New Labour Laws: How the Four Labour Codes Transform Workplaces in India

On November 21, 2025, India introduced a historic overhaul of its labour system. The government implemented four new Labour Codes that merged 29 old labour laws into one simplified framework. These four codes are the Code on Wages 2019, the Industrial Relations Code 2020, the Code on Social Security 2020, and the Occupational Safety, Health and Working Conditions Code 2020.

This transformation affects 50 crore workers, both in organized and unorganized sectors. For the first time in India’s independent history, the government created a single, modern system that covers minimum wages, social security, workplace safety, and industrial relations for all workers.

Think of it like this: Before, Indian workers had to follow 29 different, confusing laws. Now, everything comes under four clear, unified codes. This change benefits workers in factories, construction sites, farms, gig economy platforms, and informal businesses across all of India.

Why This Change Matters

Many of India’s old labour laws dated back to the 1930s–1950s, created during the British era. These outdated rules didn’t fit modern work. They created confusion, made it hard for employers to comply, and left millions of workers, especially those in unorganized sectors, without basic protections.

The new codes modernize labour rules for today’s economy. They make it easier for businesses to operate while giving workers stronger protections, fairer wages, and social security benefits.

The Four New Labour Codes Explained Simply

1. Code on Wages, 2019: Fair Pay for All Workers

What it does: This code ensures every worker gets a fair minimum wage and gets paid on time.

Key Benefits:

• Every worker (organized or unorganized) now has the right to minimum wages
• The government will set a national floor wage that no state can go below
• Workers must get paid within 7 days for monthly wages or within 2 working days after leaving a job
• Overtime pay is now double the normal wage rate for work beyond fixed hours
• Equal pay for equal work (no gender-based wage discrimination)
• Clear, simple salary slips showing all deductions

Real-World Impact: A daily laborer in Delhi now gets the same wage protection as a factory worker. A woman doing the same job as a man must be paid equally. A delivery driver working extra hours gets double pay for those hours.

2. Industrial Relations Code, 2020: Fair Workplace Relations

What it does: This code handles relationships between workers and employers. It covers strikes, unions, layoffs, and dispute resolution.

Key Benefits:

• Trade unions now have official recognition and statutory protection
• Faster dispute resolution through tribunals (cases solved within 1 year instead of dragging on)
• Workers get 15 days’ wages (called re-skilling fund) when they lose jobs due to retrenchment
• Companies with 300+ employees need government permission before laying off workers
• Clear rules for layoffs and workplace closures

Real-World Impact: When a dispute arises between workers and employers, it gets resolved quickly through tribunals. A worker laid off from a company gets money to learn new skills. Small businesses (under 300 employees) have more flexibility, while large corporations must follow stricter rules.

3. Code on Social Security, 2020: Protection for All Workers

What it does: This code extends social security benefits to all workers, including those in unorganized sectors and the gig economy.

Key Benefits:

• Provident Fund (PF) for retirement savings
• Health insurance through ESIC (Employee State Insurance Corporation)
• Maternity benefits extended (26 weeks paid leave for women)
• Gratuity (lump-sum payment for long service) is now paid after just 1 year for fixed-term workers (instead of 5 years)
• Gig and platform workers (like delivery partners, cab drivers, freelancers) now get social security
• Benefits are portable, workers can carry them across states and jobs
• Free annual health check-ups for all workers above 40 years

Real-World Impact: A contract worker gets the same social security as a permanent employee. A delivery partner working for an app now gets health insurance. A construction worker moving from Delhi to Mumbai keeps all their benefits intact.

Special Note on Wages Definition: Basic pay must now be at least 50% of total salary. This means higher contributions to PF and gratuity, which may slightly reduce take-home pay initially but significantly improves retirement security.

4. Occupational Safety, Health and Working Conditions Code, 2020: Safe Workplaces

What it does: This code ensures safe, healthy, and fair working conditions for all workers.

Key Benefits:

• Mandatory appointment letters for every worker (even informal workers)
• Free annual health check-ups for workers above 40 years
• Women can work night shifts in all jobs (with consent and safety measures)
• Workplace must be free from hazards and provide rest facilities
• Working hours capped at 9 hours per day, with a maximum of 48 hours per week
• Minimum 1-hour rest break after 5 continuous hours of work
• Paid annual leave of 1 day for every 20 days worked (after 180 days of service)
• Work-from-home formally recognized
• Safe commute to work is covered (accidents during commute count as workplace injuries)

Real-World Impact: Every worker gets a written contract. A woman can safely work night shifts. A construction worker doesn’t work more than 9 hours daily. A remote worker gets the same protections as an office worker.

