India’s labour law landscape has undergone its most significant transformation in decades with the introduction of the New Labour Codes in India Designed to replace and simplify 29 outdated central labour laws, these reforms aim to create a more transparent, uniform, and business-friendly framework while safeguarding employee welfare.

The four new codes are:

  1. Code on Wages, 2019

  2. Industrial Relations Code, 2020

  3. Occupational Safety, Health and Working Conditions Code, 2020

  4. Code on Social Security, 2020

Once implemented, these codes will impact every employer, from small businesses to multinational corporations, as well as workers across all sectors — including gig and platform workers.

Why Were the New Labour Codes Introduced?

India’s old labour laws were complex, overlapping, and often inconsistent between states. Compliance was time-consuming and costly, especially for businesses operating in multiple locations.

The main objectives of the new labour codes are:

  • Simplification – Combining multiple laws into four streamlined codes.

  • Uniformity – Establishing common rules across states.

  • Transparency – Clear responsibilities for employers and rights for workers.

  • Ease of Doing Business – Making hiring, firing, and operations more flexible.

  • Expanded Social Security – Extending benefits to more categories of workers.

The Four New Labour Codes in Detail

1. Code on Wages, 2019

This code consolidates the Payment of Wages Act, Minimum Wages Act, Payment of Bonus Act, and Equal Remuneration Act.

Key Provisions:

  • Uniform Minimum Wages: Applicable to all employees, regardless of sector.

  • New Wage Definition: Basic pay + certain allowances must be at least 50% of total salary.

  • Equal Pay for Equal Work: Stronger measures to prevent wage discrimination.

  • Timely Payment: Clear deadlines for salary disbursement.

2. Industrial Relations Code, 2020

This code merges laws governing trade unions, industrial disputes, and employment conditions.

Key Provisions:

  • Notice for Strikes: Mandatory prior notice to avoid sudden work stoppages.

  • Standing Orders Threshold: Increased from 100 to 300 employees.

  • Easier Retrenchment: Higher threshold for requiring government permission.

  • Grievance Redressal: Compulsory committees for employee complaints.

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

This code unifies laws on workplace safety and employee welfare.

Key Provisions:

  • Single Registration: One license for operations across multiple states.

  • Working Hours: Standardized at 8 hours/day, with overtime pay.

  • Women in Night Shifts: Allowed with proper safety measures.

  • Annual Health Check-ups: For certain categories of workers.

4. Code on Social Security, 2020

This code expands social protection for workers in the formal and informal sectors.

Key Provisions:

  • Universal Social Security: For gig, platform, and unorganised workers.

  • EPF & ESI Expansion: More employees covered through reduced thresholds.

  • Gratuity for Fixed-Term Workers: No 5-year service requirement.

  • Maternity & Disability Benefits: Extended to more workers.

Impact on Employers

Advantages:

  • Simplified compliance processes.

  • Uniform rules across India.

  • Greater flexibility in workforce management.

Challenges:

  • Increased wage-related costs due to new definitions.

  • HR and payroll system upgrades.

  • Need for retraining compliance teams.

Impact on Employees

Benefits:

  • Stronger wage protection.

  • Improved workplace safety.

  • Broader social security coverage.

  • Better grievance handling mechanisms.

Concerns:

  • Potential for extended working hours.

  • Changes in job security due to relaxed retrenchment rules.

How to Prepare for the Transition

  1. Audit Current Policies – Compare existing HR practices with new code requirements.

  2. Update Payroll Systems – Ensure wage definitions comply with the 50% rule.

  3. Train HR Staff – On dispute resolution and grievance procedures.

  4. Plan Budget Adjustments – For possible increases in social security contributions.

  5. Monitor State Notifications – As each state will issue its own implementation rules.

Infographic Concept

Title: The 4 New Labour Codes in India – Key Highlights

Design Layout:

  • Four quadrants, each representing a code, with an icon and 3–4 bullet points.

    • Code on Wages: Rupee icon – minimum wages, wage definition, equal pay.

    • Industrial Relations Code: Handshake icon – strikes notice, standing orders, retrenchment rules.

    • OSH Code: Safety helmet icon – working hours, night shifts, safety measures.

    • Social Security Code: Umbrella icon – gig worker coverage, gratuity, ESI/EPF expansion.

  • Bottom strip: “Benefits for Employers” vs “Benefits for Employees” side-by-side.

FAQ – New Labour Codes in India

Q1: When will the New Labour Codes be implemented?
The exact date is pending. The central government has passed them, but states must notify their own rules before nationwide enforcement.

Q2: Will the wage definition change my take-home salary?
Yes, if allowances exceed 50% of your salary, your basic pay will rise, increasing PF and gratuity contributions but reducing take-home pay.

Q3: Do these codes cover gig workers?
Yes, gig and platform workers will receive social security benefits under the Social Security Code.

Q4: Can women work night shifts under the new codes?
Yes, with employer-provided safety measures and consent.

Q5: How do these codes benefit small businesses?
They simplify compliance, reduce legal disputes, and allow more flexibility in workforce management.

Conclusion

The New Labour Codes in India are a landmark reform, bringing India’s labour framework closer to global standards. They aim to protect workers while offering employers a simplified and flexible regulatory environment.

While there will be short-term challenges in adapting payroll, HR policies, and compliance systems, the long-term benefits include reduced disputes, more efficient operations, and enhanced worker trust.

Businesses that prepare early — by updating systems, training teams, and understanding the codes thoroughly — will be better positioned to comply smoothly and take advantage of the opportunities these reforms create.