Working Hours, Overtime & Leave Under Labour Codes 2026

Last verified: 2026-07-13

Working hours, overtime and leave under the new labour codes are governed mainly by the Occupational Safety, Health and Working Conditions Code, 2020 and its 2026 Central Rules. The day is capped at eight hours and the week at 48. Work beyond that is overtime, paid at twice the ordinary wage and capped at 144 hours a quarter. Earned leave now accrues at one day for every 20 days worked, and you qualify once you have put in 180 days in a calendar year, down from the old 240.

This article sets out how working hours, overtime and leave now work under the new labour codes, what changed from the old Factories Act and Shops and Establishments regime, and what it all means for employees and employers.

The four codes came into force across the country on 21 November 2025. The numbers that actually run your working day, though, live in the subordinate rules: the Occupational Safety, Health and Working Conditions (Central) Rules, 2026, notified on 8 May 2026.

One caveat before the detail. State Shops and Establishments rules still operate alongside the central framework for offices and shops. So the figures below are the national baseline. Your state can sit on top of them, and in a few places it already does.

Working hours under the new labour codes

Working hours under the new labour codes are capped at eight in a day and 48 in a week, and that weekly ceiling is the number that really governs. Section 25 of the Occupational Safety, Health and Working Conditions Code, 2020 sets the daily and weekly maximum, and the 2026 Central Rules fill in the mechanics: the normal working day is eight hours, and where a worker is not on a daily wage, hours are arranged so the week does not cross 48.

Why does the weekly figure matter more than the daily one? Because the codes deliberately let the day flex while holding the week fixed. That single design choice is what makes a compressed week possible, and it is also what most headlines got wrong when they announced a “12-hour workday”.

Daily and weekly caps

The daily cap is eight hours of actual work. The weekly cap is 48 hours. Neither number is new in spirit; the Factories Act, 1948 used the same 9-hour-day and 48-hour-week logic for decades. What the OSH Code does is standardise the 48-hour week across establishments that were earlier governed by a patchwork of state Shops and Establishments Acts, each with its own daily figure.

Here’s the practical reading. If your contract says nine hours including a lunch break, the working time inside that is what counts against the eight-hour cap. Break time is not “work” for the daily-hours calculation, but it does count toward the spread-over, which we get to next.

Spread-over, rest breaks and the weekly day off

Spread-over is the total stretch of the day from the moment work starts to the moment it ends, rest intervals included. Under the 2026 Central Rules, that stretch can run up to 12 hours in a single day. So the eight hours of work can sit inside a 12-hour window, with breaks and gaps filling the rest.

Rest is not left to the employer’s discretion. A worker cannot be made to work more than five hours at a stretch without a break of at least 30 minutes. And the week has a floor of rest too: no worker is to be engaged for more than six days in any week, which preserves the standard one-day weekly holiday that Indian workers have long expected.

A common worry on employee forums runs like this: if the day can be 12 hours, am I now expected to work more each week? No. The 48-hour weekly cap does not move. A longer day only means a shorter week in days, never more hours overall. That distinction (day flexes, week holds) is the whole point.

The four-day week, and why it is optional

The four-day week is now legally possible, but it is not compulsory. If an employer and its workers arrange four days of 12 hours each, that totals 48 hours, and the remaining three days become weekly rest. The Labour Ministry clarified that this is an option the codes permit, not a mandate they impose. [FUTURE]

In practice, expect selective adoption. Some IT and services employers, where output is not tied to a fixed shift line, may offer a compressed week as a retention perk. Manufacturing, where shift handovers and machine uptime matter, is far less likely to move. The better approach, in our view, is to treat the four-day week as a scheduling tool that some roles suit and many do not, rather than a universal shift that is coming for everyone.

Overtime pay and the 144-hour quarterly limit

Overtime under the new labour codes is paid at twice the ordinary rate of wages, and there is now a hard ceiling of 144 hours a quarter on how much of it an employer can ask for. Section 26 of the Occupational Safety, Health and Working Conditions Code, 2020 sets the double-rate rule, and the 2026 Central Rules add the quarterly cap and the consent requirement.

