Earlier this month, the Indian Government consolidated 29 separate labour laws into four comprehensive Labour Codes: the Code on Wages (2019), the Industrial Relations Code (2020), the Code on Social Security (2020), and the Occupational Safety, Health and Working Conditions Code (2020). The Centre has made all four codes effective from 21 November 2025, rationalising earlier laws into this new framework.
This landmark reform modernises India’s labour regulatory framework by streamlining compliance requirements, eliminating outdated provisions, and creating a more efficient and transparent structure. The new framework aims to enhance ease of doing business while ensuring strong protections for workers’ rights, welfare, and workplace safety.
In part 1, we will look at what the four new codes are and how they differ from the colonial and post-Independence era laws they replace.
Code on Wages, 2019: Wages & equality
It replaces the Payment of Wages Act, Minimum Wages Act, Payment of Bonus Act, Equal Remuneration Act. Key provisions of this code include:
- Universal minimum wage applicable to all employees across both organised and unorganised sectors, replacing the older system that applied only to scheduled industries.
- National floor wage set by the central government, below which states cannot fix minimum wages. Floor wage must now consider skill level, regional cost differences, and working conditions.
- Strengthens gender equality, prohibiting wage or recruitment discrimination, including against transgender workers.
- Mandates overtime pay at a minimum of twice the normal rate and extends timely payment rules to all employees.
- Inspector-cum-facilitator model for offences, with many offences decriminalised and resolved through monetary penalties. Many first-time offences move from jail terms to monetary penalties/compounding.
Industrial Relations Code, 2020: Hiring, firing, unions
This code merges the Trade Unions Act, Industrial Employment (Standing Orders) Act, Industrial Disputes Act. Some of the key are:
- Fixed Term Employment (FTE), allowing time-bound contracts with parity in wages and benefits compared to permanent workers, including gratuity eligibility after one year.
- Establishment of a re-skilling fund, financed by employer contributions equal to 15 days’ wages for each retrenched worker.
- Increase in the retrenchment and closure approval threshold from 100 to 300 workers, providing greater flexibility for midsized units.
- Rules for recognising negotiating unions, granting recognition to a union with 51% membership or requiring a negotiating council when no single union qualifies.
- Tighter rules on industrial action, requiring 14 days’ notice before strikes and treating mass casual leave as a strike. Resolution of disputes may improve through industrial tribunals and greater use of digital processes.
Code on Social Security, 2020: EPF, ESIC, gig workers
It merges 9 Acts including EPF, ESIC, Maternity Benefit, Payment of Gratuity, BOCW Cess, and Unorganised Workers Social Security Acts. The main changes are as under:
- Expansion of ESIC (Employee State Insurance Corporation) coverage nationwide, including mandatory coverage for hazardous occupations.
- Time-bound processes for EPF inquiries and reduces the appeal deposit requirement to 25%, improving cash flow certainty for businesses.
- Formal recognition gig and platform workers, requiring aggregators to contribute a small percentage of turnover to a social security fund, which will support benefits such as life, disability, health, and old-age protection.
- Standardisation of the definition of “wages”, requiring at least 50% of total remuneration to count toward social security calculations.
- Additional benefits include coverage for commuting accidents, earlier gratuity eligibility for fixed-term employees, and broader definitions of dependants.
Occupational Safety, Health and Working Conditions Code: Safety, migrants, working conditions
This code consolidates 13 Acts including Factories, Mines, Plantations, Contract Labour, Inter-State Migrant Workers, BOCW, Beedi & Cigar, etc. The key provisions of this code include:
- Streamlining of administrative processes through single electronic registration, one licence valid across India, and one return instead of multiple separate filings.
- Raising of factory thresholds to reduce compliance burden, but also allows the government to enforce stricter protections in hazardous occupations even with a single worker.
- Strengthening provisions for inter-state migrant workers, including travel allowances, database registration, helpline support, and portability of ration and social security benefits.
- Working hour norms are clarified at 8 hours per day and 48 hours per week, with overtime at twice the normal rate.
- Women are permitted to work in all jobs, including night shifts, subject to safety conditions. Modernisation of contract labour regulations and adopts a facilitator-based inspection regime with digital processes and monetary penalties for many violations.
The Impact of Labour Reforms: Before vs After
So how do the new labour codes stack up against the earlier norms and practices? Below is a side-by-side comparison of pre and post reform focus areas.
| Focus Area | Pre-Labour Reforms | Post-Labour Reforms |
| Formalisation of employment | No mandatory appointment letters | Mandatory appointment letters for all workers, ensuring transparency, job security, and documented employment. |
| Social security | Limited social security coverage. | Under the Code on Social Security, 2020, all workers—including gig and platform workers—are eligible for PF, ESIC, insurance, and other benefits. |
| Minimum wage | Minimum wages applied only to notified scheduled industries, leaving many workers uncovered | Under the Code on Wages, 2019, all workers have a statutory right to minimum wages and timely payment, improving financial security.
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| Timely Wages | No mandatory compliance on timely payment of wages. | Mandatory timely wage payment, reducing financial stress and improving worker morale. |
| Women workforce participation | Restrictions on women working night shifts and in certain occupations. | Women permitted to work night shifts and across all job categories with consent and safety measures—expanding access to higher-paying roles.
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| Preventive healthcare | No legal requirement for free annual health check-ups. | Employers must provide free annual health check-ups for workers above 40 years, promoting preventive healthcare. |
| ESIC coverage | Limited to notified areas and specific industries; establishments with <10 employees mostly excluded. | ESIC coverage extended pan-India: voluntary for establishments with <10 employees, mandatory for hazardous units with even one employee. |
| Compliance | Multiple registrations, licences, and returns under separate laws. | Single registration, one licence valid PAN-India, and single return format—significantly reducing compliance burden. |
The new Labour Codes mark a major shift in India’s labour framework—bringing clarity, uniformity, and modernised regulation across wage rules, industrial relations, social security, and workplace safety. As implementation progresses, their real impact will depend on how effectively governments, businesses, and workers adapt to the new system. In part 2, we will explore the potential gains and concerns for both workers and businesses, offering a balanced view of how these reforms may reshape India’s labour landscape.
Sources
Government Announces Implementation of Four Labour Codes to Simplify and Streamline Labour Laws
India’s Labour Reforms: Simplification, Security, and Sustainable Growth
Explainer: Who benefits from India’s new Labour Codes and how? – CNBC TV18
From gratuity to gig worker insurance: What new labour laws mean for employees – India Today
New labour codes implemented across the country effective 21 November 2025 | EY – India