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17 April 2026

Summary Of The Latest Reforms In Labour Law Codes- Employer Employee Landscape

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Dhir & Dhir Associates

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While many countries modernised and merged their labour laws over the past few decades, India continued operating under an old and scattered framework of 29 Central labour Acts.
India Employment and HR
Sonjuhi Kaul and Sonal Verma
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I. Introduction and Scope:

While many countries modernised and merged their labour laws over the past few decades, India continued operating under an old and scattered framework of 29 Central labour Acts. Over time, these laws became rigid and difficult to navigate; therefore, the Government of India introduced four consolidated Labour Codes - The Code on Wages (2019), The Code on Social Security (2020), The Industrial Relations Code (2020) and The Occupational Safety, Health and Working Conditions Code (2020), replacing the earlier 29 laws.1 On 21st November 2025, the Government of India issued consolidated notifications making the four labour codes effective, bringing many core provisions of the Code into operational force across the country.

II. Overview of the Four New Labour Codes:

A. Code on Wages, 2019:

The Code on Wages was introduced in the Parliament in July 2019 to subsume four central enactments dealing with pay and related protections - The Payment of Wages Act, 1936, The Minimum Wages Act, 1948, The Payment of Bonus Act, 1965 and The Equal Remuneration Act, 1976. Its principal aims were to provide a single, consolidated legal framework on wages and bonus.2 The Code addresses two long-standing problems - the multiplicity of wage laws that produced uneven protection across sectors and the state notifications that allowed wide regional disparities. By proposing the Code, it aimed to reduce wage-poverty risks among low-paid workers, curb gender and other discriminatory pay practices, and make bonus and payment obligations more predictable for employers.

B. Industrial Relations Code, 2020:

The Industrial Relations Code consolidates and replaces principally The Trade Unions Act 1926, The Industrial Disputes Act 1947 and The Industrial Employment (Standing Orders) Act, 1946. Passed by Parliament in 2020 by notification, the code provides a highly visible substantive change in thresholds for prior government approval of layoffs, retrenchment and closure, raising the workforce size at which prior permission is required, which the Code frames as improving industrial flexibility. The purpose is to modernize industrial relations by clarifying union recognition rules, simplifying dispute resolution, and reducing adversarial litigation through stronger statutory conciliation and structured grievance mechanisms.3

C. Code on Social Security, 2020:

The Code on Social Security, 2020, modernises India’s social welfare system by replacing older, scattered laws like the ESI Act, EPF Act and Maternity Benefit Act, which were created separately over many decades. As the workforce changed with gig jobs, platform work, fixed-term roles and greater mobility, these fragmented laws became outdated and hard to administer. To address this, the government consolidated 9 central laws into one code that expands coverage, makes benefits more portable, and brings uniformity to PF, ESI, gratuity and maternity benefits. For the first time, platform and gig workers are also included in the social-security framework.4

D. Occupational Safety, Health and Working Conditions (OSHWC) Code, 2020:

The OSHWC Code, 2020, brings together India’s earlier workplace-safety laws, like the Factories Act, Mines Act, Inter-State Migrant Workmen Act and Contract Labour Act, which had become fragmented and outdated as industries and new forms of work expanded. With safety standards varying widely across sectors, there was a clear need for one consolidated law that could simplify compliance, remove overlaps, protect vulnerable and migrant workers, and update health and safety norms. To achieve this, 13 central laws were merged into a single code that sets uniform rules on working hours, safety committees, women working at night, welfare facilities and licensing.5

Table: Key Changes Introduced in the New Codes6

Name of the Code Laws Subsumed Key Changes Introduced
Code on Wages, 2019

Four laws merged-

  1. The Payment of Wages Act, 1936
  2. The Minimum Wages Act, 1948
  3. The Payment of Bonus Act, 1965
  4. The Equal Remuneration Act, 1976
  • Introduction of a uniform definition of wage across the country.
  • Aimed at ensuring a minimum wage for all sectors.
  • Mandated timely payment of wages to the employees/ workers.
  • Reviewing of minimum wages every five years.
  • Ensuring equal pay for male and female workers. (No discrimination based on gender).
  • Introduction of a floor wage to reduce regional wage disparities.
  • Simplifying the process of determining minimum wages, considering factors like skill level and location.
Industrial Relations Code, 2020

