The Labour laws in India have undergone massive reforms. The laws related to labour were predominantly framed during the British era and required updating.
The Central Government through its notification issued by the Ministry of Labour and Employment, dated 21st November, 2025, announced the implementation of the he Code on Wages, 2019 (“Wage Code“), the Industrial Relations Code, 2020 (“IR Code“), the Occupational Safety, Health and Working Conditions Code, 2020 (“OSH Code“), and the Code on Social Security, 2020 (“SS Code“) (collectively, the “Labour Codes” or “Codes“).
The Labour Codes have come into force in its entirety, repealing the 29 central laws that have been consolidated into these 4 Labour Codes. The new Labour Codes aims to ensures that workers gain easier access to security, dignity, health, and welfare measures, reinforcing India’s commitment to a fair and future-ready labour ecosystem. It further aims to enhance ease of doing business, promote employment generation, ensure safety, health, social & wage security for every worker.
With the implementation of the new Labour Codes, the number of rules shall be consolidated from 1400 to 350 and the requirement of compliance shall from dropped down from 180 to mere 73, making it easier for business entities and companies to regulate into India.
Wage Code
The Wage Code combines laws related to the Payment of Wages Act and Minimum Wages Act.
Under the Wage Code, a single wage definition now applies to all 4 Labour Codes. The wages definition includes basic pay, dearness allowance, and retaining allowance and excludes various allowances and employer contributions, therefore the basic wages shall now mandatorily be computed of a minimum of at least 50% of the remuneration. This change shall facilitate in the increase of social security contributions and gratuity pay for the balance 50% of the remuneration.
The Central government shall set a national floor wages and states must set minimum wages at or above this level. This minimum wages as set by the Central and the State governments, which shall be applied to both organized and unorganized sectors, ending the previous gaps where many sectors remain uncovered.
The Wage code also prohibits discrimination in matters of pay, on the ground of gender, making this more inclusive as compared to the erstwhile law.
Under the erstwhile law, bonus was payable only to employees earning up to INR 21,000 per month, however under the Wage Code, the State government shall be empowered to prescribe such threshold. Therefore, in the meanwhile, till the appropriate directives from the relevant state government, the minimum threshold of INR 21,000 per month shall be applicable in terms of payment of bonus.
IR Code
The IR Code, consolidates laws on trade unions, standing orders, and dispute resolution, introducing significant changes to industrial relations.
Under the IR Code the threshold for prior government approval for retrenchment (i.e., involuntary termination of employees for reasons other than personal conduct), layoffs, and closures has increased from 100 to 300 workers, giving employers greater flexibility.
The appropriate government are now empowered to prescribe the quantum of retrenchment compensation to be higher than 15 days’ average pay for each completed year of service.
The IR Code makes provision for setting up of a set up a ‘Worker Re-Skilling Fund’, to provide monetary support to retrenched workmen, for training and re-skilling purposes. Employers are required to contribute an amount equivalent to 15 days last drawn wages for every retrenched employee within 45 days to the said Fund.
The standing orders shall now be applicable to all industrial establishments, including commercial establishments, with 300 or more workers as compared to the threshold of 50 or 100 or more workmen in industrial establishment. The Code permits employers to simply adopt the model standing orders and intimate this information to the certifying officer.
The Code shall now recognize trade unions, and the employer is required to recognize at least 1 trade union for negotiation of the workers. Where there are more than 1 trade unions, the union with 51% or more workers as majority will be recognised as the sole negotiating union and in other cases, where there is no majority, the employer shall constitute a negotiation council. Trade unions must provide 14 days’ advance notice before striking.
OSH Code
The OSH Code consolidates 13 laws governing workplace safety and welfare. It applies to establishments with ten or more workers, covering most offices and service-sector units.
The OSH Code makes it mandatory for all establishments, whether factories, mines, commercial establishments– to obtain a single registration under the OSH Code. The employer is required to obtain a common license in respect of a factory, industrial premises for beedi and cigar work and for engaging contract labour, or a combination of these activities. Existing licenses obtained under previous Central law will continue to be valid until their expiry. It shall be mandatory for employers to issue appointment letters to all workers.
The OSH Code shall be applicable to establishments which employ at least 50 contractor labourers in the preceding 12 months. The Code prohibits employers to engage contract labour for the core activities of establishments.
The Employer must fix 8 hours upper limit on daily working hours. Annual leave entitlement of 18 days computed as 1 day leave for every 20-day worked.
The OSH Code imposes various responsibilities on an employer, which ranges from providing a working environment that is safe and without risk to the health of the employees, to providing adequate welfare facilities such as separate shelter-rooms, restrooms, etc., based on certain applicability thresholds.
SS Code
The Social Security Code consolidates nine social security laws and introduces coverage for gig workers, platform workers, and fixed-term employees, granting them statutory entitlements such as EPF, gratuity, maternity benefits, and accident compensation.
The SS Code recognizes fixed term employment in all industries. The Code also makes such employee eligible for “gratuity” after completing 1 year of service as compared to the 5 years period under the erstwhile Act. Thus, workers engaged for project-based or contract-bound roles will receive such benefits.
The Code also recognizes Gig workers and platform workers wherein a Fund shall be created under the Central Government Scheme, to extend social security protection to such workers.
Although the 4 Labour Codes have been enacted and notified by the Central Government, implementation remains uneven. The Central Government through its notification have empowered the various State Government to draft the rules pertaining to their State in line with the Labour Codes. In a recent press release the Central Government has clarified that the existing labor laws will continue to apply during this transitional period. Employers are advised to comply with the erstwhile rules while preparing for the new framework.
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