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India’s Historic Labour Reform: Four New Labour Codes Take Effect from 21 Nov 2025 : What It Means for Workers & Employers
India’s four new Labour Codes have taken effect from November 21, 2025, consolidating 29 existing laws to provide universal minimum wages, expanded social security, enhanced safety standards, and simplified compliance for employers.
The reforms aim to modernize the workforce ecosystem, balancing worker welfare with ease of doing business.
Introduction
India ushered in a major overhaul of its labour laws , all four Labour Codes came into force, replacing 29 outdated central labour laws. This reform is being hailed as one of the biggest workforce changes since Independence, aimed at modernising worker protections, simplifying compliance for businesses, and extending social security to previously unprotected workers.
In this article, we will break down what each code does, highlight key benefits and challenges, and explain why this matters , especially for workers in sectors like IT/ITES, gig platforms, MSMEs, and hazardous industries.
India’s four new Labour Codes have taken effect from November 21, 2025,
consolidating 29 existing laws to provide universal minimum wages, expanded social security, enhanced safety standards, and simplified compliance for employers. The reforms aim to modernize the workforce ecosystem, balancing worker welfare with ease of doing business.
For Workers: Key Benefits and Changes:
The new codes bring significant protections and formalization to the workforce:
Universal Minimum Wages and Timely Pay: All workers, irrespective of industry, now have a statutory right to minimum wages, with a national floor wage to be set by the Central Government. Salaries must be paid on time, with a mandate for IT/ITES workers to receive pay by the 7th of each month.
Expanded Social Security: The Code on Social Security extends coverage to include unorganized, gig, and platform workers for the first time, ensuring access to provident fund (PF), Employees’ State Insurance (ESI), and other benefits. Aggregators (e.g., ride-hailing or delivery companies) must contribute 1-2% of their annual turnover (capped at 5% of payouts) to a social security fund for these workers
Enhanced Benefits for Fixed-Term Employees: Fixed-term employees are now entitled to all benefits on par with permanent workers, including the eligibility for gratuity after just one year of service, instead of the previous five years
Improved Working Conditions & Safety: The Occupational Safety, Health and Working Conditions (OSHWC) Code mandates free annual health check-ups for all workers above 40 years of age and standardizes safety norms across sectors, including mining and hazardous industries.
Women Empowerment: Women are permitted to work night shifts and in all occupations (including underground mining and hazardous roles), provided their consent is given and mandatory safety measures, such as safe transportation and security, are in place. Equal pay for equal work is also legally mandated.
Formalization of Employment: Issuing written appointment letters to all employees is now mandatory, providing proof of employment history, transparency in wages, and better access to formal benefits.
For Employers: Compliance and Flexibility:
The reforms also focus on simplifying compliance to promote a business-friendly environment:
Simplified Compliance: The codes replace a multitude of fragmented laws with a single, streamlined framework, introducing a single registration, single license, and single return system across the codes.
Inspector-cum-Facilitator Role: The traditional “inspector” role has been replaced by an “inspector-cum-facilitator” system, which emphasizes guidance and support for compliance rather than solely punitive action.
Decriminalization of Minor Offences: The codes replace imprisonment for many first-time, non-imprisonable offences with monetary fines, making the system less punitive and more compliance-oriented.
Operational Flexibility: The Industrial Relations (IR) Code allows for more flexibility in hiring and firing by increasing the threshold for requiring government permission for layoffs and retrenchment from 100 workers to 300 (though this remains a point of concern for trade unions).
Faster Dispute Resolution: New provisions establish two-member Industrial Tribunals to ensure faster and more predictable resolution of industrial disputes.
Employers are advised to review their existing policies and payroll systems to align with the new definitions of wages, working hours, and social security contributions to ensure adherence to the new framework.
Team- Intellex Strategic Consulting Private Limited
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