India’s New Labour Codes: A Clear and Simple Explanation
On 21 November 2025, the Government of India finally brought into force all four central Labour Codes — the Code on Wages, 2019; Industrial Relations Code, 2020; Code on Social Security, 2020; and Occupational Safety, Health and Working Conditions (OSHWC) Code, 2020. Together, they consolidate 29 earlier labour laws into a single, unified framework that the Centre describes as “historic” and essential for ease of doing business and better social security.
These four Codes are meant to create a modern, digital-ready labour law framework for all employers and workers across India.
Why Were the New Labour Codes Created?
The earlier labour laws had deep structural issues:
They were old, many dating back 60–80 years.
There were 29 central laws and over 100 state laws, creating fragmentation.
Key definitions (like “wages”, “workman”, “establishment”) differed across Acts, causing disputes.
MSMEs struggled with complex, overlapping compliances.
Gig, platform, and unorganised workers lacked clear protections.
The new Codes aim to:
Simplify compliance
Reduce disputes
Improve digital governance
Expand social security
Increase ease of doing business
Modernise worker protections
The Four Labour Codes — Explained Simply
Below is a quick breakdown of each Code for HR teams, business owners, and employees.
1. Code on Wages, 2019
Applies to: All employees — no wage ceilings, no industry limitations.
Key features:
Common definition of “wages” across all Codes
At least 50% of CTC must be considered as “wages”
Impacts PF, bonus, gratuity, overtime, etc.
Strict timelines for wage, bonus, and overtime payment
Minimum Wages applicable to all industries
National Floor Wage to guide minimum levels nationally
Equal pay for equal work for all genders
Higher penalties for wage violations
Impact: Stabilises wage structures but may increase PF and gratuity costs.
2. Industrial Relations (IR) Code, 2020
Covers: Unions, strikes, layoffs, retrenchment, and dispute resolution.
Key features:
Stricter strike rules: 14-day notice, restrictions during proceedings
Layoff/closure permission threshold raised from 100 to 300 workers
Fixed-Term Employment (FTE) formalised with equal benefits
Standing Orders required only for establishments with 300+ workers
Streamlined dispute resolution processes
More structured union recognition rules
Impact: Most controversial Code — makes layoffs easier, strikes harder, and increases contract-based employment. Major source of union protests.
3. Code on Social Security, 2020
Covers: PF, ESIC, gratuity, maternity benefits, gig and platform workers.
Key features:
Includes gig, platform, and unorganised workers in social security
Consolidates PF, ESIC, gratuity, maternity, and compensation laws
National and State Social Security Boards to register workers
Fixed-term workers eligible for gratuity after 1 year (not 5)
PF and ESIC definitions tied to the unified “wage” definition
Push for digital platforms for registration and contributions
Impact: A major shift for gig and informal workers, but actual benefits depend on states, funding, and operational rollout.
4. Occupational Safety, Health & Working Conditions (OSHWC) Code, 2020
Covers: Factories, mines, plantations, contract labour, migrant labour, working hours, safety rules.
Key features:
Single licence for factory, contract, and migrant worker operations
Daily working hours can go up to 12 (within weekly limits)
Women permitted in all roles, including night shifts (with consent & safety measures)
Mandatory welfare, health, and safety facilities
Standardised rules for contract labour, migrant workers, and staffing agencies
Electronic registers and inspector-cum-facilitators
Impact: Modernises safety systems but raises concerns about longer daily hours and contractor-friendly provisions.
Why Is Implementation Difficult?
Despite central notification, implementation is complex and uneven across states.
1. Centre–State Coordination Problems
Labour is a Concurrent List subject, so states must notify their own rules.
Challenges include:
States moving at different speeds
Confusion for employers operating in multiple states
Officials requiring training and standardised procedures
2. MSME Compliance Burden
Small businesses face:
New digital registration and filing systems
Need to redesign wage structures and HR policies
Higher costs due to expanded “wage” definition
Fear of penalties in an unfamiliar system
3. Administrative & Judicial Load
Transitioning to new forums and authorities means:
Disputes on where to file cases post-implementation
Need for new tribunals and appellate mechanisms
Pressure on IT systems for social security and inspection workflows
Implementation is much more than issuing a Gazette — it requires building new institutional machinery.
Why Are Workers and Unions Protesting?
Protests intensified after enforcement in November 2025.
