The government of India has implemented one of the largest reforms of labour laws since independence. Four consolidated labour codes are introduced by replacing 29 separate labour laws that were often outdated and inconsistent across states and different sectors.
Many of India's labour laws were formulated during the pre-independence and early post-independence period, when the structure of the economy and work culture was vastly different from that of today. Over the time, major developed economies have modernized their workforce regulations to align with changing economic conditions and emerging worker's needs. However, India continued to operate under outdated labour regulations that were complex, fragmented, and unjustified across several sectors. These restrictive frameworks created complex challenges for workers, employers and investors. Those outdated regulations also slowed the overall growth of the Indian economy.
The objective of such reforms is to simplify compliance, ensure uniformity, expand social security coverage, to provide protection to previously excluded segments of the workforce and modernize industrial relations with the changing nature of work. This article explains the key changes introduced in the New Labour Laws 2025 and provides a comparative analysis of the old and new provisions.
The Four Labour Codes, 2025
- The Code of Wages, 2019
- The Industrial Relations Code, 2020
- The Code on Social Security, 2020
- The Occupational Safety, Health and Working Conditions Code, 2020
These New labour codes are effective from 21st November, 2025 by rationalizing 29 existing separate labour laws.
The Code of Wages, 2019
The Code on Wages, 2019 replaced the following Acts:
- Payment of Wages Act, 1936
- Minimum Wages Act, 1948
- Payment of Bonus Act, 1965
- Equal Remuneration Act, 1976
The objective of this code is to ensure the minimum wages, timely payment of wages, bonus and equal remuneration across all sectors in India under one unified framework.
This Code aims to strengthen workers' rights while promoting simplicity and uniformity in wage related compliance.
Key Points
Universal Minimum Wages: This code provides a statutory right to minimum wages for all employees across both organized and unorganized sectors without any exception. Unlike the earlier Minimum Wages Act, which applied only to scheduled employments.
Introduction of Floor Wage: A floor wage shall be fixed by the appropriate government considering the minimum living standards of workers. State Governments must fix minimum wages that are not lower than the floor wage. Minimum wages may be fixed on a time rate, piece rate or guaranteed time rate basis and must be reviewed at least once in every five years.
Criteria for Wage Fixation: For the purpose of fixation of minimum wages, the appropriate government shall primarily take into account the skill of worker, can be categorized under unskilled, semi-skilled or highly skilled.
Geographic areas of work and job conditions such as temperature, humidity or hazardous environment also can be the aspect of fixation of minimum wages.
Fixed Hours of Work: The government may fix the number of hours of work which shall constitute a normal working day inclusive of specified intervals with a day of rest in every period of seven days shall be allowed to all employees and payment for work on a day of rest.
Overtime Compensation: The employer shall pay the worker for any work done in excess of the number of hours constituting a normal working day. The overtime wage shall not be less than twice the normal rate.
Gender Equality in Employment: Employer shall not discriminate on the basis of gender including transgender while recruiting and paying wages under the similar employment condition. Every gender will get equal rights and opportunity without any biasness in any sector of any establishment.
Time Limit for the Payment of Wages
Employers must pay employees according to their work schedule:
- Daily basis: Wages are paid at the end of each shift.
- Weekly basis: Wages are paid on the last working day of the week, before the weekly holiday.
- Fortnightly basis: Wages are paid within two days after the end of the fortnight.
- Monthly basis: Wages must be paid before the 7th day of the following month.
Inspector-cum-Facilitator: The Inspector-cum-Facilitator is responsible for advising employers and workers on compliance with the Code and inspecting establishments as directed by the appropriate Government. He also has the authority to conduct search and seizure and to require any person to provide necessary information in the course of his duties.
Offence and Penalty: An employer who pays less than the amount due to an employee is liable to a fine up to Rs. 50,000, and if the offence is repeated within five years, the employer may face imprisonment up to three months, or a fine up to Rs.1,00,000, or both.
Payment of Bonus: This code provides that every employee is entitled to receive a bonus from their employer who has put in at least thirty days work in an accounting year. An eligible employee is entitled for a minimum bonus of 8.33% of the wages earned or one hundred rupees whichever is higher whether or not employer has any allocable surplus during the previous accounting year.
Disqualification for Bonus: An employee is not eligible for bonus if dismissed for fraud, violent or riotous behavior at work, theft or sabotage (Intentional Damage) of company property, or conviction for sexual harassment.
Deductions: Deductions may be made from an employee's wages only when the employee is absent, in whole or in part, from the place where they are required to work during their scheduled working period. There are some other amounts which can be deducted from the wages of workers' like deduction from the wages of worker in case of overpayment, Fines imposed, Employees provident fund, Insurance premium, house accommodation supplied by employer, amenities and services supplied by the employer etc.