How the New Labour Codes Impact Different Types of Workers

1. Fixed-Term and Contract Workers

Before: Worked under unstable conditions with limited benefits.

Now:

• Get gratuity after just 1 year (instead of waiting 5 years)
• Receive equal pay and benefits as permanent employees
• Get mandatory appointment letters ensuring job clarity
• Covered under all social security schemes

Benefit: Contract workers now have job security and social protection similar to permanent staff.

2. Gig and Platform Workers (Delivery Partners, Cab Drivers, Freelancers)

Before: Treated as independent contractors with no protection.

Now:

• Formally recognized as workers under labour codes
• Entitled to social security benefits, health insurance, disability cover, and life insurance
• Aggregator companies (Uber, Zomato, Amazon) must contribute 1–2% of annual turnover to a welfare fund
• Can access benefits through Aadhaar-linked Universal Account Number (UAN)

Benefit: Millions of gig workers finally get legal recognition and protection for the first time.

3. Women Workers

Before: Restricted from night shifts and certain jobs; faced wage discrimination.

Now:

• Can work night shifts and all types of jobs (even mining, heavy machinery) with safety measures
• Gender-based wage discrimination is illegal
• Extended maternity leave (26 weeks)
• Mandatory crèche facilities in workplaces with 50+ workers
• Safe commute guaranteed (transportation arrangements for night shifts)

Benefit: Women can earn higher incomes, work flexible hours, and do jobs previously restricted.

4. MSME Workers (Small Business Employees)

Before: Often ignored in labour compliance; faced varying protections.

Now:

• Guaranteed minimum wages
• Access to simplified social security schemes
• Mandatory appointment letters ensure transparency
• Working hours regulated (maximum 48 hours/week)
• Timely wage payment guaranteed

Benefit: Small business workers get the same protections as large industry workers, while MSMEs get simplified compliance processes.

5. Unorganized Sector Workers (Construction, Beedi, Textile, Agriculture)

Before: Mostly unprotected; no social security or minimum wage guarantees.

Now:

• Guaranteed minimum wages across all sectors
• Access to provident fund and health insurance
• Appointment letters provide proof of employment
• Working hour regulations apply
• Free annual health check-ups

Benefit: 40 crore unorganized workers now get basic protections and dignity at work.

Work Hours and Leave Rules Under New Codes

Working Hours

Aspect	Details
Daily Work Hours	Maximum 9 hours per day
Weekly Hours	Maximum 48 hours per week
Rest Break	Minimum 1 hour after every 5 continuous hours
Overtime Pay	Double the normal wage rate
Night Shifts	Allowed for women with consent and safety measures
Weekly Holiday	At least 1 day per week (usually Sunday)

Leave Rules

Leave Type	Details
Annual Paid Leave	1 day per 20 days worked (≈ 18 days/year) after 180 days of service
Sick Leave	Paid sick leave (amount decided by respective codes)
Maternity Leave	26 weeks paid (applies to all women, including gig workers)
Casual Leave	Varies by industry and state rules
Compensatory Leave	Given for work on weekly/national holidays
Paternity Leave	May be available (details in respective state rules)

Important Note: Annual leave is now easier to get for workers who qualify after 180 days instead of 240 days.

Key Changes: Before vs. After New labour Law

Feature	Before (Old Laws)	After (New Codes)
Minimum Wages	Limited to scheduled industries; many workers uncovered	All workers (organized, unorganized, gig) get minimum wages
Gratuity for Fixed-Term Workers	Required 5 years of service	Now required after just 1 year
Social Security	Limited to organized sector (~10% of workers)	Extended to 50 crore workers, including unorganized and gig workers
Appointment Letters	Not mandatory for informal workers	Mandatory for all workers
Women’s Night Work	Restricted or heavily limited	Allowed with consent and safety measures
Free Health Checkups	No legal requirement	Mandatory for workers above 40 years
Work-from-Home	No formal recognition	Now formally recognized
Wage Payment Timeline	Delayed payments common	Must pay within 7 days (monthly) or 2 days (upon termination)
Overtime Pay	Inconsistent rates	Double wage rate (at least)
ESIC Coverage	Limited to few sectors and areas	Extended across all sectors and districts
Compliance Burden	29 different laws; multiple registrations	Single code; one registration, one license, one return

Why These Changes Matter: Real-World Scenarios

Scenario 1: Priya, a Delivery Partner

Before: Priya worked as a delivery partner for an e-commerce company. She had no health insurance, no provident fund, and was treated as self-employed. If she got injured, she got no compensation.

