Compliance Simple, Business Successful
In English: simple compliance, successful business.
Labour Law and Factory Licence Compliance for MSMEs Under the New Labour Codes
The labour laws you knew have been replaced. Not sure which registrations, licences and returns now apply to your business?
Four labour codes replaced 29 central labour laws, including the Factories Act, from 21 November 2025, and states are still issuing their rules. Most MSMEs need to recheck their registrations, wage structures and records. GRO-MSME helps you work out what applies, complete registrations and keep a simple compliance calendar.
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GRO-MSME provides compliance guidance and registration support through Early Grow Advisory Services Pvt Ltd. It is not a law firm; for disputes, inspections or legal proceedings, consult an advocate.
What Labour Laws Apply to an MSME in 2026?
Since 21 November 2025, four labour codes apply across India: the Code on Wages, the Industrial Relations Code, the Code on Social Security and the Occupational Safety, Health and Working Conditions (OSH) Code. Together they replaced 29 central laws, including the Factories Act, the EPF and ESI Acts and the Contract Labour Act. Central rules were notified in May 2026, and each state issues its own rules. In addition, state shops and establishments laws and professional tax continue to apply. What an MSME must do depends on its state, type of premises and number of workers.
What Changed Under the Labour Codes?
Key changes MSMEs usually notice first.
| Area | Before | Under the codes |
|---|---|---|
| Factory definition | 10 or more workers with power, 20 without (Factories Act) | 20 or more workers with power, 40 without (OSH Code) |
| Contract labour | Contract Labour Act applied from 20 contract workers | OSH Code provisions for contractors apply from 50 contract workers |
| Definition of wages | Different definitions in different laws | One definition; if excluded allowances exceed 50% of total pay, the excess is added back to wages |
| Appointment letters | Not required for all workers | Employers must issue appointment letters to employees |
| Registrations and licences | Separate registrations under several laws | Registration of establishments and a common licence for factories and contractors under the OSH Code, online |
Summary only. Thresholds and procedures depend on the code, the rules and your state.
Which Registrations and Licences Apply to Your Business?
A quick guide to the most common employer registrations. Always confirm against your state’s rules.
| Registration or licence | Usually applies when | Where |
|---|---|---|
| Shops and establishments registration | You run a shop, office or commercial establishment (state law; thresholds vary) | State labour department portal |
| Factory registration and licence | A manufacturing unit with 20+ workers using power, or 40+ without | State factories department, under the OSH Code rules |
| EPF (provident fund) | Establishments with 20 or more employees; voluntary below that | EPFO unified portal |
| ESI (health insurance) | Establishments with 10 or more employees in notified areas; covers employees up to the ESIC wage ceiling | ESIC portal |
| Contractor licence | Contractors engaging 50 or more contract workers | Under the OSH Code rules, online |
| Professional tax | In states that levy it, on employers and employees | State tax department |
Early Grow, which powers GRO-MSME, handles ESI registration, PF return filing and business and trade licences.
Get a Labour Compliance Review
Share your state, type of unit, number of employees and contract workers. GRO-MSME will call you back with what applies to you.
- Free call back from GRO-MSME experts
- Eligibility check and document guidance
- Support from application to follow-up
Prefer to talk? +91-9811312259
Labour Compliance Checklist for MSMEs
A practical checklist to review your position. Tick what is already in place.
0 of 10 ready
A general checklist, not a legal opinion. Requirements depend on your state, industry and workforce.
Who Needs Labour Compliance Support?
Factories and workshops
Units near the factory thresholds, or adding shifts and workers.
Shops and offices
Retail, service and professional firms with staff.
Businesses using contractors
Units that depend on contract labour for production, security or housekeeping.
Growing MSMEs
Businesses crossing 10 or 20 employees and becoming liable for ESI or EPF.
How to Get Started with GRO-MSME
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Share your details
State, type of unit, number of employees and contract workers.
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Applicability review
We map the codes, state laws and registrations that apply to you.
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Register and fix gaps
We help you complete missing registrations and set up records.
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Stay compliant
A simple calendar of monthly and annual filings, with reminders.
What GRO-MSME Does, and What It Does Not Do
GRO-MSME helps you
- Work out which codes, rules and registrations apply
- Complete EPF, ESI, shop and other registrations
- Set up registers, appointment letters and a compliance calendar
- Keep up with state rule changes
GRO-MSME does not
- Represent you in labour court or disputes (consult an advocate)
- Issue licences: only the authorities can
- Guarantee the outcome of an inspection
Related GRO-MSME Services
Labour Law and Factory Compliance: Frequently Asked Questions
Are the new labour codes in force?
Yes. The Code on Wages, the Industrial Relations Code, the Code on Social Security and the OSH Code came into force on 21 November 2025, replacing 29 central labour laws. Central rules were notified in May 2026, and states are notifying their own rules.
Is the Factories Act still applicable?
The Factories Act, 1948 has been replaced by the Occupational Safety, Health and Working Conditions Code, 2020. Under the OSH Code, a factory is a premises with 20 or more workers where power is used, or 40 or more without power.
When is EPF registration mandatory?
EPF generally applies to establishments employing 20 or more persons. Smaller establishments can join voluntarily.
When is ESI registration mandatory?
ESI generally applies to establishments with 10 or more employees in areas where ESIC has implemented the scheme, and covers employees earning up to the wage ceiling set by ESIC.
Do small shops need registration under labour law?
Shops and commercial establishments are registered under state shops and establishments laws, which remain in force. Whether registration is needed, and from how many employees, depends on your state.
What is the 50% rule for wages?
Under the Code on Wages, if allowances excluded from wages exceed 50% of total remuneration, the excess is treated as wages. This affects the calculation of contributions and benefits such as gratuity.
Can GRO-MSME handle my labour compliance?
GRO-MSME helps with applicability reviews, registrations, records and filing calendars through Early Grow Advisory Services. For disputes, inspections and legal proceedings, you should consult an advocate.
Get Your Labour Compliance in Order
Tell us how many people you employ, where and in what kind of unit, and we will map what applies. Compliance Simple, Business Successful — talk to GRO-MSME.
- Free call back from GRO-MSME experts
- Eligibility check and document guidance
- Support from application to follow-up
Prefer to talk? +91-9811312259