INTRODUCTION
The government of India has implemented New labour codes in India on 21 November 2025, consolidating 29 existing labour laws into four comprehensive codes which are code on wages (2019), Industrial relations code(2020), social security code (2020), and occupational safety, health and working conditions code (2020). These codes are designed to simplify regulation, improve compliance and enhance the working condition for employees and as well as employers across various sectors. Since the formation of old labour laws 1930-50s employees and employers both have struggled with overlapping laws, inconsistent definition and state level variation. But with these new labour codes not only Indian business but also foreign business operating in India will face both opportunities and compliance challenges. These new labour codes have increased obligations around wages, social security and workplace safety.
Why the Reform Was Needed
India’s labour laws were framed in the pre independence and early post-independence era (1930-1950s), when the conditions were all different. And with the time, as the process has been changed but the labours laws remain the same revolving around those 29 central labour laws. The old system created difficulties for both workers and employers, making reform inevitable . The Labour Law reform was needed to simplify laws, modernize employment regulation, expand social security, and promote economic growth, while still protecting workers’ rights. It reflects India’s effort to create a balanced and future-ready labour framework
The Four Labour Codes
1. Code on Wages, 2019
As wages fall under the Concurrent List, each State earlier had its own definition of wages, which made the concept difficult to define and apply uniformly. The Code on Wages, 2019 addresses this issue by introducing a single definition of ‘wages’ for all purposes. Furthermore it has introduced National floor wages. It has universalised minimum wages for all workers, ensures the timely payment of wages, and further provides that where workers are required to work overtime, the overtime wages shall be at least twice the normal rate of wages.
2. Industrial relations code, 2020
The Industrial Relations Code, 2020 consolidates and replaces three major labour laws governing industrial relations Trade Unions Act, 1926, Industrial Disputes Act, 1947, Industrial Employment (Standing Orders) Act, 1946. The aim of the Code is to modernize and simplify the industrial relations system through an efficient means of settling disputes. It provides a clear set of regulations regarding the establishment and recognition of trade unions, a prescribed method for laying off, retrenched employees, striking and setting thresholds for government approval of new trade unions depending on the size of a business. Additionally, the Code encourages one union registration only, e-filing of union returns and e-management of union disputes which enhances transparency and reduces administrative burdens. Through balancing the rights and responsibilities of employees and employers, the Code establishes the basis for predictable industrial relations, limits the potential for conflict and creates a more streamlined approach to managing workers in both the organized and unorganized workforce.
3. Social security code, 2020
This Code removed nine existing social security legislations, including the Employees Provident Fund Act, the Employees State Insurance Act, the Payment of Gratuity Act, and the Maternity Benefit Act. The main objective of the Code is to widen the social security coverage to categories of all types of workers who were previously excluded from statutory protection. By introducing a uniform, inclusive, and technology driven framework, the Code aims to ensure income security, health protection, and social dignity in a labour market increasingly characterised by flexible and non-traditional employment relationships.
For the first time, gig workers and platform workers receive statutory recognition under social security law, marking a significant shift in labour regulation. The Code further provides for the establishment of a social security fund for unorganised, gig, and platform workers. Fixed-term employees are made eligible for gratuity upon completion of one year of service, thereby removing the earlier distinction between permanent and contractual workers. Additionally, provident fund coverage is extended to establishments employing twenty or more persons, while Employees’ State Insurance coverage is made mandatory even where a single worker is engaged in hazardous activities.
4. Occupational safety, health and working conditions code 2020
By combining 13 previous Laws into 1 Law, the Code will provide a more modern approach to organizing workplace safety, health and working conditions.With the streamlined business registration process, a single common business operation license, and the ability to submit forms electronically, compliance will be easier for employers. With the fixed workweek requirement, workers will undergo a health inspection prior to employment and the way hazardous materials are processed will be regulated to create a consistent way in which all employees are treated. Workers, including women, will have more opportunities available to them because safety considerations will be included when selecting their hours of work, including for nighttime shifts. The Code will set minimum standards for sanitation, ventilation, and grievance procedures while improving the enforcement of workplace safety and increasing accountability in workplaces for workplace safety. The Code’s goal is to create a workplace that is safer, healthier, and more transparent across all sectors of the Economy.
Challenges and Practical Considerations
1 . Uniform Codes Implementation by States: There is a possibility that the lack of capacity and differences between states, even with uniform codes, will mean there is a delay in having uniform enforcement. Different interpretations of the provisions will also create uncertainty with regard to compliance between different states.
2 . Awareness and Adaptation by SMEs: New requirements for digital filings, single registrations and social security contributions for gig and platform workers may be difficult to comprehend for many SMEs.
3 . Increased Cost of Compliance: The additional responsibilities of having to provide health check-ups, ESIC coverage for hazardous workers, paying overtime, and providing a provident fund will all lead to increased costs of operation, and in particular for smaller businesses.
4 . Worker Awareness of Benefits: Although workers now have rights as a result of the codes this includes gig and fixed-term employees. Due to a lack of awareness of their rights, workers may not fully utilise the benefits they are entitled to as per the codes.
5 . Balancing Employer Flexibility / Worker Protection: While the codes are intended to provide a balance between providing flexibility for employers while protecting workers, ambiguities exist within the codes relating to the definitions of women working night shifts, definitions of fixed-term employment, or contractors’ definitions could result in disputes or litigation.
6 . Timeframe for Implementation: Training, updating of systems, and the development of Digital Infrastructure will take years to implement in order to transition from 29 fragmented laws to four uniform codes.
7 . Reliant on Technology: One of the areas where the codes rely on technology is in the area of electronic filing, electronic records storage, and online compliance tracking. This assumes a certain level of reliability across different industries and geographic regions with respect to technology access.
Conclusion:-
The 2025 Labour Codes reformulate the Labour Ecosystem in India, combining 29 other labour-related laws (which were all old) into 4 new labour codes that provide an extension of labour law coverage, the unification of all labour protection, and the modernisation of labour law definitions. The New Codes will streamline compliance for employers and employees, protect previously excluded groups of workers (e.g. gig and platform workers), and create uniform standards for wages, industrial relations, social security, and workplace health and safety. The reforms are an important step toward achieving a fair and sustainable labour framework for the future. Although there are still issues relating to implementation, awareness, and reliance on technology, these reforms demonstrate a significant movement towards the establishment of a more balanced and sustainable labour law framework that will modernise the regulation of employment while protecting the rights and well-being of all workers in all sectors.