Limits on Deductions: The total deductions made from an employee's wages must not exceed 50% of the employee's total wage in a month. This includes all permissible deductions (such as fines, loans, etc.).
Notice and Consent: For certain deductions (like loans, insurance premiums, or advances), the employer must obtain prior consent from the employee, and the terms of repayment should be clearly defined.
Central Advisory Board: The Central Advisory Board is constituted by the Central Government to advise on matters related to wages, payment of bonus, and other related issues, ensuring uniformity and proper implementation of the Code across establishments. It consists of representatives from employers' organizations, employees' organizations, and independent experts or government officials nominated by the government. The Board's role is primarily advisory, providing guidance to help frame policies and guidelines for effective wage and bonus administration.
The Industrial Relations Code, 2020
The Industrial Relations Code has been established to simplify, modernize, and consolidate India's complex labour laws. It replaces and merges multiple earlier laws related to industrial relations, including the Industrial Disputes Act, 1947, the Trade Unions Act, 1926, and the Industrial Employment (Standing Orders) Act, 1946.
This code aims to promote harmonious relation between employers and employees, ensure effective and fast dispute resolution and provide a clear framework for trade unions, strikes, layoffs, retrenchments, and closures. It balances the interests of workers with the need for industrial growth and flexibility in employment practices.
Key Points
Works Committee: If any industrial establishment is employing 100 or more workers or have been employed on any day in preceding 12 months, the government can direct the employer to constitute a Works Committee consisting of representatives from both management and workers. In which the number of worker representatives must be at least equal to the number of employer representatives. Worker representatives are chosen in consultation with registered trade unions, if any.
The Committee's primary duty is to promote harmony and good relations between workers and management, comment on matters of common interest, and resolve material differences to prevent industrial disputes and hindrances.
Grievance Redressal Committee: Every industrial establishment employing 20 or more workers must constitute this Committee with an equal number of representatives from employers and workers, including adequate representation of women workers.
Any aggrieved worker may file a grievance within one year, and the Committee is expected to resolve it within 30 days, with decisions taken by majority vote of the Committee, provided more than half of worker representatives agree. If unresolved or aggrieved by the decision of committee, the worker may approach a conciliation officer within 60 days from the date of such decision, and if still unresolved after 45 days, they can directly apply to the Tribunal.
Trade Union Recognition: As per this code only one trade union per establishment can be recognized for the purpose of collective bargaining. Recognition is based on membership strength, ensuring the union represents the majority of workers.
Standing orders Threshold: Any industrial establishment with 300 or more workers have to comply with the provisions of standing orders under this code. In previous Code the Threshold limit for the compliance of these orders was 100 or more workers.
Notice for strikes and lockouts: Workers must give 14 days' notice before striking. The notice period allows for conciliation and resolution of disputes before industrial action. Strikes or lockouts conducted without following this procedure are considered illegal, and the government may take appropriate action to maintain industrial peace.
Fixed Term Employment: This provision allows employers to hire workers for a specific period or for the completion of a specific task. Employees on fixed-term contracts are entitled to the same wages, gratuity benefits after one year and working conditions as regular employees doing similar work. This provision gives employers flexibility in workforce management while protecting workers' rights and offers cost efficiency to employers.
Re-skilling Funds: The Code empowers the Central or State Government to require employers to contribute to a reskilling fund for workers. This fund is used to train and upgrade the skills of employees, especially in cases of retrenchment, closure, or technological changes.
The objective behind this step is to enhance productivity, motivation among employees and facilitate smooth work culture.
Work from Home Provision: Employees working from home are entitled to the same wages, benefits, and protections as those working on-site. Employers and employees are expected to mutually agree on terms, including work hours, deliverables, and responsibilities.
Women Representation: The Code emphasizes adequate representation of women workers in industrial relations bodies. This ensures that women employees have a voice in addressing grievances, workplace policies, and dispute resolution.
Automation of Records: Employers are expected to maintain records, submit returns, and report statutory information through automated or online systems wherever prescribed.
Automation helps ensure timely reporting, transparency, and efficient monitoring, reducing paperwork and making industrial administration more streamlined.
Compounding of Offences: The Code decriminalizes several minor violations, compounding from penal prosecution to monetary penalties, making enforcement more business friendly and reducing litigation.
Offences and Penalties: This code levy penalty for violation of its provisions to ensure compliances. Offences include illegal strikes or lockouts, non-constitution of Works Committees or Grievance Redressal Committees, failure to maintain records, non-compliance with standing orders, and violations of terms for fixed-term or contract employment. Penalties are generally monetary fines, with higher fines for repeat offences.
