India Implements Four Labour Codes, Replacing 29 Laws in Biggest Workforce Reform Since Independence

In a landmark move to modernize its labor governance, India has officially implemented four new Labour Codes, consolidating 29 existing laws. Effective November 21, 2025, this comprehensive reform aims to simplify regulations, enhance worker welfare, strengthen safety standards, and align India's labor ecosystem with global best practices. The government hails this as the most significant reform in the sector since Independence, designed to create "a protected, future-ready workforce and resilient industries".

A Modern Framework for a Future-Ready Workforce

Many of India's labor laws date back to the 1930s–1950s, an era vastly different from today's digital and gig-driven economy. These outdated and often overlapping laws increased compliance complexity and left large sections of workers, especially those in the gig, informal, and contract sectors, outside the social safety net. The new Labour Codes consolidate these provisions into four comprehensive laws designed to ensure better wages, social security, occupational safety, gender equality, and simplified compliance.

The four codes are:

• The Code on Wages, 2019: This code standardizes wage structures across industries by replacing the Minimum Wages Act (1948), Payment of Wages Act (1936), Payment of Bonus Act (1965), and Equal Remuneration Act (1976). A key feature is the introduction of a "floor wage" set by the central government, ensuring a fair and consistent wage for all employees across India. The wage definition now includes basic pay, dearness, and retaining allowance, while limiting exclusions like HRA and travel allowance to 50%, ensuring higher long-term savings for employees.
• The Industrial Relations Code, 2020: This code brings significant changes to labor dispute resolution and industrial relations. It raises the threshold for standing orders (rules regarding employment terms) from establishments with 100 workers to those with 300, granting smaller firms more flexibility in hiring and firing. Establishments with over 300 workers require government permission for layoffs, retrenchments, or closures.
• The Code on Social Security, 2020: This code aims to provide social security benefits to all workers, including those in the unorganized sector, gig workers, and platform workers. It broadens the definition of employees to include inter-state migrant workers, construction workers, and film industry workers. The code also paves the way for establishing social security funds for unorganized, gig, and platform workers.
• The Occupational Safety, Health, and Working Conditions Code, 2020: This code emphasizes workplace safety and aims to ensure better living and working conditions, particularly for migrant laborers. It standardizes work hours, introduces portable benefits for migrant workers, and includes a "Journey Allowance" to cover travel costs for workers from their home states to their workplaces. The code also makes provisions for mandatory, free annual health check-ups for workers.

Impact and Key Changes

The implementation of these codes brings comprehensive worker protections and reforms across various sectors:

• Fixed-Term Employees: Entitled to the same benefits as permanent staff, including gratuity after one year of service.
• Gig & Platform Workers: Legal recognition for the first time, with aggregators contributing 1-2% of their turnover to welfare funds.
• Contract Workers: Guaranteed social security, health benefits, annual medical checks, and fair treatment.
• Women Workers: Allowed to work night shifts across sectors with consent and appropriate safety arrangements.

The new framework also simplifies compliance for employers with a single registration and return system, replacing multiple filings. It introduces the role of "inspector-cum-facilitators" focused on guidance rather than punitive enforcement. A national floor wage ensures no worker earns below a government-set threshold, and gender-neutral pay provisions prohibit discrimination.

Challenges and the Path Ahead

While the Labour Codes represent a significant step forward, challenges remain. Experts note that the specific implementation mechanisms and comprehensive benefits for gig and platform workers still lack clarity. There are also concerns about the potential impact on small and medium-sized businesses regarding managing costs.

The government is committed to continuous consultation and improvement, urging collaboration between unions and industry to address issues such as flexibility in task allocation, variable reward mechanisms, and industry accountability for skill enhancement. The ultimate goal is to create a labor ecosystem that promotes economic growth, ensures worker well-being, and aligns with India's vision of becoming a self-reliant nation.