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In a historic landmark move, the government has announced the implementation of new labour codes in India. This is aimed at modernising India’s labour governance, which was framed in the pre-independence and early post-independence era (1930s-50s), a period that was very different from today. The four labour codes rationalise the 29 existing central labour laws.
By initiating significant transformative changes in better wages, social security, and workers’ welfare, the government is aligning India’s labour ecosystem with global standards. Hence, this landmark decision lays the foundation for strong, resilient industries, besides a future-ready workforce.
Table of Contents
Introduction to the New Labour Codes in India
On 21st November 2025, India officially implemented four major labour codes. The new labour codes are:
- The Code on Wages, 2019
- The Code on Social Security, 2020
- The Occupational Safety, Health and Working Conditions Code, 2020
- The Industrial Relations Code, 2020
These codes will consolidate the existing 29 central labour laws and further simplify compliance. Furthermore, it will align India’s labour market with modern global economic standards. This aims at ensuring social justice for all workers.
Key Changes Across All Four Labour Codes
The four comprehensive labour codes aim to ensure better wages, social security, improved occupational safety, simplified compliance and gender equality.
Key Changes:
» Mandatory appointment letters for all workers to strengthen formalisation.
» Pan India ESIC coverage, including small and hazardous establishments.
» All workers will receive the right to minimum wages, and the government will set a national floor wage.
» Social Security for gig workers with PF, ESIC, Insurance and other benefits.
» Women can work night shifts across all establishments with their consent and safety protocols.
» Fixed-term employees are eligible for gratuity after one year, instead of five.
» Free annual health checkups for workers above the age of 40, promoting preventive healthcare.
» Commuting accidents are covered. Accidents during travel between home and workplace are now deemed employment-related, qualifying for compensation.
» Each worker has the option to avail annual leaves after 180 days of work in a year.
» The government will establish a National OSH Board to standardise safety and health norms across sectors.
» Establishments with more than 500 workers must form safety committees to improve workplace accountability.
» Single registration, licensing and returns greatly reduce compliance burden.
Comparison of Old Laws Vs New Labour Codes
After the implementation of the Labour Codes 2025, India’s labour ecosystem has evolved significantly. The comparison below highlights the key changes.
| Pre Labour Reforms | Post Labour Reforms | |
| Formalisation of Employment | No mandatory appointment letters were required. | Mandatory appointment letters are required for all workers. Written proofs will ensure transparency, job security and fixed employment. |
| Minimum Wages | Large sections of industries remained uncovered as minimum wages applied only to scheduled industries/ employments. | Every worker will receive a statutory right to minimum wage payment under the Code on Wages, 2019. Moreover, minimum wages and timely payment will strengthen financial security. |
| Timely Wages | No mandatory compliance requirements for employers regarding wage payments. | Mandatory for employers to pay wages on time. This will ensure financial stability, reduce work related stress and boost the morale of workers. |
| Social Security Coverage | Limited Social Security Coverage | All workers, including the gig and platform workers, will get social security coverage under the Code on Social Security, 2020. Additionally, every worker will get PF, ESIC, insurance and other social security benefits. |
| Preventive Healthcare | Employers were not legally required to provide free annual health checkups to workers. | All workers above the age of 40 will be provided with a free annual health checkup by the employer. This will promote a culture of timely preventive healthcare. |
| ESIC Coverage | ESIC coverage was limited to specific industries and notified areas. Establishments with fewer than 10 employees were generally excluded, and hazardous process units did not have uniform mandatory ESIC coverage across India. | ESIC benefits and coverage are extended to Pan India. They are voluntary for establishments having fewer than 10 employees and mandatory for establishments with even one employee engaged in hazardous processes. Social protection coverage will be extended to all workers. |
| Women Workforce Participation | Women’s employment in night shifts and certain occupations was restricted. | Women are permitted to work night shifts and take on any type of job across all establishments, provided they give their consent and the required safety measures are in place. Women will have thus equal access to higher-paying job roles, enabling them to earn more. |
| Compliance Burden | Multiple registrations, licences, and returns are required under different labour laws. | Single registration, a single PAN India license and one return. This will ensure a simplified process. |
Key Implications for Employers
Employers should prepare for labour law compliance in India as the new codes are in effect nationwide. Notably, the new framework brings updated definitions, broader social security coverage, revised employment norms and several other changes that will affect all employers.
Employers should conduct a comprehensive review across HR, Finance, Payroll, and Legal functions. They need to:
» Review job descriptions and workforce classifications to ensure alignment with the revised definitions of “employee” and “worker.” Additionally, they will need to evaluate hiring models and employment contracts, including fixed-term roles and restrictions on contract labour for core activities.
» Examine the impact on compensation structures and payroll processes to meet the uniform wage definition and benefit calculations, and assess the financial impact of expanded employee benefits on the organisation.