That combination (a higher pay multiple, a firm cap, and a consent gate) is the real shift. Overtime is no longer an open-ended demand an employer can make at will.

The overtime trigger and the twice-wage rate

Overtime is triggered when a worker works beyond eight hours in a day or beyond 48 hours in a week. The rules calculate it on whichever basis (daily or weekly) is more favourable to the worker, so an employee never loses out because the employer picked the less generous measure.

The rate is twice the ordinary rate of wages. The rules even fix how odd minutes are counted: work of 15 to 30 minutes past the line is rounded to half an hour, and anything over 30 minutes counts as a full hour. Small mercies, but they close the gap that used to let employers shave overtime by treating a 40-minute overrun as nothing.

What does “ordinary rate of wages” mean here? It’s built from the wage as defined in the Code on Wages, 2019, and that definition is where a quiet but real change hides, which we come to in a moment.

The 144-hour quarterly ceiling and consent

An employer cannot require more than 144 hours of overtime from a worker in any quarter. Cross that line and it’s a compliance breach, exposing the employer to penalty under the OSH Code. This is a genuine constraint on the total overtime an establishment can extract, quarter by quarter.

Just as important: overtime needs the worker’s consent. No worker can be forced to work beyond the normal hours. That’s the point most employees don’t realise they can lean on. If your employer treats overtime as automatic, the code says otherwise, and for women working after 7 pm the protection is stronger still, with written consent and safe transport both mandatory. The laws on overtime and night work in India go into the night-shift protections in more detail.

Is there a catch for employers who like the extra headroom? Yes. More permitted overtime does not mean cheaper overtime, and the next point explains why.

How the Code on Wages 50% rule lifts your overtime base

Here’s where it gets interesting. The Code on Wages, 2019 defines “wages” so that allowances cannot swamp the basic component: the excluded allowances are capped so that basic wages stay at least 50% of total remuneration. Many salary structures were built the other way, with a small basic and large allowances, precisely to keep statutory costs down.

Because overtime is twice the “ordinary rate of wages”, and that rate is anchored to this reworked wage definition, the base on which overtime is calculated rises for a lot of employees. So even as the quarterly ceiling gives employers more room, each overtime hour can cost more than it did under the old structure. [SECOND-ORDER]

Think of it this way. An employee with a Rs. 50,000 monthly package that was 30% basic used to see overtime computed on that thin basic. Reset the basic to 50% under the wage definition, and the same overtime hour is now calculated on a materially larger number. The practical reality is that employers who assumed the codes only relaxed limits are finding the cost side moved too.

Earned leave and encashment under the new labour codes

Leave under the new labour codes is earned at one day for every 20 days worked, and you become eligible for it once you cross 180 days in a calendar year. Section 32 of the Occupational Safety, Health and Working Conditions Code, 2020 sets both the accrual rate and the eligibility threshold, and this is the pillar the broad guides skip most often.

The headline change is the eligibility threshold. The old Factories Act, 1948 made you work 240 days in a year before annual leave began to accrue. The OSH Code cuts that to 180. That’s roughly two months of qualifying service shaved off, and it pulls a lot of shorter-tenure and seasonal staff into paid-leave entitlement earlier than before.

Earned-leave accrual and the 180-day threshold

The accrual is mechanical: one day of leave for every 20 days of work, in a calendar year that runs 1 January to 31 December. Put in a full year and you accrue in the region of 15 days of earned leave, tracking the rate rather than a flat grant.

Does the 240-to-180 change apply to a private-company employee in an office, not a factory? For establishments the OSH Code covers, yes, the earned-leave provisions apply, subject to the state Shops and Establishments position we cover further down. Frankly, this gets overlooked because people still associate “earned leave” with factory law, when the code now standardises it far more widely.

Worth flagging: this is earned or annual leave. Casual leave and sick leave are not governed by this accrual rule. Those continue to come from your contract, company policy, or the applicable state Shops and Establishments Act, so don’t read the OSH Code as your total leave entitlement.

