies who continue engaging contractors based on unsustainably low rates should ask themselves a serious question: “If the quoted commercial structure does not support statutory wage obligations, how exactly will the compliance gap be filled?” That is the question enforcement agencies will also increasingly ask.
A large number of companies still do not verify whether their contract workers are receiving proper PF, ESI, gratuity and other social security benefits. What happens under the new framework in such cases?
As I explained about the change in the definition of “employer”, the compliance to all social security schemes is now the joint responsibility of both company & contractor. Under the new framework, social security compliance is non-negotiable. And businesses must clearly understand one very important legal principle: The responsibility does not stop with the contractor.
If contract workers are denied statutory benefits, if PF deposits are irregular, if wages are manipulated, or if statutory remittances are not made — the principal employer will inevitably come under scrutiny.
For years, many companies operated under the assumption that labour compliance was a contractor problem. Under the New Labour Codes, it becomes a board-level governance responsibility. Organizations must immediately begin Contractor compliance audits, social security contributions reconciliation, etc. Companies that fail to do so are carrying substantial hidden liabilities.
The New Labour Codes standardize the 7th of the month as the wage payment date. With many security companies as MSMEs facing delayed bill clearance and cash-flow constraints, how significant is this change for customers and service providers?
Extremely critical. The New Labour Codes bring far greater rigidity and accountability regarding wage payment timelines. The wage payment date has effectively been standardized around the 7th of the month. Earlier operational flexibility that existed in some sectors will significantly reduce.
More importantly, the Codes place substantial responsibility upon principal employers to ensure that wages of contract workers are actually paid. Code on Wages, 2019 Section 43, Central Rules of Code on Wages, 2026 Rule 11 & Central Rules of OSHWC Code, 2026 Rule 98 strongly emphasize accountability for timely wage disbursement on the principal employer.
The seriousness of the Government’s approach can already be seen from the Office Memorandum issued by the Department of Expenditure, which advises all DDOs and departments emphasizing timely payment to contractors so that workers receive wages without delay. This emphasizes the importance which the Government of India places on timely wages for all employees.
Organizations therefore need to understand that delayed contractor payments and extended credit cycles can now directly create labour law exposure. If a contractor cannot pay wages because the principal employer has delayed payments, regulators will not simply ignore that commercial reality. The expectation under the new system is very clear: If workers have worked, wages must be paid on time.
Many industries, including security services, continue operating 12-hour deployment structures. Are such models sustainable under the New Labour Codes?
The traditional 12-hour deployment structure becomes clearly illegal under the new framework, unless the worker is paid OT for the extra four hours. Any work beyond prescribed working hours attracts overtime obligations, and overtime is payable at double the normal rate. Then too, OT for a quarter is capped at 144 hours. Going forward, companies will need to assess the commercial viability of the 12-hour working model under the current scenario.
One of the most discussed changes under the New Labour Codes is gratuity eligibility for fixed-term employees. Earlier, gratuity was largely associated with completion of five years of service. Why has this changed and how will it work in practice for contractual employees such as security guards?
The philosophy behind this change is very clear — social security and terminal benefits cannot remain restricted only to long-tenured formal employees. The Government’s intention under the New Labour Codes is to ensure wider social security coverage for all categories of workers, including fixed-term, contractual, outsourced, gig, and platform workers.
Historically, many industries operated in a manner where workers kept changing establishments, contractors, or deployments and therefore never technically completed five continuous years under one establishment or contract structure. As a result, lakhs of workers remained outside gratuity coverage despite spending years in active employment.
The New Labour Codes attempt to address this structural gap. For fixed-term employees, gratuity eligibility is no longer intended to be viewed purely through the traditional five-year lens. The principle is that if a worker has rendered service under a fixed-term employment structure, he shall not be denied social security benefits merely because the nature of deployment is contractual.
