New Labour Codes in India: A Complete Guide for Employees and Employers

Introduction: India Enters a New Era of Labour Reform

On 21 November 2025, the Government of India officially brought into force four major Labour Codes that consolidate and simplify 29 central labour laws into a unified framework. These include:

1. Code on Wages, 2019

2. Industrial Relations Code, 2020

3. Code on Social Security, 2020

4. Occupational Safety, Health and Working Conditions (OSHWC) Code, 2020

This historic move modernises India’s labour ecosystem, ensures greater worker protection, simplifies compliance for employers, and aligns the country’s labour standards with global best practices.

The reforms aim to build:

1. A protected and productive workforce

2. Transparent and standardised employment conditions

3. Social security coverage for all

4. A more competitive and simplified business environment

These labour codes represent one of the most significant structural reforms since Independence.

Why Labour Law Reforms Were Needed in India

India’s earlier labour laws were scattered, outdated, and difficult to implement. Most of these regulations were created between 1930s–1950s, during and immediately after the colonial era. Over the years, work environments and industries changed drastically, but labour laws did not.

Challenges Under the Old System

Earlier labour laws had:

1. 29 different legislations with overlapping definitions

2. Complex registration and return filing requirements

3. Limited coverage of social security schemes

4. Weak enforcement mechanisms

5. Ambiguities over wages, working hours, and job roles

6. Restrictions affecting women workers’ participation

7. Difficulty in hiring fixed-term workers

8. Unclear rules for gig workers, platform workers and remote workforce

As India’s economy transformed—especially with growth in IT/ITES, gig platforms, e-commerce, MSMEs, manufacturing, and digital media—these laws became increasingly incompatible with modern needs.

The new labour codes bring clarity, uniformity, and accessibility, benefiting both employees and employers.

Overview of the Four Labour Codes

India’s fragmented labour laws are now merged into four simplified codes:

1. Code on Wages, 2019

This code consolidates four laws:

1. Minimum Wages Act, 1948

2. Payment of Wages Act, 1936

3. Payment of Bonus Act, 1965

4. Equal Remuneration Act, 1976

Key Objectives

1. Standardising wages across all sectors

2. Ensuring minimum and timely wages

3. Promoting gender-neutral pay

4. Reducing disputes related to wage calculations

2. Industrial Relations Code, 2020

This code merges:

1. Industrial Disputes Act, 1947

2. Trade Unions Act, 1926

3. Industrial Employment (Standing Orders) Act, 1946

Key Objectives

1. Promoting harmonious employer-worker relations

2. Ensuring faster resolution of disputes

3. Managing layoffs, retrenchments, and closure rules

4. Strengthening collective bargaining

3. Code on Social Security, 2020

This code integrates nine major social security laws, including:

1. EPF Act

2. ESI Act

3. Maternity Benefit Act

4. Employees’ Compensation Act

5. Unorganised Workers’ Social Security Act

Key Objectives

1. Universal social security coverage

2. Defined benefits for gig, platform, unorganised workers

3. Simplified registrations and returns

4. Portability of benefits

4. Occupational Safety, Health and Working Conditions (OSHWC) Code, 2020

This code merges 13+ regulations, including:

1. Factories Act

2. Mines Act

3. Dock Workers Act

4. Contract Labour Act

5. Working Journalists Act

Key Objectives

1. Ensuring health & safety in all establishments

2. Defining standard working hours

3. Continuous safety surveillance

4. Mandatory welfare facilities for workers

Key Changes: Before vs. After Labour Reforms

The Labour Codes bring clear, measurable change across industries.

1. Formalisation of Employment

Earlier:
Appointment letters were not mandatory in many sectors.

Now:
Employers MUST issue mandatory appointment letters to all workers.

Benefits:

1. Transparency about job roles and wages

2. Prevents exploitation

3. Helps with EPF/ESI eligibility

4. Establishes formal employment relationships

2. Universal Minimum Wages

Earlier:
Minimum wages applied only in "scheduled" industries.

Now:
Under the Code on Wages, all workers have a statutory right to minimum wages.

