India’s New Labour Codes: A Comprehensive 2025 Overview

India’s labour landscape has undergone its most significant transformation in independent history with the introduction and partial implementation of the four new labour codes. These codes—Code on Wages (2019), Industrial Relations Code (2020), Code on Social Security (2020), and Occupational Safety, Health and Working Conditions Code (2020)—aim to modernise, simplify, and unify the country’s fragmented labour regulations. Together they replace 29 separate Central labour laws, creating a streamlined framework that addresses both employer efficiency and worker welfare. This article explores the new labour codes in a clear and balanced manner.

Why Labour Reform Was Needed

For decades, India’s labour system was governed by dozens of old laws, many drafted in the post-colonial era. These laws were often overlapping, contradictory, and hard to enforce. Compliance burden was heavy for businesses, especially MSMEs, which form the backbone of the Indian economy. At the same time, millions of workers—especially in the unorganised sector, gig economy, and informal employment—remained outside the protective umbrella of social security.

The new labour codes were introduced to address these gaps, bring standardisation, improve ease of doing business, and provide stronger protections to all categories of workers.

The Four New Labour Codes Explained

1. Code on Wages, 2019

The Wage Code consolidates previous laws related to minimum wages, payment of wages, bonus, and equal remuneration. Its key achievements include:

  • Universal minimum wage: All workers—organised or unorganised—are now entitled to a statutory minimum wage.
  • Timely wage payments: Strict timelines ensure no delays in salaries.
  • Gender neutrality: Equal pay for equal work is emphasised more strongly.
  • Floor wage: A national floor wage is to be fixed by the Centre, which states cannot reduce.

This single code reduces compliance complexity and brings millions of informal workers under wage protection.

2. Industrial Relations Code, 2020

The Industrial Relations (IR) Code deals with trade unions, strikes, layoffs, dispute resolution, and employment terms. Its major features include:

  • Ease of hiring and restructuring: The threshold for seeking government permission for layoffs or closure has been increased to establishments with 300 workers, giving more flexibility to industries.
  • Re-skilling fund: A unique provision creates a fund to support workers who lose jobs due to restructuring.
  • Streamlined union recognition: The code defines rules for negotiating unions and dispute settlement.
  • Stricter norms for strikes: Workers in essential services must follow notice periods, reducing sudden economic disruptions.

The IR Code aims to promote industrial peace, attract investment, and ensure that workers’ rights are balanced with economic realities.

3. Code on Social Security, 2020

Social Security Code (SSC) has one of the widest impacts, extending welfare to the largest number of people.

Key points:

  • Coverage for gig and platform workers: For the first time, delivery partners, ride-share drivers, freelancers, app-based workers, and other gig workers are recognised and included in social security schemes.
  • Unified social security: It merges EPF, ESI, maternity benefits, gratuity, and other welfare laws.
  • Universal registration: A national database of workers across formal and informal sectors is to be created.
  • Government & employer contributions: The code outlines shared responsibilities for funding welfare schemes.

With the gig economy booming in India, this code is revolutionary for workers who previously had no long-term safety net.

4. Occupational Safety, Health & Working Conditions Code, 2020

This code merges laws related to safety, health, and working conditions across factories, mines, docks, and other establishments. Important features include:

  • Appointment letters mandatory: Every worker must receive a formal appointment letter—crucial for reducing exploitation.
  • Annual health check-ups: Free health examinations for workers over 40 years of age.
  • Women allowed in all jobs and night shifts: Subject to safety conditions and consent.
  • One licence for multiple states: Businesses operating in several states can now obtain a single licence, reducing paperwork.
  • Better working conditions: Clearer rules on sanitation, drinking water, ventilation, restrooms, and working hours.

This code aims to bring Indian workplaces closer to global safety standards.

Major Benefits of the New Labour Codes

1. Simplification and Digital Governance

By merging 29 laws into four codes, compliance becomes far easier. Digital filings, single-window clearances, and uniform definitions reduce legal ambiguity.

2. Greater Worker Protection

Appointment letters, minimum wages for all, social security for gig workers, and safer workplaces significantly improve the quality of employment conditions.

3. Boost for Ease of Doing Business

Flexible hiring, simplified procedures, and uniform rules across states are expected to attract investment and encourage job creation, especially in manufacturing.

4. Empowerment of Women

Allowing women to work in any establishment and in night shifts signals more gender-inclusive labour policy.

5. Formalisation of the Informal Sector

Since more than 80% of India’s workforce is informal, mandatory registration, appointment letters, and social security inclusion make the labour market more formal and accountable.

Concerns and Criticisms

While the reforms are broad, they have sparked criticism from trade unions and labour rights groups:

  • Easier layoffs in firms up to 300 employees may weaken job security.
  • Stricter strike rules are seen as limiting workers’ collective bargaining.
  • Implementation varies by state, since labour is a concurrent subject.
  • Gig worker benefits are still unclear in terms of contribution percentages and eligibility.

Thus, while the codes promise a modernised framework, their success depends entirely on practical implementation.

Implementation Status (as of late 2025)

The Union Government has notified several provisions, and some states have begun aligning their rules. The codes are being implemented in stages, and full enforcement will depend on all states notifying their respective rules. Some provisions—like appointment letters and safety clauses—are already active.

Conclusion

India’s new labour codes represent a historic shift in the governance of work and employment. They modernise the regulatory framework, provide enhanced protection for workers, support businesses with simpler compliance, and prepare the country’s labour market for the digital and industrial era ahead. While implementation challenges remain, these codes mark a decisive step towards a more organised, equitable, and growth-friendly labour ecosystem.

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