Employer of RecordNovember 24, 2025New Labour Code 2025: What the New Codes Mean for Workers and Employers

The four comprehensive labour codes represent a historic consolidation replacing 29 separate labour laws with a unified regulatory framework designed for India’s diverse workforce, from traditional industrial workers to digital platform workers.

This transformation addresses decades of compliance complexity where organizations navigated overlapping regulations from the Factories Act, Industrial Disputes Act, Minimum Wages Act, and dozens of other statutes. The comprehensive labour codes create a future ready labour ecosystem balancing worker protection with ease of doing business.

The Code on Wages replaces four major wage-related laws: Payment of Wages Act, Minimum Wages Act, Payment of Bonus Act, and Equal Remuneration Act. This code establishes universal minimum wage coverage across all sectors and introduces a statutory floor wage set by the central government.

The expanded worker definition now covers sales promotion staff, home-based workers, and digital media workers previously excluded from minimum wage protection. This connects directly to social security calculations since the code mandates basic pay must constitute at least 50% of total wages, significantly affecting provident fund and gratuity computations.

The Industrial Relations Code 2020 subsumes the Industrial Disputes Act, Trade Unions Act, and Industrial Employment (Standing Orders) Act, focusing on employment relationships and dispute resolution mechanisms. This code introduces fixed term employees with full social security benefits and establishes work-from-home provisions as a legal right with mutual consent.

Building on wage reforms, the industrial relations framework emphasizes formal employment relationships through mandatory appointment letters for all workers, including contract labour and migrant workers. The approval limit raised from 100 to 300 employees for retrenchment and closure provides operational flexibility while maintaining worker protections through reskilling fund contributions.

The Code on Social Security 2020 covers nine existing laws including EPF Act, ESIC Act, and Maternity Benefit Act, extending social security coverage to gig workers and platform workers for the first time. Unlike the previous fragmented approach, this creates comprehensive coverage where aggregators contribute 1-2% of annual turnover toward platform worker benefits.

The Occupational Safety Health and Working Conditions Code 2020 replaces 13 laws including the Factories Act and Mines Act, establishing uniform workplace safety standards across all establishments. This code permits women workers to work night shifts with consent and safety measures while mandating free annual health check-ups for all employees.

Transition: These foundational changes create immediate compliance requirements that transform day-to-day employment practices across all sectors.

Building on the comprehensive framework outlined above, the new labour codes introduce specific workplace changes that require immediate organizational adaptation across documentation, wage structures, and worker benefits.

All workers, including contract workers, migrant workers, and gig workers, must receive formal appointment letters detailing employment terms, wage structure, and applicable benefits. This represents a fundamental shift from informal employment arrangements that previously characterized much of India’s workforce.

Employers must maintain digital records for all worker categories and provide employment proof that enables workers to access social security benefits and other provisions. This documentation requirement extends to dock workers, cigar workers, and other specialized categories previously operating under separate regulatory frameworks.

The basic pay minimum 50% requirement fundamentally alters existing salary structures, directly impacting provident fund, gratuity, and bonus calculations. Organizations must restructure compensation packages to ensure statutory compliance while managing increased social security costs.

Unlike current practices where wage payment timelines varied across sectors, the new labour codes mandate provisions ensuring timely payment within seven days of month-end for all workers.

The government has not introduced any changes to the earlier working hours. The hours remain unchanged, i.e., the eight-hour workday and forty-eight-hour workweek, but now governments have more flexibility to structure the weekly schedule, whether four long days, five medium days or six standard days.

The government has kept the existing working-hour limits unchanged with eight hours per day and forty-eight hours per week. What has changed is the added flexibility for governments to decide how these hours are distributed, whether across four longer days, five moderate days, or six regular working days.

Overtime compensation at double normal rates applies to work beyond eight hours daily, with specific protections for youth workers and women workers working night shifts.

Gig and platform workers gain access to ESIC and EPF benefits for the first time, with aggregators required to register workers and contribute to social security funds based on annual turnover.

Fixed-term employees, those hired on time-limited contracts across sectors like IT, media, logistics, manufacturing, and services, previously had to complete five years of service to qualify for gratuity.

