The new labour codes and your six-person travel agency

Your office runs on four people and a WhatsApp group. Nobody has a written appointment letter. The tour manager who does six departures a year gets a verbal season rate and a cash advance, and every Diwali there's a bonus nobody wrote down. That arrangement now puts you offside the new labour codes, not because you did anything differently, but because the law under you changed.

The four labour codes came into force on 21 November 2025, and most small agencies have kept running exactly as before. Nobody sent a notice to a six-person office in a tier-2 city saying the rules for hiring, paying and documenting staff had shifted. This post is that notice: what changed, what it costs you to ignore it, and the order to fix it in.

What actually changed on 21 November 2025

On 21 November 2025, the Code on Wages, the Industrial Relations Code, the Code on Social Security and the Occupational Safety, Health and Working Conditions Code all took effect together, folding 29 separate central labour laws into one framework (Telangana Today). This isn't a bill working through Parliament. It's live law.

For a travel agency, the four codes touch four things: what you must give a worker in writing, how much of their pay counts as "wages" for PF and gratuity math, how you can legally hire seasonal staff without a labour contractor, and what social-security obligations follow from your headcount. None of it needed you to register anywhere. It applies because you employ people.

The one rule every six-person agency is already breaking: the written appointment letter

Every worker on your payroll, permanent, fixed-term or seasonal, is now entitled to a written appointment letter before their first day of work. This isn't a best practice. Rule 6 of the Occupational Safety, Health and Working Conditions (Central) Rules, 2026 makes it a formal requirement, and reporting frames it as hitting traditional, semi-organised employers hardest (Business Today), which describes most small travel agencies exactly.

The letter must state, at minimum: designation and employment category, wages and allowances, working hours, leave entitlement, notice period and workplace location, plus the worker's EPFO/ESIC entitlements. A phone call and a joining date scribbled in a register no longer counts.

Careful: This covers every category of worker, not just office staff. A tour manager hired for six departures a summer, a driver-coordinator for peak season, a three-month data-entry hire: all need the same written letter before day one. "We've always done it on trust" is not a defence an inspector, or a labour court, will accept.

The fix is mechanical, not expensive: one letter format that covers your common hire types, issued before someone starts, not after.

The wage definition that quietly resets your PF, ESI, gratuity and bonus bill

Under the Code on Wages, at least 50% of a worker's total remuneration now has to count as basic pay plus dearness allowance, and that combined figure is what PF, gratuity, ESI and bonus calculations run off (Moneycontrol). If your salary structures split pay mostly into allowances, or a "special allowance"-heavy CTC with a nominal basic, the base your statutory contributions run on has changed even if you haven't touched a payslip.

Agencies commonly keep basic low, to hold down PF and gratuity, and load the rest into HRA, conveyance and named allowances. That now runs against the 50% floor: everything downstream, PF, gratuity, bonus, ESI eligibility, is keyed off wages as newly defined, not off whatever's labelled "basic." Check your own numbers against honest staff salary benchmarks for 2026 while you're at it.

This part of the law is still contested. An MSME industry forum has formally objected to the labour ministry's 16 March 2026 FAQ interpretation of the 50% rule, arguing PF and bonus shouldn't count toward it and asking for a carve-out for firms under ₹10 crore turnover with roughly 100 workers (Rediff.com), with neither view accepted nor rejected. Treat the 50% rule as live and binding, but confirm the current interpretation with your CA before restructuring anyone's CTC.

Example: A travel executive is on a ₹30,000/month CTC: ₹10,000 basic, ₹4,000 DA, and the remaining ₹16,000 spread across HRA, conveyance and a "special allowance." Basic plus DA is ₹14,000, roughly 47% of CTC, just under the floor. Compliance means raising basic plus DA to at least ₹15,000, which raises the PF and gratuity base too, not just the payslip headline.

Fixed-term employment: the legal way to hire tour managers and season staff

Fixed-term employment is the codes' answer to a problem every agency has: a tour manager for the Ladakh season, extra hands through wedding months, but not year-round. Agencies have historically handled this two ways, both messy: cash with no paper trail, or a contract-labour agency that adds its own margin.

Fixed-term is different from contract labour. It's a direct contract between you and the worker, time-bound and tied to a role or season, but entitling them to benefits and working conditions on par with a permanent employee doing comparable work (Moneycontrol). The change under the new codes is gratuity: a fixed-term employee can now claim it after just one year of continuous service, pro rata, instead of the five years still required for permanent staff (Telangana Today).

That one-year right is reported to apply to workers joining on or after 21 November 2025. Whether it reaches back to cover a fixed-term contract signed before that date isn't clearly settled in current reporting, so don't assume retroactive coverage; check with a labour consultant before finalising gratuity math on an existing contract.

For your tour manager hiring and pay decisions, the shift is practical: a written, fixed-term letter tied to the season or departure calendar is now the compliant route, not a workaround.

PF and ESI at a four-to-ten-person office: what actually triggers coverage

PF and ESI coverage turns on two things: how many people you employ, counted in a way that includes fixed-term and seasonal staff, not just permanent office staff, and whether wages fall under the relevant ceiling. Cross the headcount threshold and PF becomes compulsory for the whole establishment, not just staff above or below a wage cutoff.

