Centre Notifies 12% Simple Interest on Delayed Dues Under the Code on Social Security, 2020

This is a Ministry of Labour and Employment notification (S.O. 2698(E)), published in the Gazette of India on 29 May 2026 and issued under Section 127 of the Code on Social Security, 2020.

The substance is a single specification: an employer is liable to pay simple interest at 12% per annum on any amount due from him under the Code, calculated from the date the amount became due until the date of its actual payment.

The key practical point is the effective date — the notification is deemed to have come into force on 21 November 2025, the date the Labour Codes were operationalised. So it applies retrospectively across the entire period since the Code commenced, rather than only from the date of publication.

A couple of things worth flagging for compliance use:

• It is simple interest, not compound — relevant for how delayed-contribution interest is computed.
• Section 127 is the enabling provision that lets the Central Government fix this rate; this notification is what actually operationalises it. The 12% applies to delayed dues under the Code (e.g. provident fund, ESI, gratuity and other CoSS amounts), and sits separately from any damages/penalty provisions.

Please find attached the official notification:

NotificationonSection127regardingsimpleinterest