Carry-forward cap of 30 days, and encashment

You can carry unused leave into the next year, but only up to a point. The carry-forward is capped at 30 days. If your accumulated leave would push past 30, the excess doesn’t simply vanish and it doesn’t roll indefinitely either. The employer must pay it out. So the days beyond the 30-day carry-forward line are encashed rather than lost.

Can you bank leave forever, then? No. The 30-day cap is the deliberate limit, and encashment of the surplus is the release valve. For employees this is a protection; for employers it’s a provisioning line that has to sit on the books.

Encashment also bites at exit, and generously. When a worker is discharged, dismissed, resigns, superannuates, or dies in service, the accrued leave is paid out in the full-and-final settlement. And the rules are explicit that this encashment is due even if the worker had not completed the 180 qualifying days that year. Someone who resigns in July, short of the threshold, still encashes leave accrued at the one-per-20 rate.

Two more numbers round this out. Adolescent or young workers accrue leave at the more generous rate of one day for every 15 days worked, not 20. And maternity leave sits in a separate code entirely: the Code on Social Security, 2020 carries forward the 26-week paid maternity entitlement. The way leave and hours clauses then sit inside the contract itself is something we cover in our guide to drafting an employment agreement in India.

One timing rule ties leave to exit. Under Section 17(2) of the Code on Wages, 2019, wages owed on resignation, removal, dismissal or retrenchment must be settled within two working days. Leave encashment is part of that full-and-final math, so the old practice of dragging settlements out for weeks is now on a two-day clock.

What changed from the Factories Act and Shops and Establishments regime

What changed from the old regime is best read as a set of specific swaps, not a wholesale reinvention. The daily and weekly hour logic is broadly familiar; the eligibility numbers, the overtime ceiling, and the standardisation across establishment types are where the movement is. [HISTORICAL]

For most of the last seventy years, two families of law split the field. The Factories Act, 1948 governed hours, overtime and leave for factories. State Shops and Establishments Acts governed offices, shops and commercial establishments, each state writing its own daily caps, leave rules and overtime multiples. The result was a genuine patchwork, where the same 48-hour week could mean quite different daily arrangements depending on the state and the sector.

Hours, spread-over and the weekly off

On core hours, continuity is the story. The eight-hour day and 48-hour week carry over. The spread-over concept carries over too, now set at up to 12 hours including rest intervals. The weekly day off survives, framed as no more than six working days in a week. If you worked under the Factories Act, none of this will feel alien.

What’s cleaner is the standardisation. Instead of reading a state Shops Act for the daily figure and the Factories Act for the factory figure, establishments covered by the OSH Code read one central rule set, with state rules layered on where they apply. That reduces the cross-referencing that used to trip up multi-state employers.

Overtime cap and leave eligibility

Here the numbers genuinely move, and a comparison makes it plain.

Read the table and the pattern is clear. The everyday rhythm of work is similar. The thresholds that decide who qualifies and how much overtime is permitted have shifted, and the leave eligibility drop from 240 to 180 days is the change most likely to reach an ordinary employee’s actual entitlement.

Is any of this a reason for an employer to panic? Not really. But the mistake we see most often is assuming that “same 48-hour week” means “nothing changed”. The eligibility and cap numbers moved, and those are exactly the numbers that drive cost and compliance.

Who the rules cover and how central and state rules divide

The rules cover establishments employing 10 or more workers, with a higher, separate threshold for what counts as a “factory”. Coverage is the first question any employer should settle, because it decides whether the hours, overtime and leave provisions above apply at all.

Getting coverage wrong cuts both ways. Assume you’re out and you may be running an uncovered-establishment defence that doesn’t hold; assume you’re in when you’re not and you build compliance overhead you don’t owe. So the thresholds are worth reading precisely.

Establishment, factory and hazardous-unit thresholds

The general threshold is 10 or more workers: an establishment where a trade, business, manufacture or occupation is carried on with at least that many people is covered. The health, safety and welfare provisions, hours and leave included, apply from that 10-worker line.