1. Job Security & “Hire-and-Fire” Fear
Layoff permission threshold raised to 300 workers
Easier closures for medium and large establishments
Seen as weakening workforce protection
2. Stricter Strike Rules
Longer notice periods
More conditions that make strikes illegal
Viewed as undermining collective bargaining
3. Longer Hours & Contract-Based Work
Unions fear:
12-hour shifts becoming normal
Fixed-term jobs replacing permanent roles
Easier engagement of contract labour
4. Weak Social Security for Gig Workers
Concerns include:
Unclear funding
Difficult registration processes
No strong, enforceable benefits
5. Poor Tripartite Consultation
Indian Labour Conference hasn’t met since 2015
Opposition walked out during passage of Codes in 2020
Unions say reforms were rushed without their input
What This Means for Employers and HR Leaders
The landscape ahead will require caution, clarity, and communication.
Key realities:
Central laws have changed, but state rules and systems are still evolving
Unions and employees are sensitive; communication must be proactive
Compliance will eventually be easier, but the transition phase is complex
Recommended actions for organisations:
Conduct a full gap analysis of policies, wage structures, contracts, and standing orders
Communicate openly with employees and unions; clarify what changes affect them
Track notifications across all states you operate in
Invest in compliance capacity instead of reactive corrections
Conclusion
The new labour codes are a permanent shift. Whether they bring more formalisation and security — or fuel insecurity and conflict — will depend on how governments and employers handle the transition, and whether workers are meaningfully included in the dialogue.
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7On 21 November 2025, the Government of India finally brought into force all four central Labour Codes — the Code on Wages, 2019; Industrial Relations Code, 2020; Code on Social Security, 2020; and Occupational Safety, Health and Working Conditions (OSHWC) Code, 2020. Together, they consolidate 29 earlier labour laws into a single, unified framework that the Centre describes as “historic” and essential for ease of doing business and better social security.
These four Codes are meant to create a modern, digital-ready labour law framework for all employers and workers across India.
Why Were the New Labour Codes Created?
The earlier labour laws had deep structural issues:
They were old, many dating back 60–80 years.
There were 29 central laws and over 100 state laws, creating fragmentation.
Key definitions (like “wages”, “workman”, “establishment”) differed across Acts, causing disputes.
MSMEs struggled with complex, overlapping compliances.
Gig, platform, and unorganised workers lacked clear protections.
The new Codes aim to:
Simplify compliance
Reduce disputes
Improve digital governance
Expand social security
Increase ease of doing business
Modernise worker protections
The Four Labour Codes — Explained Simply
Below is a quick breakdown of each Code for HR teams, business owners, and employees.
1. Code on Wages, 2019
Applies to: All employees — no wage ceilings, no industry limitations.
Key features:
Common definition of “wages” across all Codes
At least 50% of CTC must be considered as “wages”
Impacts PF, bonus, gratuity, overtime, etc.
Strict timelines for wage, bonus, and overtime payment
Minimum Wages applicable to all industries
National Floor Wage to guide minimum levels nationally
Equal pay for equal work for all genders
Higher penalties for wage violations
Impact: Stabilises wage structures but may increase PF and gratuity costs.
2. Industrial Relations (IR) Code, 2020
Covers: Unions, strikes, layoffs, retrenchment, and dispute resolution.
Key features:
Stricter strike rules: 14-day notice, restrictions during proceedings
Layoff/closure permission threshold raised from 100 to 300 workers
Fixed-Term Employment (FTE) formalised with equal benefits
Standing Orders required only for establishments with 300+ workers
Streamlined dispute resolution processes
More structured union recognition rules
Impact: Most controversial Code — makes layoffs easier, strikes harder, and increases contract-based employment. Major source of union protests.
3. Code on Social Security, 2020
Covers: PF, ESIC, gratuity, maternity benefits, gig and platform workers.
Key features:
Includes gig, platform, and unorganised workers in social security
Consolidates PF, ESIC, gratuity, maternity, and compensation laws
National and State Social Security Boards to register workers
Fixed-term workers eligible for gratuity after 1 year (not 5)
PF and ESIC definitions tied to the unified “wage” definition
Push for digital platforms for registration and contributions
Impact: A major shift for gig and informal workers, but actual benefits depend on states, funding, and operational rollout.
4. Occupational Safety, Health & Working Conditions (OSHWC) Code, 2020
Covers: Factories, mines, plantations, contract labour, migrant labour, working hours, safety rules.
Key features:
Single licence for factory, contract, and migrant worker operations
Daily working hours can go up to 12 (within weekly limits)
Women permitted in all roles, including night shifts (with consent & safety measures)
Mandatory welfare, health, and safety facilities
Standardised rules for contract labour, migrant workers, and staffing agencies
Electronic registers and inspector-cum-facilitators
Impact: Modernises safety systems but raises concerns about longer daily hours and contractor-friendly provisions.
Why Is Implementation Difficult?
Despite central notification, implementation is complex and uneven across states.