Three laws merged-

  1. Trade Unions Act, 1926
  2. The Industrial Disputes Act, 1947
  3. The Industrial Employment (Standing Orders) Act, 1946.
  • Introduced a single negotiating union if it has 51% or more membership, or a negotiating council if no union meets the threshold.
  • Provided for clear grounds for cancellation or suspension of a trade union’s registration.
  • A fourteen-day notice period is compulsory for strikes and lockouts in all industries.
  • Restriction on strikes and lockouts during conciliation, arbitration, or tribunal proceedings.
  • Raised the threshold for government permission for layoffs, retrenchment, and closure from one hundred to three-hundred workers.
  • Standardised retrenchment compensation to 15 days’ wages for every completed year of service.
  • Introduction of a worker reskilling fund, requiring employers to contribute 15 days’ wages per retrenched worker.
  • Provided government-issued Model Standing Orders that employers can adopt directly.
  • Updated definitions of worker, employer, industry, and industrial dispute for better clarity.
  • Recognition fixed-term employment and grants fixed-term workers the same benefits as permanent workers, including eligibility for gratuity.
  • Set-up of a two-member Industrial Tribunal., one judicial and one administrative member for quicker dispute resolution.
  • Aimed at reducing compliance burden and creating a more flexible yet secure industrial relations environment.
Code on Social Security, 2020

Nine laws merged-

  1. Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
  2. Employees’ State Insurance Act, 1948
  3. Employees’ Compensation Act, 1923
  4. Maternity Benefit Act, 1961
  5. Payment of Gratuity Act, 1972
  6. Building and Other Construction Workers’ Cess Act, 1996
  7. Unorganised Workers’ Social Security Act, 2008
  8. Cine Workers Welfare Fund Act, 1981
  9. Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959
  • Expands coverage to unorganised, gig and platform workers.
  • Makes registration compulsory for unorganised, gig and platform workers.
  • Creates a dedicated Social Security Fund for these categories.
  • Requires gig/platform employers to contribute to the fund.
  • Promotes digital systems for registration, return filing and records.
  • Extends maternity benefits to all working women, including those in the unorganised sector.
  • Establishes a structured grievance-redressal mechanism.
  • Proposes a separate corpus for unorganised-sector schemes.
  • Extends benefits to fixed-term employees, interstate migrant workers and contract employees.
Occupational Safety, Health and Working Conditions Code, 2020

Thirteen laws merged-

  1. The Factories Act, 1948
  2. The Mines Act, 1952
  3. The Dock Workers (Safety, Health and Welfare) Act, 1986
  4. The Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996
  5. The Plantations Labour Act, 1951
  6. The Contract Labour (Regulation and Abolition) Act, 1970
  7. The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979
  8. The Working Journalists and Other Newspaper Employees (Conditions of Service) and Miscellaneous Provisions Act, 1955
  9. The Working Journalists (Fixation of Rates of Wages) Act, 1958
  10. The Motor Transport Workers Act, 1961
  11. The Sales Promotion Employees (Conditions of Service) Act, 1976
  12. The Beedi and Cigar Workers (Conditions of Employment) Act, 1966
  13. The Cine Workers and Cinema Theatre Workers (Regulation of Employment) Act, 1981
  • Applies to all establishments with more than 10 workers, and to all mines and docks, regardless of workforce size.
  • Introduces uniform and modern health and safety standards to prevent accidents and occupational diseases.
  • Provides free annual health check-ups for employees in specific sectors and age groups, especially in hazardous work.
  • Requires employers in sensitive sectors to obtain mandatory licenses to ensure compliance with safety norms.
  • Sets clear rules for working hours, overtime, annual leave, and extra pay for overtime work.
  • Mandates basic welfare facilities like drinking water, toilets, first aid, and canteen, based on establishment size.
  • Requires appointment of safety officers in eligible establishments to strengthen compliance.
  • Enforces strict accident reporting and occupational disease reporting guidelines.
  • Establishes Safety and Health Advisory Boards at the national and state levels for oversight and recommendations.
  • Provides specific protections for contract workers, ensuring parity with regular workers in safety and welfare.
  • Encourages electronic filing and digital submissions to simplify compliance.
  • Defines inter-state migrant workers clearly and mandates their registration for better tracking and benefits.
  • Requires employers to provide a journey allowance for migrant workers to visit their home state once a year, plus safe working and living conditions.

