Decoding India’s New Labour Law Reforms : A Simplified Guide to the Labour Codes
- polsodepthindu
- 18 hours ago
- 4 min read
Introduction
In a recent decision, the Government of India has announced the implementation of the four labour codes- The Code on Wages, 2019 ; The Industrial Relations Code, 2020 ; The Code on Social Security, 2020 and The Occupational Safety, Health and Working Conditions Code, 2020. As such, the new labour codes have rationalised the 29 existing labour laws into 4, and the number of rules that govern labour have come down from 1,400 to around 350, while the number of forms companies had to fill have reduced from 180 to 73. This reform showcases the government’s aim of enhancing workplace safety, improving ease of doing business and aligning with global standards; while for businesses, this means fewer overlapping regulations and a clearer direction for workforce management.
Decoding the New Framework: The Four Labour Codes
The New Labour Codes have brought a series of favourable changes, some of which include an increase in scope of women workforce participation. Women are now permitted to work at night and in all types of work, subject to their consent and proper safety measures.
Secondly, the new laws also mandate appointment letters to all workers, clearly defining ‘Gig work’, ‘Platform work’ and ‘Aggregators’ for the first time, and extending social security benefits to the unorganised sector, gig, platform workers and Fixed Term Employees (FTE). Beyond the above highlighted initiatives, the Labour Codes further introduce more reforms such as a National Floor Wage, Gender-Neutral Pay and Gender Parity, Single Registration to reduce Compliance Burden and a National OSH Board to harmonise safety and health standards across sectors.
Therefore, the New Labour Codes simplify compliance and promote ease of doing business in India. They streamline multiple registrations and licenses into single electronic registration and a single license, thus aiming to reduce paperwork and administrative costs, particularly for small businesses (MSMEs).
This is most visible with the introduction of the "National Floor Wage" by the Central Government, establishing a minimum wage baseline for employees across organised and unorganised sectors across the nation. This floor wage will be determined by factors such as skill level, type of work and geographical area, ensuring a safety net for workers while allowing states flexibility to set higher rates.
The Occupational Safety, Health and Working Conditions Code (OSH Code) creates a uniform national regime, replacing 13 central statutes. Key changes include standard 8-hour workdays, overtime rules and rules allowing women to work at night shifts, subject to consent and security measures. The OSH Code also revises classification for factory thresholds and introduces new employer obligations, such as issuing appointment letters and providing annual health examinations.
Furthermore, the new codes promote gender parity with provisions like equal pay for equal work, maternity benefits (such as paid leave for 26 weeks, adoption/surrogacy coverage) and 1/3rd women members in advisory boards. They are further entitled to a ₹3,500 medical bonus and nursing breaks.
The new codes also iron out glaring inconsistencies, such as varied definitions of the same rules that were prevalent in the previous law. With fewer compliance burdens and stronger social security, experts hold the view that these reforms could help formalise India's vast informal economy.
Operational Challenges and Roadblocks
Businesses have welcomed the new labour reforms. From their perspective, in the long run, investor confidence would see an improvement due to simplified and digitised compliance, which will reduce administrative burden and litigation risk. Most importantly, these reforms would improve the ease of doing business, something companies have voiced their support for, especially in the light of their sustained criticism regarding India’s restrictive labour practices.There may however be a need to navigate some short-term challenges, with one being “aligning to the new definition of wages”, as the ambiguities surrounding its interpretation continue specifically with respect to variable payments, stock benefits etc.
Secondly, the government will have to come to an understanding with the trade unions, which have organised demonstrations and protests across the country against the new reforms. Two controversial clauses in the reforms have particularly vexed unions. One of the clauses makes it easier for companies to fire workers on one hand, and harder for workers to legally conduct strikes on the other hand. Earlier, factories with 100 or more workers needed the government's permission before they could lay off employees, which has been increased to 300, and workers are now required to give a 14-day notice before going on strike, which was earlier applicable only to state-run companies.
Lastly, while the Codes have come into effect, the Central and State rules are still being finalised, creating a dual compliance environment. Provisionally, organisations must carefully assess which provisions to follow during the phase, particularly where multiple state rules apply. While the impact of the new rules on India's manufacturing growth remains unclear in the short term, it’s clear that transition will pose certain short-term challenges for companies.
Conclusion
To sum it all up, the establishment of the new Labour Codes marks a turning point in India’s labour environment. By combining worker welfare with business facilitation, the reforms try to lay the foundation for a more equitable and growth-oriented economy. While there will remain a series of roadblocks and short-term challenges to navigate, it is clear that proper implementation and understanding of the new codes- by both workers and companies- would pave the way for inclusive and sustainable progress in the long run.
References
Press Information Bureau, Government Makes the Four Labour Codes effective to Simplify and Streamline Labour Laws (Nov. 21, 2025), https://www.pib.gov.in/PressReleasePage.aspx?PRID=2192463®=3&lang=2
KPMG, India – Government of India Announces Implementation of Four Labour Codes, GMS Flash Alert 2025-267 (Dec. 12, 2025),
India’s Labour Reforms: Simplification, Security, and Sustainable Growth, (Nov. 21, 2025),
Decoding India’s New Labour Law Reforms, BBC (Nov. 27, 2025),
SCC Online, A Complete Guide to Four Labour Codes: Key Reforms, Compliance Checklists & Impact on India’s Workforce, (Nov. 29, 2025),
TT&A, Overview of India's New Labour Law Framework, (Dec. 2025), https://tta.in/overview-of-indias-new-labour-law-framework/
PIB, New Labour Codes Modernizing India's MSME Ecosystem, (Dec. 5, 2025), https://share.google/qA5ympC6umlL2RnK9
ABOUT WRITER
Rishabh Mathur is a first-year Political Science Honours student at Hindu College, University of Delhi. New to the rigour of college life, he strives to make the most of it. He's keen to understand the intricate workings of public policy and complex issues prevailing in modern society.
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