The Code on Social Security, 2020
The Code on Social Security, 2020 simply consolidates and modernizes nine earlier labour laws, including the Employees' Provident Funds and Miscellaneous Provisions Act, 1952; Employees' State Insurance Act, 1948; The Employment Exchange Act, 1959; Employees' Compensation Act, 1923; Maternity Benefit Act, 1961; Payment of Gratuity Act, 1972; Unorganized Workers' Social Security Act, 2008; Building and Other Construction Workers' Welfare Cess Act, 1996; and the Cine Workers' Welfare Fund Act, 1981.
The Code aims to extend social security coverage to all workers, including those in the unorganized and gig economy, by providing healthcare, financial support, insurance, and retirement benefits. By unifying these laws, it simplifies compliance, ensures uniform benefits, and strengthens the social safety net across sectors.
"Gig economy refers to a labour market where short-term, flexible, or freelance jobs replace traditional full-time employment. Workers in the gig economy, often called gig workers, are usually hired for specific tasks, projects, or services, rather than being permanent employees."
Key Points
Board of Trustees of Employees' Provident Fund: The Board of Trustees of the Employees' Provident Fund is constituted by the Central Government and includes representatives of employers, employees, and the government. It oversees the management, investment, and protection of workers' provident fund contributions, ensuring transparency and accountability.
Employees' State Insurance Corporation: The Employees' State Insurance (ESIC) has been expanded pan-India, removing the earlier "notified areas" restriction. Coverage now applies to more categories of workers, including those in hazardous occupations, plantation work, and unorganized or gig sectors. Establishments with fewer than 10 employees can opt in voluntarily with mutual consent of employers and employees. The expansion ensures that a wider workforce receives social security benefits such as healthcare, sickness, maternity, disability, and dependent benefits, strengthening the overall social safety net.
National Social Security Board and State Unorganised Workers' Board: The National Social Security Board is constituted by the Central Government, while the State Unorganised Workers' Boards are constituted by the respective State Governments under the Social Security Code, 2020. These boards formulate policies and schemes to provide social security and welfare benefits to workers in the unorganized, gig, and platform sectors, ensuring broader and inclusive coverage across the country.
EPF Related Inquiries: EPF-related inquiries must be initiated within 5 years of the dispute and concluded within 2 years (extendable by 1 year). This ensures faster resolution and protection of workers' retirement savings.
Social Security Fund: The Social Security Fund under the Code, 2020 is financed by employers, employees, government contributions, and penalties from compounded offences, and is used to provide healthcare, provident fund, insurance, maternity, and retirement benefits to workers, including those in the unorganized and gig sectors.
Expanded Definition of Dependents: Coverage extended to maternal grandparents and in case of female employees it also includes dependent parents-in-law, broadening family benefit access.
Compensation of Accidents: Accidents occurring while commuting to or from the workplace are treated as employment-related accidents, provided there is a clear connection between the employment and the accident. This ensures that workers or their dependents are eligible for compensation and social security benefits in such cases.
Uniform Definition of Wages: "Wages" now include basic pay, dearness allowance, and retaining allowance, and if excluded components exceed 50% of the total remuneration (or such percentage as may be notified), the excess is added back to wages. This ensures uniformity and consistency in calculating gratuity, pension, and social security benefits.
Gratuity for Fixed-Term Employees: Gratuity becomes payable to fixed on a pro-rata basis after completion of one year of service, even if they do not complete five years, thereby expanding social security coverage.
Inspector-Cum-Facilitator: The Inspector-cum-Facilitator system replaces the traditional inspection regime with a more facilitative and advisory approach. Inspectors are tasked with ensuring compliance, conducting inspections, and guiding employers on statutory requirements, promoting transparency, voluntary compliance, and ease of doing business while protecting workers' rights.
Decriminalization and Compounding Offence: Many minor violations have been decriminalized and replaced with monetary fines. This shift reduces the risk of imprisonment for employers, encourages voluntary compliance, and allows certain offences to be compounded by paying prescribed penalties, while ensuring accountability and protection of workers' rights.
Vacancy Reporting: Employers are required to report vacancies in their establishments to the appropriate authorities. This ensures that employment opportunities are transparently recorded and helps in monitoring workforce trends.
The Occupational Safety, Health and Working Conditions (OSH) Code, 2020
This Code consolidates and modernizes 13 earlier labour laws related to safety, health, and working conditions of workers across sectors. The Code is incorporated in such manner which ensures safe, secure, and healthy workplace, promote uniform standards, and simplify compliance for employers.