The “factory” definition sits higher and, notably, moved up. A factory now means a unit with 20 or more workers where a manufacturing process runs with power, or 40 or more without power, raised from the old 10-with-power and 20-without-power figures. Units carrying on a hazardous process are generally covered regardless of headcount, which is the standard carve-out for dangerous operations.

Which employees does this reach in practice? Far more than “factory workers”. An office, a shop, a services firm with 10 or more people on the rolls falls within the establishment threshold, which is why treating these as factory-only rules is the misread to avoid.

Central rules versus state Shops and Establishments rules

India’s Constitution puts labour on the Concurrent List, so both the Centre and the states legislate. The OSH Central Rules, 2026 govern central-sphere establishments. For state-sphere establishments, the state’s own rules, including the Shops and Establishments framework, apply and can differ in the detail.

That’s the caveat that runs through this whole article. The central figures are the baseline, but a multi-state employer has to check each state’s position, because a state can set its own daily hours or leave specifics within the code’s architecture. Early signals suggest the state rules are rolling out unevenly, so through 2026 and 2027 expect some friction between the central baseline and slower-moving state regimes. [FUTURE]

Based on what we’ve seen, the safe operating assumption for a multi-state employer is to comply with the stricter of the central rule and the applicable state rule for each location, rather than run a single national policy and hope it clears every state.

Employer compliance duties and penalties

Employers must now issue appointment letters, keep overtime inside the 144-hour quarterly cap with consent on record, and settle dues within two working days of exit. These duties are not optional add-ons; they are the operational core of what the codes changed for the compliance team.

The shift for HR is from discretion to documentation. Much of what was informal (a verbal overtime ask, a leave register kept loosely, an offer letter that doubled as the only record) now has to be evidenced.

Records, appointment letters and consent trails

Every worker is now entitled to a formal appointment letter, which sounds basic but closes a long-standing gap where millions worked without any written proof of terms. For the employer that means a letter on file for each hire, capturing the role and conditions.

Alongside it sits a records duty: hours worked, overtime, and leave have to be tracked in a form that survives inspection. Overtime in particular needs a consent trail, because the rules make overtime consensual, so an employer relying on “they agreed” without a record is exposed. [SECOND-ORDER] This is where a written consent process and a quarterly overtime dashboard stop being nice-to-haves. A full new labour code compliance checklist is the practical way to make sure none of these registers is missed.

The full-and-final settlement clock ties in here too. With wages due within two working days of exit under the Code on Wages, 2019, the leave-encashment and dues math has to be ready almost immediately, which in turn depends on the leave records being current rather than reconstructed at exit.

Penalties and enforcement

Breaches carry graded penalties that scale with seriousness and repetition, from monetary fines up to imprisonment for serious or repeat violations, with many offences compoundable. Exceeding the 144-hour overtime ceiling, failing to pay overtime at the correct rate, or not issuing appointment letters all sit within this exposure.

Enforcement runs through an Inspector-cum-Facilitator model, which pairs the traditional inspection power with an advisory role meant to help establishments comply rather than only catch them out. Early enforcement attention is likely to fall on the visible, checkable duties: the overtime ceiling, appointment letters, and records. If a notice does land, knowing how to respond matters, and our guide on responding to a labour authority notice covers that ground. [FUTURE]

What trips employers up most? Assuming enforcement will stay light because the model is “facilitative”. The facilitation framing is real, but the penalties behind it are not soft, and an establishment that reads the advisory tone as permission to defer compliance is misreading the design.

Frequently asked questions

1. What are the working hours under the new labour codes? Eight hours a day and 48 hours a week, under Section 25 of the Occupational Safety, Health and Working Conditions Code, 2020. The daily spread-over, including rest breaks, can extend up to 12 hours, but the weekly ceiling of 48 hours does not move.

