Decoding India’s New Labour Codes: A Landmark Reform

The Indian employment sector underwent a complete transformation with the enactment of the Citizenship Amendment Bill on November 21, 2025. The government began the monumental task of consolidating 29 labor laws as a result of the Bill. This India Labour Codes is to change the employer-employee relationship for more than 400 million workers across the country. With the revised laws, the aim is to change the relationship for the better, and improve the welfare laws in the country to, and improve the transparency and equilibrium in the economy of the country. 

Today in this blog we will talk about the essential components of the new Indian Labour Codes. You will understand the four new laws, and will be able to understand the new changes, and the new effects that it will bring to the people of the country and the people who employ them.

Four Codes as the New Wages of Labour

The new labour codes will help in assimilating different laws that connote other legislations within them. So rather than assimilating the top law, which will help in the growth of the bottom law, the government is expected to improve bottom law, and assimilate it top law, which will improve the outcome of the bottom as a result.

1. The first of them being The Code on Wages, 2019, which aims to unify the definitions of all the elements that pertain to the payment of workers in different sectors and industries, and in different states.
2. The Industrial Relations Code, 2020: Updating the conditions surrounding the hiring, firing, and framework concerning the trade unions and industrial disputes.
3. The Code on Social Security, 2020: This particular code extends the social safety net to protect previously unprotected workers, which includes gig and platform workers.
4. The Occupational Safety, Health and Working Conditions Code, 2020: This code attempts to provide uniform criteria to protect all workers and ensure they work in safe and healthy conditions.
5. These changes are aimed at improving, or rather, transforming employment conditions in terms of the different aspects of business management such as finance, safety, employment, and work conditions.
6. These changes impact every business in India, and are unparalleled in the length and scope of their impact.

The Code on Wages, 2019

This code seeks to promote uniformity in the concept of wages bid and ease of wage-related legal disputes by providing a legal definition of the term “wages.” It also includes, as a key provision, the introduction of a National Floor Wage, which is in fact a minimum floor wage, and as such, is a living wage which is to be paid to all employees irrespective of when they are paid and is to be paid equally for work done.

Industrial Relations Code 2020  

This Code manages the procedural aspects governing trade union activities and the resolution of industrial conflicts. This Code aims at simplifying the management of industrial relations by allowing an industrial establishment with 300 or more employees to obtain prior government permission for mass layoffs or closure of the establishment. The Code aims to maintain an industrial peace by encouraging the settling of industrial disputes through dialogue and negotiations.  

The Code on Social Security 2020  

This Code on Social Security is social security legislation and is the first of its kind to extend social security coverage to certain categories of previously uninsured workers including gig workers. This Code is progressive as for the first time contract workers in India will be entitled to social security benefits such as a provident fund, insurance, and maternity benefits. This Social Security Code is also progressive in the sense that it changes the paradigm of social security legislation in India from a threshold-based approach to a universally inclusive social security to all workers in India.  

The Occupational Safety, Health and Working Conditions Code 2020  

The Code seeks to achieve a uniform implementation of health and safety regulations in all workplaces in India. The Health and Safety of all workers, including blue-collar workers, will be provided with appointment letters, thereby formalizing their employment. The Code extends to informal and migrant workers and is expected to positively impact their working conditions.

Key Changes in New Labour Codes   

• The reforms will bring many changes that will impact day to day functions and employee rights. The most salient changes may include the following:   
• Fixed Term Contract Workers Have Equal Treatment: Workers in fixed-term contracts win the same benefits and will get gratuity after one year of employment, not after five.
• Formal Recognition of Gig Workers: Workers in the gig and platform economy will get formal recognition, along with membership to select social security schemes.
• Updated Social security to include support for Employees in Micro, Small, and Medium Enterprises (MSMEs) and those in high-risk/life-threatening sectors.
• Guaranteed Minimum Wage: Employers will pay a guaranteed minimum wage, ensuring timely and equitable payment to all workers.
• Gender Equality: Women will work in all sectors and functions of the economy, earning the same as men for equal work, without restrictions.
• Employee Health: Employers will provide annual health check-ups at no cost and establish health and safety committees.
• Equity in Contract Workers: Employers will guarantee equal pay and access to social welfare for contract workers and extend equal rights to welfare for all migrant workers.
• Capped Working Hours: Employers will cap daily working hours, typically limiting them to 8-12 hours based on the sector.
• Reduced Qualifying Period for Leave: Employers will reduce the qualifying period for annual leave from 240 to 180 working days before employees can access leave.
• Formal Appointment Letters: Employers will issue formal employment letters to all employees to improve clarity.

A New Chapter for Indian Labour: The Bigger Picture

With these codes comes a blossoming transformation of India’s perspective on labour rights and business compliance. The reforms addressing universal coverage will bring a significant portion of the informal workforce to the formal economy. This will improve accountability and transparency, and more importantly, provide these workers invaluable benefits and protections. The required shift to digital compliance will eliminate paperwork, improve efficiency, and minimize corruption.

The New Codes and Employees

India’s 400 million workforce will reap the benefits the new codes bring to the economy. Many feel assured that they will no longer be exploited and that a minimum wage and social security net will be instituted to lessen the socio-economic inequalities. Even wage discrimination against women will be addressed and equal pay provisions will help achieve improved parity.

Social Security Provisions within the new codes have also been extended to the gig economy. This encompasses delivery partners, ride-hailing drivers, and freelancers, all of whom contribute immensely to the economy. With the issuance of formal appointment letters, the ambiguity surrounding employment documents will be resolved and worker rights will be better protected.

What the New Codes Mean for Employers

For employers, the consolidation of 29 laws into four codes significantly simplifies the compliance landscape. Employers now face fewer interpretations of the term, “wages”. However, Employers now face increased obligations, including paying social security and meeting additional workplace safety compliance for more workers.

While businesses must still comply with state-specific labor laws, the central codes will simplify the compliance process in applicable states. The transition will take time, but it will ultimately make compliance simpler and more predictable.

Key Reforms: A Practical Breakdown

Let us take a look at some of the most important changes which employers will have to implement.

1. Salary Structure and Take-Home Pay

From October 2022, basic pay must comprise 50\% of total pay, meaning that some employees will take home less pay. However, contributions to long savings like provident fund and gratuity will increase. Employers will have to change their definition of wages for payroll systems.

2. Annual Leave and Work-Life Balance

Workers are now able to take annual leave after 180 days of service. In the past, that used to be 240 days. Employers must grant employees 20 days of annual leave, and employees can carry forward 30 days of annual leave.. This will certainly increase retention among employees and make it much desirable for employees to remain with the company.

3. Digitalization of Compliance

Keeping employee records digitally is now compulsory. This reduces administrative burden and corruption risks, while enabling faster, transparent pay and dues for employees. This also helps the workers by allowing for random online inspections by labour authorities.

4. Advancement of Safety in Work Environment  

The code prescribes consistent occupational health and safety standards for all industry sectors. The legal interpretations of terms such as “employee,” “establishment,” and “dangerous workplace” have removed ambiguity. The requirement for appointment letters and expanded protections for employees from foreign employers reinforce a culture of safety and courtesy.

Paving the Way Forward  

New Labour Codes enactments is a historical event in India. It signifies the first and positioning step towards a fair, accountable, and competitive employment ecosystem. Employees now have stronger protections, and their rights are more accessible. Employers face more social obligations but gain advantages through easier compliance with regulations. These changes in India elevate the country’s efforts to provide a fair and sustainable work environment in all workplaces.