Key Takeaways from the New Labour Codes 2025

In a landmark overhaul of the nation’s employment framework, the Central Government implemented all four consolidated Labour Codes on November 21, 2025.

This historic move, replacing 29 fragmented, decades-old central labour laws, aims to streamline compliance, enhance ease of doing business, and significantly expand the social security net for the vast Indian workforce.

The new structure rationalizes existing laws into four 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 (OSHWC) Code (2020).

I. Universal Wage and Payment Security (Code on Wages)

The reforms center on guaranteeing basic economic security for all workers.

1. Universal Minimum Wages are now a statutory right for all employees, covering both organized and unorganized sectors.
2. The Centre will set a National Floor Wage, based on minimum living standards. This ensures no state fixes minimum wages below this level.
3. Timely Payment is mandatory, with salaries required to be released by the 7th of every month across all establishments, directly affecting sectors like IT/ITES.
4. Overtime Compensation is standardized at least twice the normal wage rate.
5. The definition of “Wages” mandates that at least 50% of the total remuneration must be basic pay, dearness allowance, and retaining allowance, directly impacting statutory calculations like PF and Gratuity.

II. Labour Codes 2025: Expanded Social Security and Welfare (Code on Social Security)

The most significant expansion of worker benefits includes formal recognition of non-traditional workers:

6. Gig and Platform Workers are legally defined for the first time.
7. Aggregator Contributions of 1-2% of annual turnover (capped at 5% of payouts) are mandated to fund a welfare scheme for these workers.
8. Fixed-Term Employees (FTEs) must receive equal pay and benefits on par with permanent staff.
9. The new codes reduce Gratuity Eligibility for FTEs and contract workers from five years to just one year of continuous service.
10. Wider Coverage: The ESI and PF network is expanded pan-India, extending essential benefits to millions of workers in MSMEs.
11. An Aadhaar-linked Universal Account Number (UAN) ensures Portability of Benefits for migrant workers and those who change jobs or states.
12. The new codes strengthen Principal Employer Liability, holding organizations responsible if their contractors default on statutory social security payments.
13. The new codes entitle workers above 40 years of age to free annual health check-ups.

III. Flexibility, Safety, and Equality (OSHWC & IR Codes)

The codes focus on balancing industrial flexibility with worker dignity and protection:

14. The new codes mandate Gender Equality, prohibiting discrimination in recruitment and pay, including for transgender persons.
15. The new codes permit Night Shifts for Women across all sectors, including underground mining and hazardous industries, subject to their consent and stringent safety protocols.
16. Working Hours are capped at 48 hours per week.
17. The new codes will now consider Commuting Accidents occurring during travel between home and workplace employment-related.
18. The new codes require Mandatory Safety Committees in large establishments (e.g., 500+ workers) to ensure workplace safety standards.
19. The new codes strengthen Migrant Worker Protection, ensuring equal wages, welfare, and PDS portability across states.
20. The new codes raise the requirement for government approval for layoffs, retrenchment, or closure from 100 to 300 workers (a measure for industrial flexibility).
21. The introduction of two-member Industrial Tribunals expedites Dispute Resolution.
22. Notice for Strikes: Workers must give a 14-day notice before initiating a strike, preventing ‘flash strikes.’

IV. Labour Codes 2025: Simplified Compliance

23. One License, One Registration, One Return: This centralized, digital compliance system replaces a labyrinth of previous filings.
24. The new system replaces the punitive role of ‘Inspector’ with the Inspector-cum-Facilitator. This new role focuses on guidance and compliance rather than prosecution.
25. Appointment Letters are mandatory for all workers, formalizing employment records.
26. The new codes decriminalise certain first-time offences, replacing those offences with monetary fines.

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