Additional Reform:

National Floor Wage—a base wage fixed by the Central Government that no state can fall below.

3. Timely Payment of Wages

Earlier:
No strict enforcement on the deadline for paying wages.

Now:
Employers MUST pay wages within the prescribed time, reducing financial stress for workers.

4. Social Security for All

Under the new system:

1. Gig workers

2. Platform workers

3. Unorganised sector workers

4. Contractual and fixed-term employees

5. Inter-state migrant workers

…all get access to:

1. EPF

2. ESI

3. Pension schemes

4. Maternity benefits

5. Insurance

6. Disability and death benefits

The social security net is now truly universal.

5. Healthcare for Workers

All workers above 40 years must receive free annual health check-ups.

This promotes early diagnosis and preventive healthcare.

6. Women Empowerment & Gender-Neutral Provisions

Key Changes:

1. Women can work night shifts (with consent + safety measures).

2. Women can work in mines, docks, and hazardous sectors.

3. Equal pay for equal work is mandatory.

4. Mandatory representation of women in internal committees.

5. Parents-in-law included under the “family” definition.

7. ESIC Coverage Expanded Nationwide

Earlier:
Only notified districts had ESIC coverage.

Now:
ESIC has pan-India coverage, including rural areas.

Even establishments with 1 employee in hazardous processes must register.

8. Simplified Compliance for Employers

Earlier, employers had to:

1. Obtain multiple registrations

2. File multiple returns

3. Maintain parallel records

Now, employers benefit from:

1. Single registration

2. Single licence (PAN-India)

3. Single return

This reduces administrative burden and increases ease of doing business.

How Labour Codes Impact Key Worker Categories

1. Fixed Term Employees (FTE) & Contract Workers

Benefits for FTEs

1. Same benefits as permanent employees

2. Leave, holidays, PF, ESI applicable

3. Gratuity eligibility reduced to 1 year (earlier 5 years)

4. Equal pay for equal work

Benefits for Contract Workers

1. Principal employer must ensure social security

2. Safety facilities must be ensured

3. Standard working hours & double overtime wages

2. Gig & Platform Workers

This is the first time Indian laws legally recognise:

• Gig workers (freelancers, flexible workers)

• Platform workers (Uber, Zomato, Urban Company, Swiggy, Ola, etc.)

New Benefits:

• Aggregators must contribute 1%–2% of annual turnover

• Contributions capped at 5% of worker payments

• Aadhaar-linked universal social security number

• Portability of benefits across states

3. Women Workers

The Labour Codes significantly improve women's workplace protections.

Key Improvements:

• Equal pay for equal work

• Legal prohibition of gender discrimination

• Consent-based night shifts

• Safety, transportation & surveillance for night work

• Women permitted in all jobs including underground mines

• Mandatory women members in grievance committees

4. Young Workers (Including First-Time Workers)

• Mandatory appointment letters

• Guaranteed minimum wages

• Wage payment during leave

• Floor wage protection applicable to all sectors

5. MSME Workers

Since MSMEs employ over 90% of India’s workforce, reforms focus strongly here.

Benefits:

• ESI, PF & social security coverage

• Basic facilities like canteen, drinking water, washrooms

• Standard working hours

• Paid leave & double overtime

6. IT, ITES & Digital Media Workers

The IT workforce, journalists, media personnel and digital content creators benefit from:

• Structured appointment letters

• Clear designation & wage terms

• Double overtime wages for journalists

• Equal pay for equal work

• Salary must be paid by 7th of each month

• Women permitted in night shifts

7. Beedi, Cigar, Mine, Dock & Hazardous Industry Workers

These workers were traditionally vulnerable and lacked strong protections.

