Introduction
In a landmark development for the Indian labour law landscape, the Government of India has announced the implementation of the four labour codes, which will replace 29 existing labour laws, effective November 21, 2025. The four labour codes are:
- 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")
In this publication we have tried to cover some of important changes that every employer and employee must know. Below are some of Key Highlights of New Labour Code:
Simplified Compliance
Merges 29 laws into 4 codes. Introduces single registration and digital filing. Most registrations, returns, and licences are unified-reduced paperwork and digital channels for easy management, dramatically easing processes for employers. Social Security benefits are now portable across states and job via Aadhar linkage.
Universal Minimum Wages
All workers irrespective of sector - organised, unorganised, and scheduled employment-now have access to standardized minimum wages payment set by Central Government, ensuring broader protection.
Uniform Wage Definition
"Wages" now include all basic pay plus dearness allowance and retaining allowances, ensuring clear calculation and transparency. The new labour law requires that basic salary must be atleast 50% of the CTC of employees.
Working Hours and Overtime
Employers must now cap working hours at 8 hours per day and 48 hours per week, with additional pay for overtime. Overtime pay is set at a minimum of 2x of the regular rate. Industries with seasonal demand - manufacturing/retail/hospitality/logistics can now legally extend employee hours peak season. Overtime limit increased to 125 hours per quarter.
Gender Equality
Prohibits discrimination; mandates equal pay, conditions, and opportunities regardless of gender. Provision to add parents-in-law in Family Definition of Female employees, expanding dependent coverage and ensuring inclusivity. Also Allows women to work night shifts subject to their consent and mandatory safety and security measures are provided by the employer.
Timely Wage Payment
Wages to be paid within 7 days incase of less than 1000 employees and within 10 days in case of 1000 or more employees from end of wage period. Also, final settlement must be cleared in 2 working days of resignation /dismissal /removal /retrenchment.
Gig and Platform Worker Benefits
Social security provisions now extend even to gig (freelancers/ app based workers) and online platforms (Swiggy/Amazon delivery partners) workers.
Faster Gratuity Eligibility
The eligibility period for gratuity for fixed term employees has been reduced from five years of continuous service to just one year. This ensures quicker social security even for contract/project based staff. However permanent workers still continue under 5yr rule (except death/disablement).
ESIC Coverage
ESIC coverage and benefits are extended Pan-India - voluntary for establishments with fewer than 10 employees and mandatory with 10+ employees. It is even mandatory for establishments engaged in hazardous processes. Social protection coverage will be expanded to all workers.
Higher Thresholds for Retrenchment/Layoff
Employers with up to 300 employees can institute layoffs without prior government approval, enhancing business flexibility but reducing Job security. However employers must still pay reskilling fund (15 days wages per worker retrenched).
Preventive Healthcare
Free annual health checkup mandatory for all workers above the age of 40yrs to promote timely preventive healthcare culture.
Formal Appointment Letters
Written appointment letters are mandatory for all workers, clarifying terms and boosting security for employees. This applies even in informal or gig-work settings where such formalities often did not exist.
Dispute Resolution
Quick, two-member tribunals ensure faster resolution of disputes between employers and employees. Also every establishment with 20+ workers should have a grievance redressal committee and compulsorily have atleast 1 women member in it.
Mandatory Notice for Strikes
Requires 14-day notice and encourages dialogue to prevent disruptive mass actions.
Important Note
The final rules under the Labour Codes by the Central and State Government are still to be notified but are expected to be followed shortly. During transition, the relevant provisions of the existing Labour Acts and their respective rules, regulations, notifications, standard schemes etc. will continue to remain in force.