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Labour Reform: India’s Four New Labour Codes Come into Force
On 21 November 2025, the Government of India implemented a sweeping reform of its labour law architecture, bringing into force four consolidated labour codes that together replace 29 existing labour laws. The huge policy shift — described by officials as one of the most significant since Independence — is designed to modernize regulatory frameworks, strengthen worker protections, simplify compliance, and adapt India’s labour regime to the demands of a 21st-century economy.
The Four Codes: What They Are and Why They Matter
The four labour codes now in effect are:
- Code on Wages (2019)
- Industrial Relations Code (2020)
- Code on Social Security (2020)
- Occupational Safety, Health and Working Conditions (OSHWC) Code (2020)
By consolidating 29 older labour laws — many dating from the pre-independence or early post-independence period — the government aims to replace a fragmented and outdated legal structure with a streamlined, uniform framework. According to the Ministry of Labour and Employment, the reform is intended to support a “future-ready workforce” and more resilient industries.
Major Reforms and Key Provisions
- Formalisation and Transparency
Under the new regime, appointment letters become mandatory for all workers. This is a big step toward formalizing employment relationships and reducing ambiguity around job roles, wages, and benefits. - Wages and Minimum Pay
The Codes introduce a national floor wage, which ensures that no worker is paid below a government-set minimum. Timely payment of wages is also mandated, helping protect workers from arbitrary or delayed salary disbursals. - Expanded Social Security
Social security coverage is significantly expanded. The Code on Social Security brings in gig and platform workers under its ambit for the first time, extending benefits such as insurance, provident fund, and pension-type schemes through mandatory employer contributions. The ESIC (Employees’ State Insurance) coverage is now more widely applicable, even for small establishments involved in hazardous work. - Safety, Health, and Working Conditions
Under the OSHWC Code, companies must adhere to stronger safety norms. There are provisions for free annual health check-ups (for older workers), and safety committees are required in larger establishments. The code also standardizes workplace safety across sectors previously governed by different laws. - Industrial Relations
The new Industrial Relations Code raises the threshold for mandatory government approval for layoffs — previously firms with 100 or more workers needed approval, but now that number has risen to 300 employees. This gives companies greater flexibility in workforce management, especially for medium-sized firms. - Gender and Inclusivity
Women’s workplace rights get a boost: the Codes allow women to work night shifts, subject to their consent and safety arrangements. There is also a stronger push for equal pay for equal work and non-discrimination across gender identities, including for transgender workers. - Compliance Simplification
To ease the burden on businesses, a single registration and single return system replaces the multiplicity of filings under older laws. Moreover, rather than strictly punitive inspections, the government is promoting an inspector-cum-facilitator model, where labour inspectors guide employers as well as enforce compliance. - Dispute Resolution
The Codes also aim to speed up resolution of industrial disputes by setting up two-member industrial tribunals, which are expected to provide faster justice than the older, overburdened system.
Government’s Rationale and Goals
Prime Minister Narendra Modi praised the move, calling it “one of the most comprehensive labour-oriented reforms since Independence,” and said it would “greatly empower” workers. He also framed it as supporting both worker welfare and business ease: stronger protections for workers, but simpler compliance for employers.
The government sees this reform as key to driving formal employment, raising productivity, and building robust industries under its broader Aatmanirbhar Bharat (self-reliant India) vision.
Who Stands to Gain — and Who’s Concerned
Winners in this Reform
- Gig and Platform Workers: For the first time, they are explicitly recognized under labour law and will be eligible for social security benefits.
- Fixed-term Employees: They now become eligible for gratuity after just one year of work.
- Women Workers: More flexibility and equal pay, plus the ability to work night shifts (with safeguards).
- All Workers: Benefit from minimum wages, formal contracts, and improved safety norms.
- Businesses: Face lower regulatory burden due to rationalization; also more flexibility in hiring/firing for firms employing fewer than 300 workers.
Concerns & Criticism
Not everyone is pleased. Several trade unions have expressed deep reservations, arguing that the reforms may dilute worker rights. Some fear that looser layoff norms will make “hire-and-fire” easier, undermining job security.
There are also worries about implementation: while the Codes are now legally in force, detailed rules at the state level must be framed and notified, and some states might lag. Additionally, enforcement will matter — the shift from punitive inspections to facilitation must be backed by capacity and political will.
Significance & Future Outlook
The launch of these four labour codes marks perhaps the biggest labour-law reform in India in decades. By consolidating 29 laws into a cohesive and modern framework, the government aims to resolve long-standing fragmentation, reduce red tape, and broaden worker protections — especially for previously marginalized workers like gig-economy labourers and contract staff.
If implemented effectively, the Codes could lead to better formalization of jobs, increased social security coverage, and a more stable industrial relations landscape. For businesses, simpler compliance could translate to lower costs and more agility. For workers, the promise lies in more predictable pay, safer workplaces, and inclusive benefits.
However, much will depend on execution. The real test lies in how states roll out the detailed rules, how labour inspectors operate under the new model, and whether social security schemes truly reach gig and platform workers. Trade unions and civil society will likely remain vigilant, and future negotiations may shape the practical contours of these laws.
In essence, these new labour codes reflect India’s attempt to reconcile two critical goals: empowering its workforce, and making its industries competitive — a balancing act that could define its economic trajectory in the years to come.
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