» Update HR and employee relations policies, including working hours, leave provisions, and retrenchment procedures. Besides these, businesses must strengthen internal controls, conduct regular compliance reviews, and ensure effective governance practices.
Conclusion
The implementation of the four Labour Codes marks the next big step in modernising India’s labour ecosystem. This further widens the social security net and ensures that benefits move smoothly across states and sectors in India.
As the nation prepares for this unified framework, the release of detailed rules and schemes under the central and state jurisdictions will play a crucial role in shaping how these reforms operate in practice. Till then, current rules will continue to apply along with labour codes until the new rules are notified. Therefore, organisations must promptly reassess job roles, hiring models, compensation frameworks, and HR policies to remain compliant.
These new labour codes in India definitely mark a major shift, bringing together worker welfare, labour-market flexibility, and improved ease of doing business.
Explore in detail how the new labour codes impact workers and businesses in our next blog. Also, read about the labour law compliance checklist for HR and employers.
Frequently Asked Questions
Q1. | What are the four new labour codes in India? |
| Ans. | The new four labour codes in India are The Code on Wages, 2019, Social Security Code 2020, The Occupational Safety, Health and Working Conditions or OSH Code 2020 and The Industrial Relations Code 2020. |
Q2. | Why were the new labour codes introduced? |
| Ans. | The new labour codes in India were introduced to simplify and streamline the existing labour laws. The implementation will ultimately strengthen workforce welfare in India and help build a protected, future-ready labour force. This, in turn, will support resilient industries, create more employment opportunities, and advance ongoing labour reforms in India. |
Q3. | Are the new labour codes fully implemented? |
| Ans. | The four new labour codes in India have been notified and are in force, but many central and state-level rules are still being drafted or yet to be defined. Moreover, during the transition phase, certain older labour laws (the ones replaced) may continue to operate in parallel where relevant, until the full rule framework is in place. |
Q4. | Do employers need to restructure salaries now? |
| Ans. | Employers will need to restore their salary framework to comply with the new regulations in India because the new definition of wages now includes basic pay, dearness allowance and retaining allowance, which has to be at least 50% of the total Cost to Company (CTC). If an employer structures an employee’s salary with a Basic Pay component less than 50% of the CTC, the excess amount of allowances will be deemed part of the “Wages” for calculating statutory contributions. In other words, PF, gratuity, and social security must constitute at least half (50%) of an employee’s total pay, and if allowances exceed this threshold, the excess must be notionally added back for computing PF, gratuity, and other social security benefits. |
Q5. | Are PF and ESI rules changing right away? |
| Ans. | After the implementation of the new Labour Codes on 21st November 2025, provisions relating to ESI, maternity, gratuity and governance bodies are now active. Mechanical provisions relating to EPF are also active, helping the government to form rules and the new scheme, while continuing with the current EPF scheme. |
Q6. | Can HRA be counted under minimum wages? |
| Ans. | No, House Rent Allowance (HRA) is not part of the definition of “wages” under the new wage rules for minimum wage calculation. |
Q7. | Is leave entitlement changing? |
| Ans. | Under the new labour code in India, the eligibility period for annual paid leave has been lowered from 240 days of work to 180 days in a year. This willl in turn allow newer employees to access leave benefits sooner. |
Q8. | Do the labour codes change the definition of ‘wages’? |
| Ans. | Yes. The labour codes introduce a standardised definition of “wages,” which requires that basic pay (along with dearness allowance and retaining allowance, where applicable) must make up at least 50% of an employee’s total remuneration. Moreover, this unified definition applies across all codes and directly impacts calculations for PF, gratuity, bonuses, and other statutory benefits. |
Q9. | Do the codes impact annual bonus eligibility? |
| Ans. | Yes, India’s new labour codes do impact annual bonus eligibility. Under the new framework, bonus calculations will be based on the uniform definition of “wages”, which sets basic wages at a minimum of 50% of total remuneration. |
Q10. | Will employee working hours change under the new codes? |
| Ans. | India’s new labour codes have standardised the working hours. The normal working hours are capped at 48 hours a week, and 8-12 hours per day. Besides, overtime is allowed only with the employee’s consent and paid at double their wage rate. |
Q11. | Are there new social security benefits for workers? |
| Ans. | Yes, under the new labour code 2025s, there are social security benefits for workers across organised and unorganised sectors, including fixed-term, gig, platform, contract and MSME workers. |
Q12. | What must employers begin implementing immediately? |
| Ans. | Employers need to ensure full compliance with statutory requirements. For this, they must recalculate wage structure, issue appointment letters, provide annual health checkups and ensure timely payment of wages to the workers. |
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A crisp breakdown of key changes under the new Labour Codes. Useful for HR, employers, and workers preparing for 2025 compliance.
These Labour Codes are explained comprehensively and in a very lucid manner. They clear many common doubts and offer valuable clarity. This blog will be beneficial for employees, employers, HR professionals, and anyone looking to understand the new reforms effectively.