1. Centre–State Coordination Problems
Labour is a Concurrent List subject, so states must notify their own rules.
Challenges include:
States moving at different speeds
Confusion for employers operating in multiple states
Officials requiring training and standardised procedures
2. MSME Compliance Burden
Small businesses face:
New digital registration and filing systems
Need to redesign wage structures and HR policies
Higher costs due to expanded “wage” definition
Fear of penalties in an unfamiliar system
3. Administrative & Judicial Load
Transitioning to new forums and authorities means:
Disputes on where to file cases post-implementation
Need for new tribunals and appellate mechanisms
Pressure on IT systems for social security and inspection workflows
Implementation is much more than issuing a Gazette — it requires building new institutional machinery.
Why Are Workers and Unions Protesting?
Protests intensified after enforcement in November 2025.
1. Job Security & “Hire-and-Fire” Fear
Layoff permission threshold raised to 300 workers
Easier closures for medium and large establishments
Seen as weakening workforce protection
2. Stricter Strike Rules
Longer notice periods
More conditions that make strikes illegal
Viewed as undermining collective bargaining
3. Longer Hours & Contract-Based Work
Unions fear:
12-hour shifts becoming normal
Fixed-term jobs replacing permanent roles
Easier engagement of contract labour
4. Weak Social Security for Gig Workers
Concerns include:
Unclear funding
Difficult registration processes
No strong, enforceable benefits
5. Poor Tripartite Consultation
Indian Labour Conference hasn’t met since 2015
Opposition walked out during passage of Codes in 2020
Unions say reforms were rushed without their input
What This Means for Employers and HR Leaders
The landscape ahead will require caution, clarity, and communication.
Key realities:
Central laws have changed, but state rules and systems are still evolving
Unions and employees are sensitive; communication must be proactive
Compliance will eventually be easier, but the transition phase is complex
Recommended actions for organisations:
Conduct a full gap analysis of policies, wage structures, contracts, and standing orders
Communicate openly with employees and unions; clarify what changes affect them
Track notifications across all states you operate in
Invest in compliance capacity instead of reactive corrections
Conclusion
The new labour codes are a permanent shift. Whether they bring more formalisation and security — or fuel insecurity and conflict — will depend on how governments and employers handle the transition, and whether workers are meaningfully included in the dialogue.
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The new labour codes implemented by the Indian government indeed represent a significant shift in the labour law landscape. Understanding and implementing these codes will require both caution and clarity from HR professionals and employers alike. Here are a few steps to navigate this transition effectively.
Understanding the New Labour Codes
1. Familiarise yourself with the four new codes - The Code on Wages, 2019; Industrial Relations Code, 2020; Code on Social Security, 2020; and Occupational Safety, Health and Working Conditions (OSHWC) Code, 2020. Each of these consolidates several previous laws into a more streamlined framework.
2. Understand the goals of these codes - simplification of compliance, reduction of disputes, improvement of digital governance, expansion of social security, increased ease of doing business, and modernisation of worker protections.
3. Review the protests and criticisms against the implementation of these laws to better understand the potential challenges and pitfalls.
Implementing the New Labour Codes
4. Develop a clear plan for transitioning to the new laws. This might involve updating HR policies, modifying contracts, or altering dispute resolution procedures.
5. Communicate clearly and transparently with employees about the changes. This will help to alleviate fears and reduce potential disputes.
6. Monitor the implementation closely and be ready to make adjustments as necessary.
Continual Learning and Adaptation
7. Stay informed about any updates or changes to these laws. The government may make amendments based on feedback and protests.
8. Participate in HR communities or forums to share experiences and learn from others who are also navigating this transition.
Remember, these new codes are designed to modernize the labour law framework and improve conditions for workers across India. As HR professionals and employers, it is our responsibility to implement them in a way that supports these goals. The journey might be challenging, but with careful planning and open communication, it is a step in the right direction towards better labour relations in India.
From India, Gurugram
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Understanding the New Labour Codes
1. Familiarise yourself with the four new codes - The Code on Wages, 2019; Industrial Relations Code, 2020; Code on Social Security, 2020; and Occupational Safety, Health and Working Conditions (OSHWC) Code, 2020. Each of these consolidates several previous laws into a more streamlined framework.
2. Understand the goals of these codes - simplification of compliance, reduction of disputes, improvement of digital governance, expansion of social security, increased ease of doing business, and modernisation of worker protections.
3. Review the protests and criticisms against the implementation of these laws to better understand the potential challenges and pitfalls.
Implementing the New Labour Codes
4. Develop a clear plan for transitioning to the new laws. This might involve updating HR policies, modifying contracts, or altering dispute resolution procedures.
