Key Highlights of Labour Codes

On November 21, 2025, the Government of India notified the enforcement of the 4 (four) labour codes called the Code on Wages, 2019 (“Wages Code”); the Code on Social Security,2020 (“SS Code”); the Occupational Safety, Health and Working Conditions Code, 2020 (“OSH Code”); and the Industrial Relations Code, 2020 (“IR Code”). Together, these labour code legislations consolidate 29 (twenty-nine) central labour laws on wages, industrial relations, social security and occupational safety, welfare and working conditions.

As on the date of enforcement, all provisions of the IR Code and OSH Code stand duly notified and in force. In contrast, only certain provisions of the Wages Code and the SS Code have been brought into effect. The remaining provisions shall be notified in subsequent phases upon finalisation of the rules.

Sr. No.Name of CodeActs consolidated under the Code1.The Code on Wages, 2019Payment of Wages Act, 1936; the Minimum Wages Act, 1948; the Payment of Bonus Act, 1965; and the Equal Remuneration Act, 1976.2.The Code on Social Security, 2020Employees’ Provident Funds and Miscellaneous Provisions Act, 1952; the Employees’ State Insurance Act, 1948; the Maternity Benefit Act, 1961; the Building and Other Construction Workers Cess Act, 1996; the Payment of Gratuity Act, 1972; the Employment Exchange (Compulsory Notification of Vacancies) Act, 1959; the Cine Workers Welfare Fund Act, 1981; the Unorganized Workers’ Social Security Act, 2008; and the Employees Compensation Act, 1923.3.The Occupational Safety, Health and Working Conditions Code, 2020Factories Act, 1948; the Plantations Labour Act, 1951; the Mines Act, 1952; the Working Journalists and other Newspaper Employees (Conditions of Service) and Miscellaneous Provisions Act, 1955; the Working Journalists (Fixation of Rates of Wages) Act, 1958; the Motor Transport Workers Act, 1961; the Beedi and Cigar Workers (Conditions of Employment) Act, 1966; the Contract Labour (Regulation and Abolition) Act, 1970; the Sales Promotion Employees (Conditions of Service) Act, 1976; the Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979; the Cine-Workers and Cinema Theatre Workers (Regulation of Employment) Act, 1981; the Dock Workers (Safety, Health and Welfare) Act, 1986; and the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996.4.The Industrial Relations Code, 2020Trade Unions Act, 1926; the Industrial Employment (Standing Orders) Act, 1946; and the Industrial Disputes Act, 1947.

KEY HIGHLIGHTS ON WAGES CODE

Minimum wages will apply for all employees across both organized and unorganized sectors, irrespective of industry, category, or nature of employment, which was previously restricted to scheduled employments.
The definition of ‘wages’ has been modified and now includes basic pay, dearness allowance, and retaining allowance. A detailed list of exclusions is provided which now also includes ‘house rent allowance’. A new proviso has been introduced which specifies that if allowances and contributions (which are excluded from the definition of wages) exceed 50 % (fifty percent) or such other percentage as may be notified by the Central Government, the excess amount shall be deemed as part of wages. The Code prohibits discrimination on the basis of gender in matters relating to recruitment, wages, or employment conditions for same or similar work performed by employees.
‘Floor wage’ has been introduced which shall be set by the Central Government on the basis of minimum living standards, with possible variation across geographical areas. The State Governments must ensure that the minimum wages fixed by them are not lower than the floor wage.
Appropriate government will determine the minimum wages based on the skills or geographic location of the workplace or both and arduousness of the work for certain category of workers in addition to the minimum rate of wages. The minimum wage rates shall be provided for timework and piece work period by hours, day or by month. These rates shall be reviewed or revised at an interval not exceeding 5 (five) years.
The Code mandates that wages must be paid within 2 (two) working days from the date of employee’s removal, dismissal, retrenchment, or resignation, ensuring prompt settlement of dues.
The employers are required to adhere with the provisions of timely payment of wages for all employees, irrespective of wage limits which was previously only applicable to employees earning upto INR 24,000 (Indian Rupees Twenty-Four Thousand) per month.
First time offense, not being an offense with imprisonment only, or with both imprisonment and fine, can be compounded by paying a penalty for a sum of 50% (fifty percent) of the maximum fine. However, in case of repeated offenses, committed within 5 (five) years of commission of similar offence which was earlier compounded and commission of similar offence for which such person was earlier convicted, cannot be compounded.

