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On November 21, the Government of India announced the implementation of four Labour Codes with the stated objective of simplifying and streamlining the country’s labour laws. In its press release, the government claimed that these newly enacted Codes would herald a transformational change by ensuring better wages, enhanced safety, expanded social security, and improved welfare for India’s workforce. According to the government, the Codes lay the foundation for a protected and future-ready workforce and resilient industries, thereby boosting employment and advancing labour reforms in line with the vision of Atmanirbhar Bharat. It was further asserted that the Codes align India’s labour ecosystem with global standards, ensuring social justice for all workers.

The new Labour Codes in a nutshell

The new labour laws, effective from November 2025, have consolidated 29 existing laws into four comprehensive Codes: Wages, Social Security, Occupational Safety, Health and Working Conditions (OSH), and Industrial Relations. The stated objectives of these reforms include the introduction of a universal minimum wage, expanded social security coverage including gig and platform workers, mandatory written appointment letters, flexible working hours capped at 48 hours per week with daily flexibility, faster gratuity eligibility for fixed-term and gig workers, simplified compliance procedures, and the extension of protections to the unorganised sector.

A brief elaboration of the Codes

1] Code on Wages, 2019

This Code provides for:

a) A Universal Minimum Wage applicable to all workers, with a National Floor Wage set by the Central Government.

b) A Unified Wage Definition aimed at reducing disputes, with caps on allowances and mandatory timely payment of wages.

c) Equal pay for men and women performing the same work or work of a similar nature.

2] Code on Social Security, 2020

This Code introduces provisions for gig and platform workers, including:

a) Welfare fund contributions by digital platforms, ranging from 1–2% of their annual turnover.

b) Expanded coverage under ESI and EPF—ESI for hazardous jobs and EPF for establishments with 20 or more employees.

c) Portability of social security benefits, allowing workers to retain coverage across jobs and locations.

3] Code on Occupational Safety, Health and Working Conditions (OSH), 2020

Key provisions include:

a) Mandatory written appointment letters for all workers.

b) Emphasis on workplace safety through safety committees and health screenings, particularly in larger establishments.

c) Enhanced women’s rights, enabling women to work night shifts subject to consent and adequate safety measures.

4] Industrial Relations Code, 2020

This Code provides for:

a) Gratuity eligibility for fixed-term workers after one year of service.

b) Flexible working hours, with a weekly cap of 48 hours, permitting 8–12 hour workdays subject to overtime payment at twice the normal rate.

Why are Trade Unions opposing the Codes?

Ten major trade unions, aligned with various political parties, have opposed the Labour Codes, branding them a “deceptive fraud” and demanding their immediate withdrawal. While the Labour Ministry has stated that more than a dozen consultations with unions were held since June 2024, union leaders argue that their concerns were marginalised and substantive objections ignored.

Left-leaning parties acknowledge that the earlier legal framework had shortcomings, but maintain that it nevertheless ensured safeguards relating to wages, working hours, social security, industrial safety, inspection mechanisms, and collective bargaining. According to the trade unions, the new Codes are designed in a manner that leaves labour vulnerable to the onslaught of capital, weakening protections rather than strengthening them.

Industry and Business perspectives on the Codes

Industry responses to the new Codes have been mixed. The Association of Indian Entrepreneurs has reportedly expressed concern that the new framework could significantly increase operating costs for small and medium-sized enterprises and disrupt business continuity across several sectors. The Association has therefore urged the government to provide transitional support and flexible implementation mechanisms to help MSMEs adapt to the new regime.

Large industries, however, have generally welcomed the Codes, viewing them as progressive measures aimed at simplification and modernisation. Provisions such as fixed-term employment and higher thresholds for layoffs in establishments employing more than 300 workers are seen as offering greater operational flexibility. Sectors such as textiles, IT, and manufacturing have reportedly responded positively, particularly to simplified compliance procedures that facilitate multi-state operations. Nonetheless, businesses continue to face uncertainty due to the dual compliance framework involving both Central and State rules, necessitating careful strategic planning for implementation.

Workers’ benefits depend largely on employers’ goodwill

While the Codes promise to extend social security to workers in the unorganised sector, formalise employment, and align labour standards with global norms, questions remain regarding the extent to which these assurances are legally guaranteed. Economist Sheba Tejani, Senior Lecturer in International Development at King’s College London, has raised critical concerns in this regard (Indian Express, 11 December).

Tejani points out that although the Social Security Code claims to provide coverage to unorganised workers for the first time, it does not specify explicit entitlements or enforceable commitments. Section 109 of the Code merely states that Central and State governments “shall frame and notify, from time to time, suitable welfare schemes for unorganised workers,” without clearly defining funding mechanisms.

Regarding the OSH Code, she observes that while employers are formally required to issue appointment letters, the absence of robust compliance mechanisms or penalties for violations risks rendering this provision largely symbolic. Furthermore, the International Labour Organization notes that most countries restrict fixed-term employment to genuinely temporary work. In India, however, unrestricted fixed-term contracts could lead to workforce insecurity and a potential shrinkage of stable employment.

Unless these gaps are addressed through additional clauses and stronger enforcement mechanisms, it remains difficult to assess how far the new Labour Codes will genuinely serve the interests of workers, rather than merely relying on employers’ goodwill.