No Appointment Letter? Why the New Labour Codes Are a Game Changer for the Indian Workforce

A long-awaited shift in our legal framework now mandates formal employment documentation for everyone from factory floors to corporate offices.

For decades, the Indian informal sector has operated on little more than a verbal handshake. A worker joining a local workshop or a small-scale unit often had no proof of their designation, their wages, or their social security contributions. This silence, while convenient for some, left millions of workers vulnerable to arbitrary dismissals and wage disputes. With the implementation of the new labour codes, including the Occupational Safety, Health and Working Conditions (Central) Rules, 2026, the era of the "handshake deal" is reaching its sunset.

The end of the informal ambiguity

Rule 6 of the new code is explicit: every employer must issue an appointment letter in a prescribed format before the employee begins work. This isn't just a bureaucratic formality. The letter must spell out the employee’s designation, wage structure, allowances, and entitlements—including EPFO and ESIC benefits—alongside a clear description of their duties. Whether you are a technician, a manager, or a worker on the shop floor, the mandate is universal. Only interns and apprentices are exempt from this requirement.

While states previously governed these matters through varying Shops and Commercial Establishments Acts, the new code brings a much-needed national standard. Legal experts like Sajai Singh of JSA Advocates and Solicitors point out that while the requirement isn't entirely new in spirit, the national-level recognition provides a far stronger legal footing. For a worker in the unorganised sector, this document finally acts as a shield, providing written proof of their service conditions that can be presented in court should a dispute arise.

Why it matters: The bigger picture

The implications of these labour codes go far beyond administrative updates. By forcing the informal sector to codify terms of employment, the government is nudging the entire MSME ecosystem toward greater transparency. Amrita Tonk of CMS INDUSLAW notes that the transformative power of this rule lies in the formalisation of the workforce. When wages and benefits are documented, compliance becomes easier to track and harder to evade.

However, the shift hasn't been met with universal applause. Unions have raised concerns about the broader impact of the four labour codes, questioning whether these sweeping changes tilt the scales too far in favour of industrial flexibility at the cost of worker security. The debate remains active, as trade unions have called for a rollback, citing fears that these reforms might weaken collective bargaining power.

The cost of non-compliance

Employers who ignore this mandate will face significant friction. Section 94 of the code introduces steep financial penalties, ranging from ₹2 lakh to ₹3 lakh for a first-time offence. For continued violations, the law imposes per-day penalties, making it increasingly expensive for companies to keep their staff "off the books." As India moves toward a more digitised and formalised job market, these rules serve as a reminder that the informal grace period is closing. For the millions of employees who never received an appointment letter, the code now offers a clear path to demand one—and the legal muscle to ensure it’s provided.