This is exactly the kind of number that moves with each round of reform, and the current figures couldn't be confirmed against a live government source for this piece. Rather than print a number that may already be wrong, get your current headcount, seasonal hires included, in front of a CA and ask directly whether you cross the applicable thresholds.

What's worth doing regardless: keep one running register of everyone on your payroll during the year, with joining and exit dates. "Let me pull the register" beats "let me think about who worked here in March."

Careful: Don't assume a four-person office is automatically exempt. Seasonal hires often push your effective headcount over a threshold for part of the year, because you're thinking of your "core team" and not everyone technically on payroll during the season.

The annual health check for staff over 40

Workers aged 40 and above are now entitled to a free annual health check-up under a Union Labour Ministry initiative launched alongside the new codes (ETHealthworld). The employer arranges it, not the worker.

This can feel like a rule for factory floors, not a travel counter. It isn't. If even one staff member, an accountant or a senior counter executive, has crossed 40, the obligation applies the same as it would at a hundred-person company. The fix is small: identify who's 40 or older, arrange or reimburse one check-up each, and log it.

Central rules are live, state rules mostly aren't: the dual-compliance period you're actually in

Most of the above is central law, already in force. State law is not settled yet, and labour sits on both the Centre's and the states' lists. As of around May 2026, only three states, Bihar, Arunachal Pradesh and Gujarat, had notified their own rules under the four codes; 31 states and union territories had not (The Financial Express). Maharashtra was reported to be targeting notification by end of August 2026, with a dedicated online portal establishments will have to register on (Deccan Chronicle).

Practically: central obligations apply now, while state-specific rules are pending in most of the country. Don't read "my state hasn't notified" as "none of this applies." Find out whether your state has notified, and ask your CA to flag you when it does. These figures will have moved by the time you read this. Confirm your state's current position.

A compliance sequence for the next 90 days

Sequencing matters more than fixing everything in one weekend. Roughly in this order:

1. Issue appointment letters to everyone currently on staff, even those who've worked for you for years. This closes your biggest exposure fastest.
2. Review your CTC structures against the 50% basic-plus-DA rule. Flag anyone short, and get your CA's sign-off before touching payroll.
3. Reclassify seasonal hires as fixed-term employees, with written contracts tied to the season, not informal cash arrangements.
4. Confirm your PF and ESI status with a labour consultant, using a full-year headcount register that includes seasonal staff.
5. Identify staff aged 40 and above and arrange the annual health check-up.
6. Check your state's notification status, and set a reminder to revisit once it notifies.

Appointment letters fix the most exposure for the least effort. Slot these into your FY 2026-27 compliance calendar alongside your GST and TCS deadlines.

Where this leads: the contract you hand your next hire

Everything above is the explainer: what changed, and why a six-person agency is affected. The appointment letter itself is its own document. A working appointment letter and employment agreement format built for travel agency roles covers that ground, worth having on file before your next hire walks in.

Common questions

What do the new labour codes mean for employees and employers?

For employers: formal appointment letters, a redefined wage base for statutory contributions, and a legal route for fixed-term hiring. For employees: a written record of their terms, gratuity after one year on a fixed-term contract instead of five, and, for those over 40, an annual health check paid for by the employer.

Does your salary and wage definition, PF contribution, ESI, gratuity payout and bonus change?

Yes, indirectly. The codes don't set new PF, ESI or gratuity rates, but they change what counts as "wages" by requiring basic plus DA to be at least 50% of total remuneration. Below that floor, every downstream number, PF, gratuity, bonus, ESI eligibility, is now calculated on a different base.

Will your PF contribution change under the new EPF Scheme?

Possibly, but not because the rate itself moved. If restructuring your CTC to meet the 50% rule raises the wage base PF is calculated on, your contribution, and your employer match, rises even though the percentage is unchanged. Confirm current EPF Scheme provisions with a payroll consultant before assuming either direction.

If basic pay must be 50% of CTC, why does PF still get calculated on a capped wage figure?

A genuine open question. Many employers still calculate PF against a wage ceiling that predates the codes, while the 50% rule pushes basic pay higher. Whether that ceiling gets revised isn't settled in reporting as of mid-2026; ask your CA to confirm current PF wage-ceiling rules rather than extrapolating from the 50% rule alone.

The short version

• The four labour codes have been in force since 21 November 2025. This is current law, not a pending reform.
• Every worker, permanent, fixed-term or seasonal, needs a written appointment letter before day one, covering designation, wages, hours, leave, notice period and EPFO/ESIC entitlements.
• Basic pay plus DA must now be at least 50% of total remuneration, which resets the base for PF, gratuity, ESI and bonus math, even for staff you haven't given a raise.
• Fixed-term contracts are the compliant way to hire seasonal tour managers and staff; gratuity now vests after one year, pro rata, for hires from 21 November 2025 onward.
• Confirm your specific PF/ESI headcount status and current wage thresholds with a CA rather than assuming a small office is automatically exempt.
• Arrange a free annual health check-up for any staff member aged 40 or above; you're responsible for organising it, not them.
• Only a handful of states had notified their own labour-code rules as of mid-2026. Central obligations apply now regardless; confirm your own state's timeline separately.