India’s New Labour Codes: A Long-Awaited Reset of an Overgrown Regulatory Regime
Effective 21 November 2025, India’s labour governance undergoes its most sweeping transformation in independent history. Twenty-nine (29) separate labour laws—long criticised for inconsistency, overlap, and bureaucratic burden—now stand consolidated into four unified Labour Codes. This shift marks more than legislative housekeeping; it signals an institutional re-orientation aimed at balancing worker protection with economic dynamism in an economy increasingly shaped by mobility, technology, and gig-based work.
For decades, India’s labour framework grew in layers. Each new statute attempted to fix a narrow problem, eventually creating a maze of definitions, thresholds, permissions, and compliance obligations. The system functioned unevenly, favoured formal manufacturing over services, and left most unorganized and gig workers outside any protective net. Disputes dragged on, minimum wages varied widely across states, and employers navigated multiple registrations, inspections, and filings. The promise of labour welfare often remained entangled in procedure.
The new Labour Codes attempt to correct these inefficiencies without weakening the protective intent of labour regulation. Instead, they reorganise rights and responsibilities into four coherent pillars: wages, industrial relations, social security, and occupational safety.
(1.) Code on Wages: A Uniform Floor and a Clearer Wage Structure
The Code on Wages brings clarity to one of India’s most fragmented areas—minimum wages. Under the old Minimum Wages Act, only scheduled employments were covered, leaving roughly 70% of workers outside its purview. Moreover, state-level disparities were so wide that daily minimum wages ranged from under ₹160 in some regions to over ₹420 in Delhi.
The new regime introduces a national floor wage, below which no state may set its minimum. This creates a baseline of dignity in earnings across the country, significantly impacting the service sector where inconsistencies were most pronounced.
Equally important is the standardised definition of wages, requiring at least 50% of remuneration to be basic pay. This will alter salary structures—reducing inflated allowances—but it strengthens contributions to provident fund, insurance, and gratuity. With mandated timelines for wage disbursal and double-rate overtime, wage protection becomes enforceable rather than aspirational.
(2.) Industrial Relations Code: Flexibility With Safeguards
Industrial relations in India have historically swung between rigid protectionism and contentious confrontation. The new Industrial Relations Code attempts moderation.
Raising the threshold for prior government approval in cases of layoffs, retrenchment, or closure—from 100 to 300 workers—provides employers greater operational flexibility, especially in manufacturing and services aiming to scale. At the same time, the Code formalizes dispute resolution mechanisms, promotes collective bargaining, and narrows the use of contract labour by defining core and non-core activities.
The goal is to reduce industrial friction by ensuring that hiring and separation are governed by predictable, transparent rules rather than by prolonged administrative discretion.
(3.) Social Security Code: Inclusion for the Gig Economy
Perhaps the most forward-looking reform is the expansion of social security to gig and platform workers—a workforce previously invisible to statutory protections despite its centrality to the digital economy.
The Code integrates EPF, ESIC, maternity benefits, gratuity, and welfare schemes under a unified platform. A universal, Aadhaar-linked account ensures portability of benefits across states—vital for migrant workers, delivery partners, drivers, and freelance professionals. Aggregators are required to contribute to a dedicated social security fund, bringing platform-based work into the mainstream of labour protection for the first time.
The Code also widens coverage for unorganised, self-employed, and hazardous sector workers—a long overdue step in a country where informal labour remains the dominant mode of employment.
(4.) OSH Code: Safety, Health, and the Modern Workplace
The Occupational Safety, Health and Working Conditions (OSH) Code consolidates diverse safety and welfare laws into a single framework. By lowering the coverage threshold to establishments with 10 or more workers, it brings small enterprises into the safety net.
Mandatory annual health checkups for older workers, uniform safety norms across sectors, and freedom for women to work night shifts—provided employers ensure their safety—reflect a modern understanding of workplace inclusion. The Code aims to create safer environments not just in industry but also in services, logistics, hospitality, and new-age workspaces.
From Fragmentation to Coherence
With the new Codes operational, the previous 29 statutes stand repealed. While states will issue transitional rules, the old laws no longer apply independently. The regulatory model shifts decisively toward “one registration, one license, one return”, easing compliance for businesses and reducing the labyrinthine paperwork that earlier discouraged formalization.
This simplification is expected to boost investment, improve ease of doing business, and encourage enterprises to migrate workers from informal to formal contracts.
Balancing Welfare and Growth
Critics argue that raising retrenchment thresholds may dilute job security. Advocates counter that flexibility is essential for competitiveness and employment expansion. Both arguments hold merit; the real test will lie in implementation, inspection integrity, and the responsiveness of dispute resolution systems.
What is clear is that the Codes attempt a middle path—protecting workers through universal minimum wages, expanded social security, safer workplaces, and clear entitlements, while giving employers room to reorganize, innovate, and grow.
This dual emphasis aligns with India’s broader economic direction: creating a labour market capable of absorbing millions of youth entering the workforce each year, while safeguarding the dignity and rights of workers across sectors.
Domestic helpers fall at the edge of the new labour framework—acknowledged but not intrusively regulated. The intent is to protect their wage and basic welfare without converting private households into formal establishments.
A Structural Break for a Changing Economy
India’s labour landscape is no longer defined solely by factories or farms. It includes app-based workers, flexible workforce models, tech-enabled services, high-mobility logistics systems, and a rising share of women seeking formal employment. The new Codes acknowledge this demographic and economic shift.
By replacing procedural rigidity with coherent rights and responsibilities, they position India for a future where work is more fluid, digital, and diverse.
If implemented with rigour and fairness—supported by cooperation between the Union, states, employers, and worker groups—the Labour Codes could become a foundational element of a more inclusive, competitive, and worker-centric economic system.
They do not merely simplify law; they reshape the social contract governing work in modern India.