KEY HIGHLIGHTS ON IR CODE

One of the most sought after reforms is with respect to the definition of ‘industry’ which is now broader and encompasses all systematic employer-worker activities, regardless of profit or capital with specific exclusions for organizations engaged in charitable, social or philanthropic service, sovereign activities of the government, and domestic service.
The definition of ‘worker’ has been expanded to include sales promotion employees, and supervisory employees earning up to INR 18,000 (Indian Rupees Eighteen Thousand) per month, with a view to ensure that the basic labour rights are accessed by a wider segment of the workforce.
A new concept of ‘fixed term employment’ has been recognised to allow engagement of workers though written contracts of employment for a fixed period. Such workers doing same or similar nature of work as permanent workers, will receive statutory benefits available to permanent workers, proportionately, as per their period of service rendered. Furthermore, they shall be eligible for gratuity upon completion of 1 (one) year of service instead of the erstwhile requirement of 5 (five) years (practically 4 (four) years 240 (two hundred and forty) days) of service.
A ‘re-skilling’ fund shall by notification be set up to assist in training retrenched workers, under which each industrial establishment must deposit a sum equal to 15 (fifteen) days of wages for every retrenched worker. This amount is required to be transferred to the worker’s account within 45 (forty-five) days from the date of retrenchment.
The thresholds for prior permission from the appropriate government for lay-off, retrenchment and closure have been increased from 100 (one hundred) to 300 (three hundred) or more workers.
The applicability of certified standing orders has been increased from 100 (one hundred) to 300 (three hundred) workers.
Registered trade union with 51% (fifty-one percent) or more workers will now be recognized as the ‘sole negotiating union of workers’ where there are more than 1 (one) registered trade unions functioning in an industrial establishment. If the 51% (fifty-one percent) threshold is not met in any of the registered trade unions of the industrial establishment, then a ‘negotiating council’ shall be constituted with at least 20% (twenty percent) of the total workers of that industrial establishment.
Definition of ‘strike’ has been amended and now includes mass casual leave within its ambit where on a given day, more than 50% (fifty percent) workers take casual leave. Strikes and lockouts are prohibited in an industrial establishment unless notice has been given within 60 (sixty) days before such strike or lockout, and the mandatory 14 (fourteen) day waiting period has elapsed from giving such notice.
Any concerned party to an industrial dispute can now directly move to the tribunal if the matters cannot be solved within 90 (ninety) days by a conciliation officer.
The ‘grievance redressal committee’ (required to be constituted where the industrial establishment has 20 (twenty) or more workers) have to now comprise of 10 (ten) members (with equal representation from the workers and the employer) instead of the earlier 6 (six), and women employees shall get adequate representation, which is not less than the proportion of women workers to the total workers.