Now: Under the new codes, Priya is formally recognized as a worker. The company contributes to her health insurance and welfare fund. She gets disability cover and can access social security benefits. She’s safe.

Scenario 2: Rajesh, a Construction Worker

Before: Rajesh worked 10–12 hours daily on construction sites with no rest days. He had no written contract, no health insurance, and no gratuity.

Now: Rajesh’s daily work is limited to 9 hours. He gets a mandatory appointment letter proving his employment. He gets free annual health check-ups. After 1 year, he’s eligible for gratuity. His wages are guaranteed and must be paid on time.

Scenario 3: Neha, a Factory Worker

Before: Neha worked night shifts in the factory but faced safety concerns. She earned less than male colleagues doing the same work.

Now: Neha can work night shifts with safety measures. Gender-based wage discrimination is illegal; she must be paid equally. The company arranges safe transportation for her commute. She gets 26 weeks maternity leave. She has real job security.

Scenario 4: Arun, an IT Employee

Before: Arun’s salary was structured with high allowances and low basic pay. This reduced his PF contributions and gratuity calculations.

Now: Under the 50% rule, Arun’s basic pay must be at least 50% of his total salary. This means higher PF contributions and better retirement security, though his monthly take-home might decrease slightly.

Implementation Timeline and Transition for New Labour law

What Happened on November 21, 2025?

All four Labour Codes officially came into force on November 21, 2025. This is when the rules started applying to all workplaces and workers.

What’s Happening Now?

Government Actions:

• Registering workers on national database
• Rolling out digital platforms for compliance
• Training inspectors in new rules
• Setting state-level minimum wages

Employer Actions:

• Updating salary structures to meet 50% wage rule
• Creating mandatory appointment letters
• Adjusting PF and ESIC contributions
• Implementing workplace safety measures
• Registering on new labour portals

Worker Actions:

• Getting appointment letters
• Registering for social security benefits
• Understanding new leave and work-hour rules
• Checking salary calculations

Challenges and Concerns for the New Labour Law

1. For Employers

• Wage Structure Changes: Recalculating salaries to meet 50% basic pay rule
• Digital Compliance: Setting up new registration and documentation systems
• Training Requirements: Updating HR teams on new rules
• Increased Costs: Higher PF and social security contributions

2. For Workers

• Transition Confusion: Understanding new rules and how they affect benefits
• Uneven Implementation: Rules may be applied differently across states initially
• Digital Access: Workers without Aadhaar or digital literacy may face challenges

3. For Governments and Inspectors

• Implementation Coordination: Aligning rules across states
• Database Creation: Building national registries for unorganized workers
• Training and Capacity: Preparing inspectors for new systems

How to Prepare for the New Labour Codes

1. For Employees

Do This:

• Get your mandatory appointment letter
• Register with your employer for social security benefits
• Understand your new wage structure
• Link your Aadhaar with UAN (Universal Account Number)
• Keep copies of wage slips showing correct wage calculation
• Know your working-hour limits and leave entitlements

2. For Employers

Do This:

• Update salary structures to comply with 50% basic pay rule
• Issue appointment letters to all workers
• Register with labour department and ESIC/EPFO
• Set up digital compliance system
• Train HR team on new rules
• Create safety committees and health check-up procedures
• Update workplace safety measures

3. For Business Owners (MSME)

Do This:

• Understand state-specific minimum wages
• Prepare for single registration and license system
• Review work hours and ensure compliance
• Calculate accurate PF contributions
• Document all employment agreements
• Plan for health check-up provisions

Conclusion

The four new Labour Codes mark the start of the biggest transformation in India’s workplace laws. Every worker, from gig economy earners to factory staff, now receives more protection, better social security, and clear wage and leave rights. Employers benefit from simpler compliance and modern standards, helping India build a fairer, safer, and more productive workforce.

Solutions like Savvy HRMS can help businesses easily adapt to these new labour laws, automate compliance, and ensure that employees receive all the benefits and protections outlined under the new codes. By using up-to-date HR software, organizations can navigate the evolving labour landscape with confidence while supporting their people and processes for the future.

Official Government Resources

For official information, visit these authoritative sources:

• Ministry of Labour and Employment: 
• labour.gov.in
• Official Labour Codes PDF: Available on the Ministry website at 
• labour.gov.in/sites/default/files/labour_code_eng.pdf
• Press Information Bureau Release: 
• labour.gov.in/sites/default/files/pib2192463.pdf