With the government introducing a unified wage definition across labour laws, the calculation process has been revised.

Fixed term employees become eligible for gratuity after one year of continuous service instead of the previous five-year requirement.

Universal health insurance coverage extends to all worker categories, with annual health check-ups becoming mandatory for employees in hazardous industries. The Maternity Benefit Act provisions now cover female platform workers and gig workers, ensuring comprehensive social security regardless of employment type.

Key Points:

• Mandatory appointment letters required for all worker categories including informal sector employees

• Basic pay must constitute minimum 50% of total compensation affecting all statutory calculations

• Universal social security coverage extends to 45+ crore previously unprotected workers

Transition: Successfully implementing these changes requires systematic preparation and compliance strategies tailored to organizational size and sector requirements

Organizations across all sectors must complete comprehensive compliance preparation by October 2025 to meet the new labour codes’ mandatory requirements, involving wage restructuring, policy updates, and system upgrades for seamless transition.

When to use this: All organizations with 10+ employees must complete preparation by October 2025, with larger establishments requiring additional documentation and registration processes.

1. Conduct Wage Structure Analysis: Review existing compensation packages to ensure basic pay meets 50% minimum requirement while calculating impact on social security costs and employee take-home pay.

2. Update Employment Documentation: Generate formal appointment letters for all workers including contract labour, migrant workers, and any platform workers, detailing wage structure, working conditions, and applicable social security benefits.

3. Register for Social Security Coverage: Complete ESIC and EPF registration for previously excluded worker categories, establishing digital records for gig workers and fixed term employees accessing benefits for the first time.

4. Implement Digital Record Systems: Establish comprehensive employee databases linking Aadhaar identification with employment records to enable portable social security benefits across multiple employers or states.

The comparison reveals fundamental shifts requiring proactive organizational restructuring rather than incremental policy adjustments, particularly affecting gig economy platforms and multi-state employers managing diverse worker categories.

Transition: While these changes create comprehensive worker protections, organizations commonly face specific implementation challenges requiring targeted solutions.

Organizations implementing the new labour codes typically encounter three primary challenges related to cost management, worker classification, and multi-state compliance coordination that require specific strategies for successful transition.

Solution: Implement phased wage restructuring over 6-12 months with transparent employee communication explaining how basic pay increases enhance long-term social security benefits and financial stability despite potential short-term take-home pay adjustments.

Supporting cost management through gradual implementation allows organizations to absorb increased EPF and ESIC contributions while maintaining competitiveness and employee satisfaction during the transition period.

Solution: Develop clear classification criteria distinguishing between gig workers, platform workers, and traditional employees while partnering with specialized benefits administration platforms to manage social security enrollment and contribution tracking for variable workforce categories.

This approach ensures compliance with aggregator contribution requirements based on annual turnover while providing gig workers seamless access to social security coverage previously unavailable in the informal economy.

Solution: Establish centralized compliance management systems tracking state-specific rule variations and implementation schedules while maintaining consistent organizational policies that meet the highest applicable standards across all operational locations.

Coordination strategies enable organizations to manage complex regulatory environments while ensuring uniform worker protection and avoiding compliance gaps that could result in penalties or operational disruptions.

Transition: Successful navigation of these challenges positions organizations for long-term success under India’s transformed labour governance framework.

India’s new labour codes represent a transformative shift toward universal social security coverage and modernized labour governance affecting over 50 crore workers while creating a future ready labour ecosystem that balances comprehensive worker protection with operational flexibility for businesses across all sectors.

The comprehensive framework established through these four labour codes—covering wages, industrial relations, social security, and occupational safety—creates standardized protection for previously excluded worker categories while simplifying compliance through unified regulations replacing decades of fragmented labour laws.

To get started:

1. Conduct immediate organizational impact assessment analyzing current wage structures, employee categories, and social security coverage gaps requiring attention before October 2025 implementation deadline.

2. Begin wage restructuring planning ensuring basic pay meets 50% minimum requirements while developing employee communication strategies explaining enhanced social security benefits and long-term financial stability improvements.

3. Establish compliance monitoring systems including digital record-keeping capabilities, social security registration processes, and policy update mechanisms to maintain ongoing compliance across all worker categories and operational locations.