• India''s recently implemented labour codes, which consolidated 29 existing laws into four main codes effective November 21, 2025, have introduced several significant changes aimed at modernizing the workforce and streamlining compliance.
• India has entered a decisive phase in labour reforms with the operationalisation of the four Labour Codes:

1. Code on Wages, 2019
2. Industrial Relations Code, 2020
3. Social Security Code, 2020
4. Occupational Safety, Health and Working Conditions (OSH) Code, 2020

• These codes replace 29 earlier labour laws, marking the most comprehensive restructuring since Independence.
• The codes recognise the changing world of work—gig tasks, platform labour, fixed-term employment—by modernising definitions and extending protections.

India’s Labour Codes

• India’s Labour Codes streamline 29 laws into four modern frameworks, expanding social security, improving wages, recognising gig workers, enhancing safety, and promoting formalisation for a fair, future-ready workforce.

Why Labour Reform Was Essential?

1. Fragmented legal framework:

• Multiple central and state laws with conflicting definitions and requirements created compliance burdens, especially for MSMEs.

2. Persistent informality:

• Over 90% of India’s workforce remains informally employed, lacking written contracts, statutory wages, or social security coverage.

3. New employment structures:

• Self-employment, platform-based work, hybrid contracts, and increased labour mobility required updated governance.

4. Global competitiveness:

• Outdated labour laws limited ease of doing business, formalisation, and investment inflows.

5. Technological disruptions:

• Automation and platform work created new vulnerabilities requiring portable protections.

Major Objectives of the Four Labour Codes

• Simplification of labour laws by consolidating definitions, reducing overlapping provisions, and enabling single registration and reporting.
• Universalisation of protections by ensuring minimum wages and floor wages for all categories of workers.
• Formalisation of employment through mandatory appointment letters, standardised contracts, and digital record-keeping.
• Expansion of social protection to include gig workers, platform workers, and migrant workers.
• Modern industrial relations aimed at balancing flexibility for employers with rights for workers.
• Encouragement of women’s workforce participation through equal pay, night-shift permissions with safeguards, and creche requirements.
• Boost to ease of doing business through single-window compliance, uniformity across states, and predictable regulations.

Key Provisions That Strengthen Worker Welfare

1. Minimum Wages and Floor Wage:

• Central government to fix a national floor wage; states cannot set wages below this.
• Universal coverage extends minimum wages to all workers, including informal and unorganised workers.

2. Appointment Letters and Contracts:

• Mandatory written appointment letters ensure transparency in employment terms, wages, hours, and benefits.

3. Gratuity for Fixed-Term Workers:

• Eligibility after one year (instead of five), boosting protections for contractual employees.

4. Annual Health Check-Ups:

• Free health check-ups for employees aged 40+ under the OSH Code.

5. Safe Working Conditions:

• Standardised safety protocols for construction, mines, factories, and hazardous processes.

6. Gig and Platform Worker Recognition:

• First-ever statutory recognition, enabling targeted social security schemes.

7. Protection for Migrant Workers:

• Portable benefits, registration portals, and interstate coordination mandated.

Key Points of Concern & Discussion

• The primary qualms and discussions surrounding the new codes often center on the balance between providing flexibility to businesses and ensuring robust protection for workers.

1. Higher Layoff/Retrenchment Threshold The Industrial Relations (IR) Code raises the threshold for government approval for layoffs, retrenchment, and establishment closures from 100 to 300 workers.

• Qualm: Critics argue this makes it easier for larger companies to fire workers without government oversight, potentially reducing job security.
• Counterpoint: Proponents, including the government, state this offers businesses greater operational flexibility to adapt to market conditions and is expected to boost formal employment and investment.

2. Definition of Wages The new definition of "wages" mandates that allowances cannot exceed 50% of an employee''s total remuneration, which means the basic pay component will likely increase.

• Qualm: This change can increase the cost of social security contributions (like PF and gratuity) for employers and may result in a higher tax burden for some employees in the short term.
• Counterpoint: This ensures consistency in the calculation of social security benefits, ultimately leading to higher retirement savings and gratuity payouts for workers.

3. Working Hours Flexibility While the standard workday remains 8 hours, the codes allow for daily working hours to be capped at 8-12 hours per day with proper overtime compensation (at twice the normal rate) and weekly limits.

• Qualm: This provision has led to concerns and some misinterpretation about a potential mandatory 12-hour workday.
• Counterpoint: The government clarified that this provides flexibility and overtime is consent-based and compensated, not a mandatory extension of the standard workday.

1. Gig and Platform Worker Coverage For the first time, "gig" and "platform" workers are officially recognized and brought under the social security net.

• Qualm: The aggregation platforms are required to contribute 1-2% of their annual turnover (capped at 5% of the payout to workers) to a social security fund, which may impact business models and operational costs for aggregators.
• Counterpoint: This guarantees social security coverage and benefits, such as life and disability cover, for a vast section of the informal workforce that was previously excluded.

1. Formalization and Compliance Burden The codes introduce a single registration, single license, and single return system to simplify compliance, replacing multiple overlapping filings.

• Qualm: Implementation requires state governments to notify their specific rules, and a lack of uniformity across states could still pose challenges.
• Counterpoint: The simplification is designed to promote ease of doing business and encourage formal employment by making it easier for small businesses to comply with regulations.

Industry and International Response-

Industry bodies (CII, FICCI, ASSOCHAM):

• Welcomed the codes as a “historic milestone” for formalisation, productivity, and global alignment.
• Viewed as improving the investment climate and reducing compliance disputes.

International Perspective:

• ILO, OECD, World Bank, and WEF acknowledge India’s attempt to create a modern labour framework.
• Recognition of gig workers and portable social security seen as progressive and future-oriented.

Skills, Productivity, and Future Employment Pathways

• WEF estimates a large share of the global workforce requires reskilling by 2030.
• India faces significant skill mismatches:
• Technology-intensive sectors demand specialised training that large segments of youth lack.
• NITI Aayog identifies the job-creating potential of:

1. Tourism
2. Logistics
3. Healthcare
4. Education
5. Business services

Labour codes complement India’s skilling ecosystem through:

1. Apprenticeship reforms
2. Modernised ITIs
3. Public-private training collaborations
4. CSR-funded skilling initiatives

A lifelong learning ecosystem is essential to enable career mobility and future readiness.

Federal Dimensions and State-Level Innovation

• Labour is a Concurrent List subject; states play a major role in operationalising the codes.
• Variations across states will influence:

1. Ease of compliance
2. Thresholds for inspections
3. Local safety standards
4. Welfare schemes for migrant and unorganised workers
5. Inter-state coordination becomes important for migrant worker protection, especially via portable benefits.
6. States can innovate within the national framework to meet local labour market characteristics.

Challenges in Implementation

• Differences in state readiness to notify rules may create transitional uncertainty.
• MSMEs may struggle with initial compliance and technological adaptation.
• Workers need awareness of rights, entitlements, and grievance systems.
• Gig workers remain outside traditional employer–employee relationships, creating ambiguity in contributions.
• Success depends on synchronised digital infrastructure, inter-state cooperation, and continuous social dialogue.

Conclusion and Solution

• Overall, the new Indian labour codes are viewed as a significant, transformative step by the government to balance worker welfare with industry needs, though their full impact will depend on consistent implementation across the country.

India’s next step must focus on:

• Enhancing quality of work, not just job quantity
• Building universal portable social protection
• Strengthening lifelong skilling and productivity
• Ensuring gender-inclusive employment
• Maintaining industry–state–worker dialogue
• If implemented effectively, the codes can shape a dignified, secure, and productive workforce suited to the 21st century economy.