On November 21, 2025, the Government of India took a landmark step in modernizing the nation’s labour law framework by officially enforcing the four consolidated 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 (OSHWC) Code, 2020. This sweeping reform replaces 29 central labour laws with a more streamlined, cohesive, and progressive legal structure designed to simplify compliance, enhance worker protections, and align India’s labour ecosystem with global standards.
Unifying and Rationalizing Labour Laws
The four labour codes consolidate hundreds of provisions from longstanding scattered legislations, some dating back to the colonial era, into four comprehensive statutes. This rationalization reduces complexity by cutting down thousands of sections, rules, registers, returns, and licenses, thus promoting ease of understanding and enforcement. The legal unification fosters consistency in definitions and coverage, including workers’ categories such as platform workers, gig workers, fixed-term employees, and inter-state migrants, bringing many previously marginalized groups under the protective ambit of labour law.
Key Legal Provisions Affecting Employers and Employees
With these codes, the legal definition of “wages” is standardized across all codes, directly impacting calculations for minimum wages, bonuses, overtime, gratuity, and social security contributions. Employers must review and redesign their salary structures to comply with this definition to avoid legal penalties. The Codes introduce mandatory appointment letters for all employees, thereby formalizing employment relationships and ensuring transparency in terms of employment.
Legally recognized fixed-term employment is another critical feature, granting such employees gratuity rights after one year of continuous service, thus aligning contract work more closely with permanent employment benefits. Furthermore, the Industrial Relations Code raises the threshold for requiring government permission for retrenchment, layoffs, or closure from 100 to 300 employees, balancing employer flexibility with worker protections.
The social security code significantly expands welfare coverage, extending benefits such as Employee Provident Fund (EPF), Employee State Insurance (ESI), gratuity, and maternity benefits to unorganized sector workers, gig economy participants, and platform workers. This is supplemented by provisions that may require platform aggregators to contribute a percentage of their turnover to social security funds, legally entrenching shared responsibility for worker welfare.
Strengthened Occupational Safety and Health Compliance
The OSHWC Code mandates employer obligations regarding workplace safety, health standards, working hours, leave entitlements, and maintenance of registers. It also introduces provisions for permitting women to work night shifts, subject to prescribed safeguards, marking legal progress in gender-inclusive working conditions. Inspection mechanisms now focus on facilitation and compliance support rather than punitive actions; a shift aimed at encouraging voluntary adherence while maintaining enforceability.
Dispute Resolution and Compliance Modernization
The Codes overhaul dispute resolution by establishing two-member industrial tribunals aimed at expediting grievance redressal, while prohibition on strikes and lockouts is regulated under clear legal thresholds. Employers are required to contribute to a reskilling fund to aid workers facing retrenchment, reflecting an increasing emphasis on worker transition support. Digital registers and compliance portals streamline reporting and licensing, reflecting a move towards digitization in regulatory governance.
Transitional and Regulatory Challenges
While the Codes mark a historic legal reform, their full potential hinges on state governments notifying detailed rules and schemes, as labour remains a concurrent subject under the Indian Constitution. During this transition, existing labour laws and rules continue to operate until replaced by state-level notifications. Employers must undertake gap assessments against the Codes and proactively align existing HR policies, contracts, and payroll systems to ensure compliance.
Trade unions have expressed concern over certain provisions, such as eased restrictions on layoffs and the prohibition of contract labour in core activities and are actively engaging with the government for consultative dialogue. Legal practitioners anticipate phased implementation with ongoing advisory to employers to manage compliance costs and operational impacts effectively.
This comprehensive legislative move not only strengthens worker protections and expands social security coverage but also introduces legal clarity and compliance efficiency for employers. Organizations across industries must prepare for a new labour law landscape that promises streamlined governance, improved industrial relations, and a more inclusive workforce framework underpinned by these four labour codes.
Disclaimer: The information published in the above newsletter is collected from various sources in electronic medium and analyzed by the firm. The reader is advised to consult the attorney qualified in their jurisdiction, before acting on any information contained in this newsletter. India Juris excepts no liability what so ever in this regard.