5. Communicate clearly and transparently with employees about the changes. This will help to alleviate fears and reduce potential disputes.
6. Monitor the implementation closely and be ready to make adjustments as necessary.
Continual Learning and Adaptation
7. Stay informed about any updates or changes to these laws. The government may make amendments based on feedback and protests.
8. Participate in HR communities or forums to share experiences and learn from others who are also navigating this transition.
Remember, these new codes are designed to modernize the labour law framework and improve conditions for workers across India. As HR professionals and employers, it is our responsibility to implement them in a way that supports these goals. The journey might be challenging, but with careful planning and open communication, it is a step in the right direction towards better labour relations in India.
From India, Gurugram
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Can we restructure the salary as per labour code in Jan'26 and process the Dec'25 salary as per the old rules.
From India, Ahmedabad
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From India, Ahmedabad
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According to the new labor codes in India implemented in November 2025, the restructuring of salaries as per the codes can be done at any time, and there is no hard and fast rule that it should be done from the start of a financial or calendar year. However, it is important to note that once the new salary structure is implemented it has to be in compliance with the new labor codes for all future payments.
As per your query, you can process the December 2025 salary as per the old rules and start implementing the new labor codes from January 2026. Here are the steps you can follow:
1. Analyze the new labor codes in detail and understand the changes that need to be made in the salary structure.
2. Communicate the changes to the employees well in advance before implementing the new salary structure.
3. Make sure to revise the employment contracts if necessary and get it signed by the employees.
4. From January 2026, process the salaries as per the new labor codes.
It's crucial to ensure that any changes comply with the new labor codes, including the Code on Wages, 2019; Industrial Relations Code, 2020; Code on Social Security, 2020; and Occupational Safety, Health and Working Conditions (OSHWC) Code, 2020. Always consult with a legal expert or labor law consultant to ensure you're in compliance.
Remember, the new labor codes are designed to increase transparency, reduce disputes, and enhance social security. So, while it might be a challenging transition, it is a step towards a more effective and efficient labor system in India.
From India, Gurugram
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As per your query, you can process the December 2025 salary as per the old rules and start implementing the new labor codes from January 2026. Here are the steps you can follow:
1. Analyze the new labor codes in detail and understand the changes that need to be made in the salary structure.
2. Communicate the changes to the employees well in advance before implementing the new salary structure.
3. Make sure to revise the employment contracts if necessary and get it signed by the employees.
4. From January 2026, process the salaries as per the new labor codes.
It's crucial to ensure that any changes comply with the new labor codes, including the Code on Wages, 2019; Industrial Relations Code, 2020; Code on Social Security, 2020; and Occupational Safety, Health and Working Conditions (OSHWC) Code, 2020. Always consult with a legal expert or labor law consultant to ensure you're in compliance.
Remember, the new labor codes are designed to increase transparency, reduce disputes, and enhance social security. So, while it might be a challenging transition, it is a step towards a more effective and efficient labor system in India.
From India, Gurugram
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At least 50% of CTC must be considered as “wages” does not seems to be in line with the definition of wage as mentioned at sec. 2y of Code on Wages, 2019. According to this definition as on date we are to take in into consideration sub head from (a) to (i) for restructuring the wage & no other allowances are to be considered & these are also creating confusion specifically like bonus payment, OT allowance as we do not find any monthly payment of bonus system in the Act. Likewise we not heard of any OT allowance in any monthly wage pattern.
Regards,
R N KHOLA
From India, Delhi
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0
0
Regards,
R N KHOLA
From India, Delhi
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(Fact Checked)-Your understanding of the wage definition under Code on Wages, 2019 is correct. Bonus and OT are indeed not part of the monthly wage calculation. Good observation! (1 Acknowledge point)
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Bonus is a yearly payment and to be divided by 12 to get monthly effect. Similarly any other yearly component to be divided by 12 to get monthly amount.
OT is tobe considered month to month basis like in many organisations VDA is changing monthly basis.
All monthly and yearly payment payable to employee to be considered as CTC except Gratuity, ESI employer contribution, Insurance premium not paid to employees etc. to be ignored.
S K Bandyopadhyay
CEO
USD HR Solutions
98310 81531
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OT is tobe considered month to month basis like in many organisations VDA is changing monthly basis.
All monthly and yearly payment payable to employee to be considered as CTC except Gratuity, ESI employer contribution, Insurance premium not paid to employees etc. to be ignored.
S K Bandyopadhyay
CEO
USD HR Solutions
98310 81531
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(Fact Checked)-Yes, you can restructure the salary as per the new labour codes in Jan'26 and process the Dec'25 salary as per the old rules. (1 Acknowledge point)