A simple way to understand this is through the PF system. For example, in the security industry, if a security guard works at one site for three months, another site for six months, and a third site thereafter, his PF account does not disappear every time he changes deployment. The Universal Account Number remains linked to the worker, and whichever principal employer or contractor engages him during that period is responsible for depositing PF contributions for the duration of employment — even if he works there for only a few months.
The larger policy thinking for gratuity under fixed-term employment is moving in a similar direction. The objective is to ensure that workers are not deprived of statutory terminal benefits simply because industries are operating through short-duration contracts, rotating deployments, or outsourced workforce models. The New Labour Codes are very clearly moving toward continuity of worker protection, irrespective of the commercial structure through which employment is organized.
What are some of the important changes under the New Labour Codes with respect to bonus, leave, and weekly off provisions that businesses should immediately pay attention to?
Under the Code on Wages, the provisions relating to bonus continue to remain an important area of employer responsibility. The expectation from the Government is very clear — statutory bonus cannot be treated casually, delayed indefinitely, or avoided through artificial workforce structuring. The role of principal employer in enabling bonus payment of the contract workers employed at their establishment is clarified through Rule 21 of the Central Rules of Code on Wages, 2026.
Similarly, under the OSHWC Code, the provisions relating to working hours, weekly off, leave entitlement, and welfare measures have become far more structured and compliance oriented. It clearly reinforces limits around working hours and emphasizes mandatory weekly rest provisions. In industries such as security services, facility management, logistics, and manpower deployment, many organizations historically operated through continuous deployment structures where weekly off adjustments were often informal or not systematically documented. That approach will become increasingly difficult under the new framework.
Under the new framework, working on a weekly rest day entitles a worker to a compensatory off within three days & OT for the weekly rest day at double the wage rate. The Government’s broader objective is very clear — if a worker contributes continuously to the productivity of an establishment, his statutory welfare, rest periods, social security, and financial entitlements must also be protected in a structured and traceable manner. Organizations that continue operating through informal workforce management practices may therefore face increasing compliance exposure under the new regime.
Traditionally, labour law enforcement in India has often been perceived as weak or inconsistent. Why should businesses believe implementation will be different this time?
The New Labour Codes are not merely legal reforms — they are digital governance reforms. The Government has invested heavily in creating integrated compliance visibility through the Shram Suvidha portal. With its planning centred around ‘Single registration, single license, single return’, we can expect a lot of digitization & automation around inspections & compliance enforcement. The Labour Identification Number (LIN)-based traceability system which the Government has introduced shall also be a major step towards enforcement.
For the first time, regulators can potentially correlate information across multiple databases and compliance systems. In the future, cross-verification between labour databases, GST systems, social security remittances, contractor registrations, and IT filings may become increasingly common.
This dramatically reduces the ability to operate through fragmented or opaque compliance structures. Businesses should therefore not compare future enforcement with historical enforcement models. The Government is clearly serious about implementation. And once digital enforcement ecosystems mature, non-compliance patterns become much easier to detect at scale.
Closing Note
As India transitions into a new era of labour governance, the message from one of the principal architects of the New Labour Codes is unambiguous: The exploitation of workers in the name of convenient interpretation of the labour laws need to stop.
For industries heavily dependent on outsourced manpower — particularly security, facility management, and staffing — are the first stop for compliance enforcement. The New Labour Codes are not merely about legal change. They are about transparency, accountability, traceability & above all, formalization.
The New Labour Codes are expected to bring one of the biggest structural shifts the security industry has witnessed in decades, particularly in addressing the long-standing challenge of alignment between companies & contractors on labour compliance responsibilities. Going forward, workforce cost structures, deployment models, overtime practices, and statutory benefits will require far greater financial realism and transparency. As a result, many existing commercial arrangements and service contracts across the industry may need to be renegotiated to align with the compliance expectations under the new regime.
The Codes are also likely to accelerate a clear shift away from non-compliant and low-cost manpower models toward professionally governed and compliance-driven models. The industry is therefore moving toward a future where sustainable business growth will depend not merely on manpower supply capability, but on the ability to demonstrate credible, transparent, and technology-enabled workforce governance.