III. Checklist for Compliance Under the Four New Labour Codes:7

Labour Codes Key Compliance Requirements
Code on Wages, 2019
  • Written appointment letters to all workers stating wages, hours, and employment terms.
  • Minimum wage compliance
  • Equal wage for equal work
  • Timely wage payment
  • Digital registers
  • 50% Basic+DA rule
Industrial Relations Code, 2020
  • Verify applicability of 300-worker threshold for closures
  • Check applicability of Standing Orders (300+ workers)
  • Establish clear procedures for negotiating union rules
  • Follow 14-day strike notice
  • 15-day retrenchment pay
  • Follow Reskilling Fund
Social Security Code, 2020
  • Categorise workers into regular, fixed-term, contract, gig, platform, and unorganised categories.
  • Register for EPF/ESI
  • Extend all benefits to eligible categories • Contractor PF/ESI compliance
  • Update contracts per wage definition
  • Ensure contribution to Social Security Fund for gig workers
OSHWC Code, 2020
  • Conduct periodic Safety audits, medical tests
  • Ensure compliance with working hours, weekly limits, rest intervals, and overtime at double rate.
  • Night-shift safety for women
  • Provide welfare facilities, first aid, drinking water, washrooms, canteens
  • Emergency plans
  • Submit Annual safety and compliance report

Cross-Code Requirements-

  • Update HR policies and employee handbooks
  • Staff training
  • Maintain digital statutory records

IV. Recommendations to Corporations for Compliance :

Code on Wages, 2019 Industrial Relation Code, 2020 Code on Social Security, 2020 Occupational, Safety, Health, and Working Conditions, 2020
Review the full salary structure, which includes basic, allowances, CTC, and bonus, to check compliance with the new wage definition. Review whether the organisation has recognised trade unions; if yes, map existing structures to the Code’s union-registration or other recognition norms. Audit of the existing workforce, permanent, contract, gig, and fixed-term and put them to worker or employee definitions under the Code. Conduct a workplace safety & health audit across all facilities of offices, factories, construction sites, etc. to identify gaps relative to OSH requirements.
Update the corporation’s payroll system to reflect timely wage payments, proper deductions, and maintain digital records. Draft or update standing orders, employment rules, conduct, and dispute resolution consistent with the Code. Establish internal processes to manage portability, transfers, and social-security benefit claims, especially for gig, fixed-term, contract employees or workers. Update or prepare safety manuals, SOPs, emergency response plans, worker safety protocols, and shift-management policies, especially if women or vulnerable groups work night shifts.
Issuance or update of the employment letters, appointment letters, offer letters, as the case maybe. Constitute or re-constitute grievance redressal mechanisms with a required representation of women where mandated. The organisation must also comply with the provisions related to wages, payroll, and proper documentation of the social security schemes. Ensure proper amenities and welfare facilities for water, toilets, first aid, cleanliness, ventilation, and rest zones are available.
Ensure internal HR policies prohibit remuneration discrimination and comply with equal pay for equal work. Revise internal policies on retrenchment, layoff, termination, and ensure compliance with threshold, notice, consultation requirements, and documentation. For contract, migrant, labour; verification of contractor licensing compliance, maintain records, ensure contractor agreement terms as per the Code.
Comply with the mandatory health checks, and maintenance of health records as required.

V. Impact of the New Labour Codes on Employees and Employers:

As the new labour codes move into full implementation, their real significance lies in how they reshape workplace practices and compliance on the ground.