New Benefits:

• Minimum wage assured

• Working hours:

  • 8–12 hours/day

  • 48 hours/week

• Widened definition of workplace accidents

• Mandatory free annual health check-ups

• Women allowed in all roles with safety provisions

• Formal recognition for dock workers

• Safety committees for chemical-handling establishments

8. Plantation & Textile Workers

Plantation Sector

• Coverage under OSHWC & Social Security Codes

• Benefits extend to plantations with:

  • 10+ workers or

  • 5+ hectares land

• ESI facilities for family members

• Children's education support

Textile Sector

• Migrant workers to receive equal wages

• PDS portability enabled

• Claims for pending dues allowed up to 3 years

9. Export Sector Workers

Workers in export factories benefit significantly:

• PF and gratuity for fixed-term workers

• Annual leave eligibility after 180 days

• No illegal wage deductions

• Double overtime wages

• Mandatory safety provisions:

  • Transport

  • CCTV

  • Security arrangements

Additional Major Reforms Introduced by Labour Codes

1. National Floor Wage

This ensures a minimum wage baseline across India.

States cannot set wages below this threshold.

2. Gender-Neutral Laws

The codes ensure non-discrimination for:

• Women

• Transgender persons

• Other gender identities

This aligns with the Supreme Court’s NALSA judgment.

3. Faster Dispute Resolution

Industrial dispute settlement becomes faster with:

• Two-member Industrial Tribunals

• Direct access to tribunal after conciliation

4. Uniform Safety Standards

A National OSH Board creates:

• Sector-wise uniform safety guidelines

• Training modules

• Safety audits

5. Mandatory Safety Committees

Establishments with 500+ workers must have:

• Safety committees

• Equal representation of workers

• Meetings on hazards, incidents & risks

How the New Labour Codes Benefit Employers

While worker protection is central, employers also benefit significantly:

1. Simplified Compliance

• One licence

• One registration

• One return

• Unified definitions (e.g., “wages”)

• Reduced paperwork

2. Improved Productivity

Workers with:

• Regular wages

• Social security

• Safe working conditions

…tend to be more efficient and loyal.

3. Flexibility in Hiring

• Fixed-term employment

• Digital documentation

• Clear retrenchment norms

• Easier closure rules

This helps industries remain globally competitive.

4. Reduced Litigation

Clear definitions and uniformity mean fewer disputes.

Impact on Employees: What Changes for You

The labour codes improve everyday work life for employees.

You Get:

• Appointment letter

• Minimum wages

• Timely wages

• PF & ESI

• Social security coverage

• Annual health check-up

• Equal pay & non-discrimination

• Right to safe work conditions

• Benefits even if you are a gig or platform worker

Workers have more rights, protections, and legal clarity than ever before.

Impact on Employers: What You Must Do Now

Employers Must Ensure:

• Mandatory appointment letters

• Wage structure based on new definition of “wages”

• Adherence to national floor wage

• ESIC and EPF registrations where required

• Night shift arrangements for women

• Single licence registration

• Maintenance of workers’ health and safety records

• Grievance redressal mechanisms

• Compliance with dispute resolution timelines

Failure to comply may lead to:

• Penalties

• Inspections

• Litigation

• Criminal liability in some cases

Challenges in Implementing the Labour Codes

Like any major reform, implementation may see challenges:

1. States must notify their rules

2. Transition from old to new systems

3. Training HR and payroll teams

4. Cost impact for smaller businesses

5. Awareness among gig and unorganised workers

However, long-term benefits outweigh transitional challenges.

Future of Labour in India

The new labour codes are expected to:

1. Increase formal employment

2. Improve female workforce participation

3. Boost job creation

4. Strengthen worker rights

5. Encourage investments through reduced compliance burden

6. Offer social protection for next-generation workers

The reforms bring India closer to global labour standards, supporting the vision of Aatmanirbhar Bharat and a future-ready economy.

Conclusion

The implementation of India’s four Labour Codes marks a turning point in labour governance. By replacing 29 outdated laws with four simplified, coherent, and modern regulations, India is building a labour framework that is:

1. Worker-friendly

2. Business-friendly

3. Future-ready

4. Socially just

5. Globally aligned

These reforms unify wage rules, expand social security, ensure gender-neutral employment, simplify employer compliance, and upgrade workplace safety norms across industries.

As states continue to notify detailed rules, both employees and employers must understand their new rights, responsibilities, and benefits under this framework.

India now moves toward a more transparent, competitive, and equitable labour environment—one that protects its vast workforce while enabling industries to grow sustainably.