Four Labour Codes. One Unified Future for India's Workforce

Introduction

In a landmark move on 21 November 2025, the Government of India formally brought into effect the four major labour codes:

• Code on Wages, 2019
• Industrial Relations Code, 2020
• Code on Social Security, 2020
• Occupational Safety, Health and Working Conditions Code, 2020

These codes consolidate and replace 29 existing central labour laws, with the objective of simplifying the regulatory framework, enhancing worker protections and aligning India's labour ecosystem with contemporary economic realities.

This article provides a professional‐level overview of the key changes, their implications for workers and employers, and the challenges ahead.

Key Changes

1. Universal Minimum Wages and Wage Structure (Code on Wages)

• A statutory right to minimum wages for all employees-including organised and unorganised sectors-has been introduced. Previously, only scheduled employments (roughly 30% of workers) were covered under the Minimum Wages Act
• The concept of a national floor wage has been introduced: the central government will set a floor below which no state can fix minimum wages.
• For salary structuring: the basic salary (plus dearness allowance and retaining allowance) must be at least 50% of total remuneration (CTC) or such percentage as may be notified. This will affect take-home pay because provident fund and gratuity contributions are based on basic salary.
• Definitions of "wages" and bonus, timely payment etc are standardised across businesses.

2. Industrial Relations (Industrial Relations Code)

• The threshold for requiring government approval for lay‐offs, retrenchments and closures in industrial establishments has been raised (from 100 to 300 employees). This gives employers more flexibility in workforce decisions.
• Written appointment letters are now mandatory for workers, improving transparency in employment terms.
• A new classification of workforce: "worker", "employee", "contractor", etc are defined more clearly, aiding dispute resolution and compliance.

3. Social Security (Code on Social Security)

• The ambit of social security schemes has been broadened to include unorganised sector, gig workers and platform workers. This is a significant expansion of coverage.
• Portability of social security across states and sectors has been emphasised.
• Increased retirement and gratuity benefits: because "wages" will include basic + dearness + retaining allowance, the base for these benefits will increase.

4. Occupational Safety, Health and Working Conditions (OSHWC Code)

• Working hours: daily hours may extend up to 12, subject to weekly cap of 48 hours, with overtime at double rate.
• Night-work for women allowed subject to safety protections; earlier many states had blanket restrictions.
• Free annual medical check-ups mandated for workers, tighter employer obligations on safety, health and welfare.
• Single registration, single licence and single return: simplifying compliance and reducing multiplicity of authorities.

Implications

For Workers

• Better wage protections: minimum wage coverage broadened, wage definitions clearer, social security widened.
• Greater formalisation: written employment letters, standard definitions, inclusion of gig/contract workers.
• However, some workers may experience lower immediate take‐home pay because with higher basic salary percentage, more deduction might go into retirement benefits.
• Increased flexibility for employers can be a double‐edged sword: while it may boost job creation, it may also expose workers to more precarious employment in some sectors (as trade unions warn).

For Employers

• Compliance simplified: consolidation of 29 laws into four codes reduces duplication; single registration/licence/return reduces administrative burden.
• More flexibility: threshold increase for lay-off/closure reduces regulatory friction for workforce adjustment.
• But cost pressures: Higher wages, higher contributions to social security and gratuity may increase cost of employment. Some businesses (especially SMEs) may find this challenging.

For the Economy

• The reform aims to align India's labour regulatory framework with global standards, boost formalisation, improve worker welfare, and simultaneously promote ease of doing business and investment.
• With clearer rules, workforce mobility (across states/sectors) improves, as does the potential for Indian industry to scale up with a less fragmented labour law regime.
• Implementation and transitional challenges remain: States must enact complementary rules, enforcement infrastructure has to be upgraded and awareness among stakeholders is essential.

Key Challenges and Considerations

• State‐level rule making: The central legislation sets the framework, but many provisions require state rules and notifications to become fully effective. Delays or uneven implementation across states may reduce intended harmonisation.
• Transition mechanics: Existing employment contracts, allowances, wage structures may have to be restructured. Employers and workers both will need clarity on how to reinterpret "basic salary", "wages", and benefits base.
• Compliance burden on smaller firms: While the codes reduce multiplicity of laws, the new obligations (e.g., higher wage base, enhanced social security) may increase cost and administrative load for micro and small enterprises. Tokens of transitional support may be necessary.
• Worker awareness and protection in less-organised sectors: Realising the benefits for gig workers, platform workers and unorganised sector employees will depend on enforcement, registration and awareness.
• Balancing employer flexibility with worker security: Trade unions have expressed concern that greater ease of hiring/firing may reduce job security.

Conclusion

The implementation of the four labour codes marks one of the most significant labour law overhauls in India's history, consolidating decades‐old laws and providing a unified, modern framework for wages, industrial relations, social security and occupational safety. With the statutes effective from 21 November 2025, the stage is set for a transition to a more formalised, equitable and globally aligned labour regime.

Nonetheless, success will depend critically on prompt state‐level rule‐making, effective enforcement, stakeholder awareness and balanced application so that the twin goals of worker welfare and industrial competitiveness are realised. Employers, workers, industry associations and labour organisations will need to engage proactively to manage the transition effectively.

In short, these changes herald a new era of labour governance in India - but the real test will lie in implementation and operationalisation.