Impact on Employees8 Impact on Employers9
  • Expanded Social-Security Coverage – The Social Security Code extends protection to Gig workers, Platform workers, Fixed-term employees, Inter-state migrant workers, and Unorganised workers, bringing newer work categories into the formal safety net.
  • Unified Compliance Structure – Consolidated definitions and integrated obligations reduce overlap between PF, ESI, gratuity, safety, and working-hour laws.
  • Higher Long-Term Benefits – A standardised wage definition increases PF and gratuity contributions, improving long-term retirement and insurance security, though take-home pay may reduce slightly.10
  • Lower Administrative Burden – Unified online systems for registration, renewals, filings, digital inspections, and e-registers significantly reduce paperwork and routine compliance costs.
  • Safer and Standardised Working Conditions – The OSHWC Code sets uniform norms for working hours, safety committees, women’s night work, canteen/first-aid facilities, mandatory safety officers, and free annual health check-ups.
  • Greater Operational Flexibility – Higher thresholds for layoffs and closures (up to 300 workers) and flexible working-hour models allow faster restructuring and better workforce planning.
  • Faster Access Through Digital Systems – Digital registration, record-keeping, electronic returns, and Aadhaar-linked portability make social-security benefits easier to access, especially for gig and migrant workers.
  • New Obligations for Gig/Platform Worker Welfare – Aggregators must contribute 1–2% of annual turnover (limited at 5% of payouts) to Social Security Fund, expanding employer responsibility in the digital economy.
  • Stronger Job Security Mechanisms– Mandatory appointment letters and compulsory grievance-redressal systems (for establishments with 20+ employees) increase transparency and strengthen employee rights.
  • Increased Accountability for Workplace Safety – Employers must follow stricter norms on risk assessments, hazard reporting, safety officers, licensing, and welfare facilities, with stronger penalties for non-compliance.

VI. Enhancements and Drawbacks of the New Labour Codes:

A. Enhancements: 11

  1. Digital-First Compliance: Online registration, licensing, and record-keeping make compliance faster, more accurate, and more transparent.
  2. Unified Registration & Returns: A single registration system and one consolidated return replace multiple earlier filings.
  3. Integrated Licensing: One combined licence now covers several labour approvals, reducing administrative workload.
  4. Streamlined Governance: Overlapping committees and processes are removed, improving regulatory efficiency.
  5. Transparent Digital Inspections: System-driven, risk-based online inspections enhance fairness and accountability.
  6. Reduced Paperwork: Fewer documents, simplified forms, and standardised procedures lower compliance efforts.
  7. Standardised Definitions: Common definitions across all Codes reduce confusion and minimise disputes.
  8. Simplified Compliance Framework: Consolidation of numerous labour laws into four Codes ensures consistency and easier adherence.
  9. Alignment with Modern Work Practices: Regulations are updated to match current economic trends, technology adoption, and evolving work patterns.
  10. Enhanced Worker Protection: Safety, wages, social security, and health provisions are strengthened under a unified framework for all workers.
  11. Business-Friendly Environment: Simplified rules and reduced compliance costs promote investment and employment generation.
  12. Technology-Enabled Administration: Digital systems improve efficiency, transparency, and reliability in compliance and enforcement.

B. Drawbacks:

  1. Ambiguous Definitions: Key terms like “worker,” “wages,” and “gig worker” remain insufficiently defined, creating room for inconsistent interpretation.12
  2. Over-Delegation to Rules: Too many substantive provisions are left to government rule-making, risking diluted protections and inconsistent state-level standards.
  3. Weakened Job Security: Higher layoff thresholds and wider fixed-term employment provisions may reduce long-term employment stability.
  4. Stricter Strike Conditions: Mandatory 14-day notice, cooling-off periods, and high voting thresholds make collective action more difficult for unions.
  5. Gaps in Gig/Informal Worker Protection: Social Security Fund mechanisms lack clarity on benefit design, contribution levels, and enforcement for gig and platform workers.13
  6. Digital Exclusion Risks: Heavy reliance on online systems may disadvantage smaller establishments and informal-sector workers with limited digital access.
  7. Inspector–Facilitator Role Conflict: The dual role may weaken enforcement and reduce accountability.
  8. Unequal Bargaining Power: Fixed-term contracts and flexible hiring norms may accentuate power imbalances between employers and workers.
  9. Stakeholder Pushback: Employers and unions may resist changes to wage structures, documentation and compliance norms.
  10. Initial Interpretation Difficulties: HR teams may face short-term confusion when aligning contracts and salary components with new definitions.
  11. Complex Transition Phase: Shifting from numerous older laws to a unified code requires time, training and internal adjustments.

VII. Conclusion:

The introduction of the four labour codes marks the most important reforms in the country’s labour framework since Independence. By consolidating 29 separate laws into four comprehensive codes, the government has aimed to create a clearer, more efficient and future-ready system for both workers and employers. The Codes bring uniformity to wage structures, expand social-security protection to new categories of workers, modernise industrial-relations mechanisms, and strengthen safety and welfare standards across sectors. For employees, these reforms translate into broader social-security coverage, safer workplaces, more transparent employment terms, and easier access to benefits through digital systems. For employers, the Codes reduce fragmentation, simplify compliance, and offer greater operational flexibility, though they also introduce stricter responsibilities in areas such as safety, documentation, and social-security contributions.