KEY HIGHLIGHTS ON OSH CODE

Appointment letters are now formalized, and every employee shall be given appointment letters which shall specify information including but not limited to the details of the job, wages, and social security. Employees who have not been issued appointment letters before or as on date of commencement of this Code have to be issued appointment letters within 3 (three) months.
The threshold for annual leave entitlement has been reduced to 180 (one hundred eighty days).
Overtime work is only allowed with the consent of the worker at twice the rate of normal wages.
The registration has now been unified with a uniform threshold of 10 (ten) employees. The establishment shall only require 1 (one) registration in electronic format instead of the requirement of 6 (six) registrations in the erstwhile regulation. The factory thresholds to obtain license have been increased from 10 (ten) to 20 (twenty) with power and 20 (twenty) to 40 (forty) without power to reduce compliance burden on smaller factory units.
The definition of ‘inter-state migrant workers’ has been expanded to cover workers employed directly, through contractors, or who migrate on their own. Establishments must declare number of such workers and such workers get benefits including one lump-sum travel allowance in 12 (twelve) months to travel to native places.
The definition of ‘audio-visual worker’ has been expanded to also include dubbing artists and stunt persons. The definition of ‘working journalists’ has been expanded to include electronic media or digital media journalists.
Women can now work in all types of establishments during night shifts i.e.before 6 (six) A.M. and beyond 7 (seven) P.M., however consent of such employed women needs to be obtained and appropriate safety measures, need to be put in place amongst satisfying other criteria.
The revised contract labour framework under the Code introduces clearer definitions of core and non-core activities and permits the use of contract labour even in core functions in situations where; (i) the normal functioning is such that core work is ordinarily outsourced, (ii) the activities do not require full-time workers; (iii) involves situations where there is sudden increase in workload which needs to be completed in a specified time.
‘Inspector-cum-Facilitator’ system is now in place which allows inspector-cum-facilitators to act as inspectors as well as facilitators with an objective to help employers comply with law, rules, and regulations.

KEY HIGHLIGHTS ON SS CODE

Definations of 'aggregator'(means a digital intermediary or marketplace for a buyer or a user of service, to connect with seller or service provider), ‘gig worker’ (means a person who performs work or participates in a work arrangement outside of traditional employer-employee relationship and is paid for the same), and ‘platform worker’ (means a person engaged in or undertaking work arrangement for organizations or individuals using an online platform and is paid for the same) are included in this Code
Aggregators are required to contribute a minimum of 1% (one percent) but not exceeding 2% (two percent) of their annual turnover to social security schemes (for matters related to life and disability, accident insurance, old age protection etc.,) which the Central Government may frame and notify from time to time.
The Code provides that the Chapters related to Employees’ Provident Fund and Employees’ State Insurance Corporation can be voluntarily extended and also withdrawn where there is agreement in that regard between employer and majority of employees.
Accidents occurring during travel between home and workplace are now deemed employment-related, making employees eligible for compensation under the Code.
Offences have been compounded and allows first time offenses punishable with fines to be settled by paying 50% (fifty percent) of the maximum fine and offense punishable with fine and imprisonment for a term not exceeding one year can be settled by paying 75% (seventy-five percent) of the maximum fine provided for such offence.

IMPLICATIONS FOR EMPLOYERS AND EMPLOYEES

The 4 (four) labour codes coming into effect marks a significant restructuring of India’s labour law framework by consolidating several decades of fragmented central legislation into a unified regime governing wages, industrial relations, social security, and occupational safety. Further, the codes aim to balance various objectives through uniform thresholds (compounding of offences, streamlined definitions including those of workers, wages, etc.) and digital compliance systems which align with the ease of doing business while also strengthening and expanding protections for workers.

While the Central Government has enforced substantive portions of these codes and the transition will be fully effectuated in a phased manner when the State rules and procedural details are notified.During the transition period, employers must ensure compliance with both existing regulations and the new labour codes until the transition is complete. This transition period will give employers the opportunity to align their internal policies, agreements, and human resource processes according to the principles of the codes while the procedural compliance will be formalised once the rules are framed.

Unlike the erstwhile regulatory regime, which often relied on interpretations due to varying definitions of similar terms across statutes, the codes offer a consistent framework which, once fully implemented, will reduce reliance on such inconsistent interpretations. Further, the long-term significance of these labour codes will lie in how they are implemented, tested and iterated. The transition to the new regime will be phased, but the codes lay the foundation for a modernised and coherent labour framework, designed to support both employee welfare and India’s long-term economic growth objectives.