2. How is overtime calculated under the new labour codes? Overtime applies to work beyond eight hours in a day or 48 hours in a week, computed on whichever basis is more favourable to the worker. It’s paid at twice the ordinary rate of wages, with odd minutes rounded (15 to 30 minutes counts as half an hour, over 30 minutes as a full hour).

3. What is the overtime rate, and is there a cap? The rate is twice the ordinary rate of wages. Yes, there’s a cap: an employer cannot require more than 144 hours of overtime from a worker in any quarter.

4. Can my employer force me to work overtime? No. Overtime requires the worker’s consent under the 2026 Central Rules; no one can be forced to work beyond normal hours. For women working after 7 pm, the employer additionally needs written consent and must provide safe transport.

5. What is the maximum overtime allowed in a quarter? 144 hours. Crossing that ceiling is a compliance breach that exposes the employer to penalty under the OSH Code.

6. How many paid leaves do I get under the new labour codes? Earned leave accrues at one day for every 20 days worked, which is roughly 15 days across a full year. Young or adolescent workers accrue at the more generous rate of one day per 15 days worked.

7. How many days must I work to earn leave now? 180 days in a calendar year, down from 240 under the old Factories Act, 1948. The lower threshold pulls shorter-tenure and seasonal staff into entitlement earlier.

8. What is the leave carry-forward limit, and are unused leaves paid? You can carry forward up to 30 days of unused leave. Any excess above 30 days must be encashed by the employer rather than lost, so leave beyond the cap is paid out.

9. Is the four-day work week now mandatory in India? No. The codes permit a compressed week (four days of 12 hours totalling 48, then three days off), but the Labour Ministry has clarified it is optional, not mandatory. Whether to offer it is the employer’s decision.

10. Does the 50% wage rule change my overtime pay? Often, yes. Overtime is twice the “ordinary rate of wages”, and that rate is anchored to the Code on Wages, 2019 definition, which keeps basic wages at least 50% of total pay. For salary structures with a small basic and large allowances, the overtime base rises.

11. What are the night-shift rules for women in 2026? Women can work between 7 pm and 6 am only with their written consent, with employer-provided safe pick-up and drop, and subject to the prescribed safety and welfare conditions under the 2026 Central Rules.

12. What changed on working hours from the Factories Act? The eight-hour day and 48-hour week are broadly continuous. The spread-over rose to 12 hours, the overtime ceiling is now a clear 144 hours a quarter, and leave eligibility dropped from 240 to 180 days worked.

13. What is the penalty for exceeding 144 overtime hours? It’s a compliance breach under the OSH Code, carrying graded penalties that scale with seriousness and repetition, from fines up to imprisonment for serious or repeat violations, with many offences compoundable.

14. Do state Shops and Establishments rules still apply? Yes. Labour is on the Concurrent List, so state Shops and Establishments rules run alongside the central framework for state-sphere establishments and can differ in detail. Multi-state employers should comply with the stricter of the applicable central and state rules.

15. When did the codes and OSH rules take effect? The four labour codes came into force nationally on 21 November 2025. The Occupational Safety, Health and Working Conditions (Central) Rules, 2026, which put numbers to hours, overtime and leave, were notified and took effect on 8 May 2026.

References

Case Law

No Supreme Court or High Court judgment has yet interpreted Sections 25, 26 or 32 of the Occupational Safety, Health and Working Conditions Code, 2020 or the 2026 Central Rules, which have been in force for under a year. Jurisprudence on these specific provisions is still developing; this article is therefore anchored to the statutory text and official rules rather than to case law.

Statutes

1. Occupational Safety, Health and Working Conditions Code, 2020. Sections cited: 25 (daily and weekly hours), 26 (overtime wages), 32 (annual leave with wages); read with the Occupational Safety, Health and Working Conditions (Central) Rules, 2026.
2. Code on Wages, 2019. Definition of “wages” (basic at least 50% of remuneration); Section 17(2) (full-and-final settlement within two working days).
3. Code on Social Security, 2020. Provides the 26-week paid maternity leave entitlement.

This article is for informational purposes only and does not constitute legal advice. For specific legal guidance, consult a qualified legal professional.