Labour Reform
Compliance
HR Policy
India’s New Labour Codes — What’s Changed and What It Means for Your Organisation
India has implemented four comprehensive Labour Codes effective from November 21, 2025, consolidating 29 existing central labour laws into a unified framework. This historic reform modernises India’s labour ecosystem and is intended to cover workers across organised and unorganised sectors.
29 central labour laws consolidated into 4 codes — eliminating over 1,200 sections of fragmented, colonial-era legislation from the 1930s–1950s. Workers previously needed to fill four separate forms for a single benefit; that system is now replaced.
01 Central-state applicability framework
Federal structure and implementation
Labour is a concurrent subject under the Constitution of India, meaning both Central and State governments have legislative powers. The Central Government has enacted the four Labour Codes, but their implementation requires coordination with State governments. States have flexibility to modify the codes further as per their unique situation and requirements.
Transition period provisions
During the transition phase, relevant provisions of existing labour Acts and their respective rules, regulations, notifications, standards, and schemes continue to remain in force until States frame corresponding rules under the new codes. The Government will engage public and stakeholders in framing corresponding rules, regulations, and schemes under the Codes.
02 The four labour codes
Code on Wages, 2019
- Universal minimum wage coverage across organised and unorganised sectors
- Floor wages introduced to eliminate regional wage disparities
- Mandatory review every five years
- Equal pay mandated for male, female, and transgender workers
Industrial Relations Code, 2020
- Two-member Industrial Tribunals for dispute resolution within one year
- Unions with 51% votes gain recognition as sole negotiating entities
- Negotiating Councils created where no single union achieves majority
- Right to strike maintained with systematic procedures
Code on Social Security, 2020
- Extends social security to all workers including gig and platform workers
- ESIC expanded from 566 to all 740 districts across India
- Aggregators contribute 1–2% of annual turnover for gig worker benefits
- Aadhaar-linked Universal Account Number (UAN) for seamless portability
OSH Code, 2020
- Comprehensive safety framework covering factories, mines, plantations
- Gender-neutral employment — women permitted to work night shifts
- Mandatory safety committees for all large establishments
- IT-enabled inspection systems for transparency and accountability
03 Key transformational changes
Employment formalisation
- Mandatory Appointment Letters: All workers must receive written appointment letters ensuring transparency and job security.
- Fixed-Term Employee Benefits: Fixed-term workers receive equal benefits as permanent employees.
- Reduced Gratuity Eligibility: Gratuity period reduced from five years to one year for fixed-term employees.
Compliance simplification
Social security revolution
- Unorganised Sector Coverage: First-time social security access to workers in the unorganised sector.
- Comprehensive Benefits: EPF, EPS, and medical benefits intended to be available to all workers.
- National Database Creation: Registration portal for unorganised sector workers.
- Mandatory Vacancy Reporting: Employers with 20+ workers must report vacancies online.
04 Critical entity implications
Immediate compliance requirements
Appointment letter issuance
Mandatory for all workers across all categories — permanent, fixed-term, contractual, and part-time.
Single registration
Transition from multiple registrations to unified system — ensure timely migration before state rules are notified.
Minimum wage implementation
Ensure compliance across all worker categories, including gig and platform workers covered under the new codes.
Social security registration
Enroll all eligible workers in appropriate schemes — including provisions for unorganised and gig workers.
Safety committee formation
Establish mandatory safety committees for establishments meeting the threshold employee count.
HR system overhaul
Integrate UAN-based employee management systems and update documentation for unified reporting.
Strategic opportunities
Workforce flexibility
Utilise fixed-term employment with equal benefits to build agile workforce structures without statutory disadvantage.
Reduced compliance burden
Benefit from streamlined processes and single filing to redirect compliance capacity toward strategic HR activities.
Enhanced industrial relations
Leverage structured dispute resolution mechanisms and formal negotiating frameworks for more predictable labour relations.
Technology integration
The IT-enabled compliance mandate creates an opportunity to modernise HR and payroll infrastructure for long-term efficiency gains.
05 Legislative development and modernisation
The reform process involved extensive stakeholder consultation from 2015–2019, including nine tripartite discussions with Central Trade Unions, Employers’ Associations, and State Government representatives. All four Bills underwent Parliamentary Standing Committee examination, ensuring comprehensive review before enactment.
The codes address the fundamental challenge of operating under fragmented, colonial-era labour laws. By consolidating 29 laws with over 1,200 sections into four streamlined codes, the reform eliminates the previous system where workers needed to fill four forms for a single benefit.
06 Expected outcomes
The labour codes are designed to enhance Ease of Doing Business, promote employment creation, and improve worker productivity while ensuring comprehensive social protection.
This transformational change creates a framework for both employees and employers, establishing India as a competitive destination for investment while ensuring social justice for workers — a rare legislative outcome that attempts to serve both sides of the labour equation simultaneously.
Since labour is a concurrent subject, entities operating across multiple states must track state-level rule notifications independently. Central codes are effective, but state-specific rules may vary — creating a patchwork compliance environment until all states notify uniform rules.
Labour reform is no longer static law — it’s a moving compliance target.
Neurasix tracks labour code applicability, obligations, and state-level updates automatically — across states and entities.
CFO-grade regulatory insights · Built for multi-entity compliance