The 13 Acts replaced by the OSH Code are:
- Factories Act, 1948
- Mines Act, 1952
- Dock Workers (Safety, Health and Welfare) Act, 1986
- Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996
- Plantations Labour Act, 1951
- Contract Labour (Regulation and Abolition) Act, 1970
- Working Journalists and Other Newspapers Employees (Conditions of Service and Miscellaneous Provisions) Act, 1955
- Motor Transport Workers Act, 1961
- Sales Promotion Employees (Conditions of Service) Act, 1976
- Beedi and Cigar Workers (Conditions of Employment) Act, 1966
- Cine Workers and Cinema Theatre Workers Act, 1981
- Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979
- The Working Journalists (Fixation of Rates of Wages) Act,1958
Key Points
Coverage of All Workers: Unlike some older laws, the OSH Code, 2020 applies to all types of workers, including organized, unorganized, contract, gig, and platform workers, ensuring broader protection for workplace safety and health.
Applicability: This Code applies to contract labour employed through a contractor in Central or State Government offices, where the respective government is the principal employer. However, this code will not applicable to the offices of the Central Government, offices of the State Government and any ship of war of any nationality.
Registration: Every establishment to which the Code applies must be registered electronically by the employer with the appropriate government. The application for registration shall be made within 60 days of the commencement of the Code or of the establishment, in the prescribed form and manner, and no establishment shall operate without a valid registration.
Notice of Certain Accident: Where an accident in an establishment results in death, or injury causing absence from work for 48 hours or more, or is of a prescribed nature, the employer/owner/manager (as applicable to mines, factories, docks, plantations, construction, or other establishments) must notify the prescribed authority in the prescribed manner and time.
Standardization of Working Conditions: The Code sets minimum requirements for working hours, rest intervals, leave, and welfare facilities. This ensures that employees across sectors have safe and fair working conditions.
Unified Registration: Establishments employing 10 or more workers must complete a single unified registration, replacing multiple registrations under older laws. This simplifies compliance, enables centralized monitoring, and promotes transparency and digital record-keeping.
Extension to Hazardous Work: Provisions related to safety, health, and welfare are specifically extended to hazardous occupations and processes. Employers in such sectors are required to implement stricter safety measures, regular health check-ups, protective equipment, and hazard management systems, ensuring greater protection for workers in high-risk environments.
Simplified Compliances: Compliance requirements have been simplified and streamlined. Multiple registrations, returns, and inspections under older laws are replaced with unified digital processes, reducing administrative burden on employers while ensuring timely reporting, monitoring, and enforcement of safety, health, and welfare standards.
Women Employment: Women can work in all types of establishments and during night hours (before 6AM, beyond 7PM) with consent and safety measures, fostering equality and inclusion.
Formalization via appointment letters: Appointment letters specifying job details, wages, and social security will be given to enhance transparency and accountability.
Health Benefits: This code mandates employers to provide comprehensive health and medical benefits to workers. This includes periodic medical check-ups, access to first-aid and healthcare facilities, preventive measures against occupational diseases, and emergency care.
Compensation for Injury: As per the code, at least 50% of fines for workplace safety violations must be paid as compensation to injured workers or their dependents.
Working Hours and Overtime: A worker shall not work more than 8 hours a day and 48 hours a week; any work beyond this is treated as overtime and must be paid at twice the normal wage rate.
Safety and Health Surveys: The specified person may, during working hours or at any other time with written notice, conduct a survey of an establishment, and the employer must provide all necessary facilities, including access for inspection, testing, and sample collection.
Double Employment: No worker employed in a factory or mine shall be allowed to work simultaneously in any other factory or mine, ensuring that a person is not overworked or engaged in multiple employments that may compromise safety and health.
Inspector-cum-Facilitators: The appropriate government may appoint Inspector-cum-Facilitators for factories, mines, docks, plantations, and other establishments to ensure compliance with the Code, conduct inspections, provide guidance to employers and workers, and promote occupational safety and health.
Penalty for Non-Compliance: If a person fails to comply with the Code or related rules, resulting in an accident or dangerous occurrence:
1. Death: Imprisonment up to 2 years, or fine of at least Rs.5 lakhs, or both.
2. Serious bodily injury: Imprisonment up to 1 year, or fine of Rs.2-4 lakh, or both.
Additional: At least 50% of the fine may be awarded as compensation to the victim or legal heirs.
Conclusion
The New Indian Labour Laws mark a transformative shift in India's labour landscape, creating a framework that is simpler, more transparent, and inclusive. By consolidating outdated legislation into four comprehensive codes, the reforms ensure fair wages, social security, safe working conditions, and industrial harmony for all workers including those in the unorganized, gig, and platform sectors.
These codes balance the rights and welfare of workers with the needs of employers and the broader economy, promoting flexible, modern, and productive workplaces. With digital compliance, streamlined processes, and enhanced protections, India is now better equipped to foster economic growth, workplace safety, and equitable labour practices, aligning its workforce regulations with global standards.
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