As of now, 32 States and Union Territories have released their draft rules for the four new Labour Codes. However, a few regions are still behind in the process. West Bengal and Lakshadweep have not issued draft rules for any of the Codes so far. Delhi has only released its draft rules for the Code on Wages, 2019, while Tamil Nadu is yet to publish its draft rules under the Code on Social Security, 2020.14 Bihar is also among the states listed as having pre-published draft rules under the four Codes.15 Maharashtra has updated its labour laws, particularly related to the occupational safety and welfare provisions for manual workers.16 This uneven progress shows that although most states are moving forward with the implementation of the new labour framework, they still have important steps to complete before the Codes can be fully operational.

Overall, the new Labour Codes aim to balance worker welfare with ease of doing business. Their real impact will depend on effective implementation, steady adaptation by industries, and continuous monitoring to ensure that the reforms truly support a more productive, protected, and equitable workforce.

Footnotes

1. BDO India, “Implementation of Labour Codes: Key Provisions Notified Effective 21 November 2025”, https://www.bdo.in/en-gb/insights/alerts-updates/alert-implementation-of-labour-codes-key-provisions-notified-effective-21-november-2025.

2. Code of Wages, 2019, https://labour.gov.in/sites/default/files/the_code_on_wages_as_introduced.pdf.

3. Industrial Relations Code, 2020, https://labour.gov.in/sites/default/files/ir_gazette_of_india_0.pdf

4. Code on Social Security, 2020, https://labour.gov.in/sites/default/files/ss_code_as_introduced_in_lok_sabha.pdf

5. Occupational Safety, Health and Working Conditions (OSHWC) Code, 2020, https://dgfasli.gov.in/public/Admin/Cms/AllPdf/OSH_Gazette.pdf

6. CHRMP Blog, Indrani Nath, “Comparative Analysis Between Labour Codes and Labour Laws”, https://www.chrmp.com/comparative-analysis-between-labour-codes-and-labour-laws/

7. How to Prepare for India's New Labor Laws, https://www.shrm.org/in/topics-tools/news/how-to-prepare-indias-new-labor-laws

8. Four Labour Codes come into force: Who benefits, what changes, and what workers must know https://economictimes.indiatimes.com/news/economy/policy/four-labour-codes-come-into-force-who-benefits-what-changes-and-what-workers-must-know/articleshow/125484448.cms?from=mdr.

9. Implementation of new Labour Codes to raise employers' costs but simplify compliance, https://www.newindianexpress.com/business/2025/Nov/21/implementation-of-new-labour-codes-to-raise-employers-costs-but-simplify-compliance.

10. People Matters, New labour codes and impact on compensation structures, https://www.peoplematters.in/article/other-employee-benefits/new-labour-codes-changes-challenges-and-impact-for-employees-and-employers-34517

11. India’s Labour Reforms: Simplification, Security, and Sustainable Growth, https://www.pib.gov.in/PressReleseDetailm.aspx?PRID=2192524.

12. Merits and demerits of the four ‘Labour Codes’ in the context of labour market reforms in India, https://pwonlyias.com/pyq/discuss-the-merits-and-demerits-of-the-four-labour-codes-in-the-context-of-labour-market-reforms-in-india-what-has-been-the-progress-so-far-in-this-regard/

13. India’s New Labour Codes: The Pros and Cons, November 23, 2025, https://thenorthlines.com/indias-new-labour-codes-the-pros-and-cons/

14. Implementation of Code, https://www.pib.gov.in/PressReleasePage.aspx?PRID=2147926&reg=3&lang=2

15. https://www.newsclick.in/parliament-Up-31-states-pre-published-1-4%20Draft-labour-code-rules-govt

16. L. C. BILL No. III OF 2025, Amendment to the Maharashtra Mathadi, Hamal and other Manual Workers (Regulation of Employment and Welfare) Act, 1969, Chrome extension://efaidnbmnnnibpcajpcglclefindmkaj/https://prsindia.org/files/bills_acts/bills_states/maharashtra/2025/LCBill3of2025MH.pdf

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