Labour Codes 2025 - A Simplified Overview of the Four Labour Codes

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The Government of India has implemented the Four Labour Codes: 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. 

These labour reforms in India consolidate 29 Central labour laws into a modern, streamlined framework designed to expand worker protections, improve compliance systems, and align India’s labour governance with global standards.

India’s previous labour laws, many created between the 1930s and 1950s, had gradually become outdated and complex. The new Labour Codes 2025 replace overlapping and rigid provisions with a unified, contemporary structure that promotes formalisation, social security, safety and flexibility. 

Together, the Four Labour Codes support a more productive workforce while reducing administrative burden on employers.

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Key Reforms Under the New Labour Codes

1) Formalisation and Worker Protection:

• Appointment letters are now mandatory for all workers, ensuring job clarity and formal employment records. 
• Statutory minimum wages apply to all categories of workers, and timely payment of wages is legally enforceable. 
• Workers aged 40 and above are entitled to free annual health check-ups, reinforcing preventive healthcare.

2) Social Security Expansion:

• Under the Code on Social Security, 2020, social security coverage now extends to all workers, including gig and platform workers. PF, ESIC, insurance, and other benefits have become more widely accessible. 
• ESIC will operate pan-India, and even a single employee in a hazardous unit must be covered; however, it is voluntary for establishments with fewer than 10 employees.

3) Women’s Workforce Participation:

• Women can work on night shifts and all categories of employment (including underground mining and heavy machinery), subject to their consent and safety provisions. 
• Equal pay for equal work, anti-discrimination safeguards and mandatory representation in grievance committees strengthen workplace inclusivity.

4) Simplified Compliance:

• The new Labour Codes replace multiple registrations and returns with single registration, single licence, and single return structures, significantly reducing the compliance burden. 
• Businesses now engage with a more transparent, predictable and technology-enabled regulatory system.

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Impact Across Major Worker Groups

1) Formal, Contract and Youth Workers:

• Fixed-term employees receive the same benefits as permanent staff, including leave, medical coverage and social security. 
• Gratuity becomes available after one year of service. 
• Appointment letters, minimum wage guarantees and paid leave requirements improve job stability. 
• Principal employers must extend health and social security benefits to contract workers.

2) Gig and Platform Workers:

• For the first time, “gig work”, “platform work”, and “aggregators” are formally defined. 
• Aggregators must contribute 1-2% of annual turnover (capped at 5%) to the social security fund. 
• Aadhaar-linked Universal Account Numbers ensure portability of benefits across states.

3) Women Workers:

• Equal pay is legally mandated. 
• Women may take on all roles, including hazardous or high-risk sectors, provided safety protocols are in place. 
• Expanded family definitions allow women employees to include parents-in-law as dependents for benefits.

4) MSME, Textile, IT/ITES, Audio-Visual & Digital Media, and Export Sector Workers:

• MSME workers gain broader access to social security, minimum wage protection, timely wages, standard working hours, double overtime wages, paid leaves, and better workplace facilities. 
• IT & ITES establishments must pay salaries by the 7th of each month and ensure the quick resolution of workplace disputes, no gender discrimination (pay, night shifts, etc.), and compliance with social security requirements.
• Migrant textile workers receive equal wages, PDS portability, double overtime wages, and approval to raise claims for up to 3 years to settle pending dues.
• Export sector workers can avail themselves of annual leave after 180 days of work in a year.

5) High-Risk and Specialised Sectors:

• Beedi, plantation (with more than 10 workers or more than 5 hectares), dock, mine and hazardous industry workers receive clearer safety standards, formal recognition, and mandatory annual health check-ups.
• Working hours are standardised at 8-12 hours per day and 48 hours per week.
• Bonus after completing 30 days of work in 1 year.
• Safety committees, protective equipment requirements, safety training, and related measures enhance workplace safety across high-risk occupations.

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Compliance, Safety and Governance Modernisation

The Labour Codes 2025 introduce a National Floor Wage, ensuring no worker is paid below a basic minimum threshold. A gender-neutral framework explicitly prohibits discrimination, including against transgender persons.

The new Inspector-cum-Facilitator system encourages guidance-led compliance, while two-member Industrial Tribunals aim to resolve disputes more efficiently.

A National OSH Board will set harmonised safety standards across industries.

Registration, licensing, and reporting processes are unified into a single system, easing employer compliance.

During the transition phase for the new Labour Codes implementation, relevant provisions of earlier labour laws will remain in effect until corresponding rules and schemes under the new Labour Codes are fully operational.

Challenges in Labour Codes Implementation

• Increased Cost for Employers: The new Codes raise minimum wages and social security obligations, which may reduce employees' take-home pay while increasing employers' contributions, particularly impacting MSMEs.
• State-Level Alignment of Rules and Delays: Although the Four Labour Codes have come into force, states must frame and notify their rules for full implementation. Some states remain behind in this process, which may delay or fragment the consistent rollout of the reforms.
• Coverage of Informal, Gig, and Migrant Workforce: While the new Labour Codes extend social security and protections to these groups, ensuring actual reach and enforcement across India's large informal sector remains a challenge.

Long-Term Impact on India’s Labour Landscape

India’s social-security coverage has expanded from 19% in 2015 to over 64% in 2025, reflecting a significant shift toward universal protection. The Four Labour Codes further deepen this progress by embedding portability, stronger entitlements and broader coverage for women, youth, migrant, unorganised, gig and platform workers.

By modernising regulations and reducing compliance complexity, the new four Labour Codes support a more resilient, productive and employment-friendly labour market.

DhruvStar Industry Insights: What It Means for the Indian Industry

• Harmonised Compliance Can Boost MSME Productivity: Single registration and unified returns reduce administrative burden, allowing MSMEs to redirect resources toward production, quality improvement and workforce upskilling.
• Scope for Industry-Led Social Security Platforms: With gig and platform workers now formally recognised, private platforms can collaborate with the government to design contributory insurance, skilling and welfare solutions aligned with the Social Security Code.
• Stronger Safety Standards Encourage Technology Adoption: Mandatory health check-ups, OSH standards and safety committees incentivise firms (especially in high-risk sectors) to adopt modern monitoring tools, automation and safety technologies.
• Opportunity to Develop HR-Tech and Compliance Solutions: Digitised, uniform labour requirements create a clear runway for HR-tech firms to build automated compliance dashboards, wage-tracking systems and workforce management tools customised to the new Codes.

Sources

[1] PIB

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