India’s labour law framework has been overhauled in one of the most significant employment reforms in decades. On 21 November 2025, India scrapped 29 legacy labour laws and rolled out four new Labour Codes, fundamentally transforming workplace rights and employer responsibilities across sectors.
These changes are not cosmetic. They directly affect wages, social security, hiring practices, workplace safety, and dispute management. For Indian employers, compliance is no longer optional—it is foundational to business continuity, employee trust, and risk management.
This guide explains India’s new Labour Codes effective November 2025 in clear, practical terms, with a focus on what employers must do to stay compliant.
India’s New Labour Codes: An Overview
The Labour Codes consolidate 29 existing labour laws into four comprehensive statutes, notified and administered by the Ministry of Labour and Employment
👉 https://labour.gov.in
The four Labour Codes are:
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Code on Wages, 2019
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Code on Social Security, 2020
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Industrial Relations Code, 2020
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Occupational Safety, Health and Working Conditions Code, 2020
Together, these codes aim to simplify compliance, formalise employment, and expand worker protections. While the law is now more structured, employer obligations have become broader and more enforceable.
Code on Wages: What Employers Must Change
The Code on Wages, 2019 replaces long-standing laws such as the Minimum Wages Act, 1948, the Payment of Wages Act, and the Payment of Bonus Act.
(Official resources available at https://labour.gov.in)
Key Employer Obligations
Uniform definition of wages
Wages must include basic pay, dearness allowance (DA), and retaining allowance. Other allowances are capped at 50% of total remuneration, directly impacting CTC structures.
Mandatory timely wage payment
Delayed wage payments now attract stricter penalties, reinforcing financial security and worker welfare.
National floor wage
States cannot notify minimum wages below the centrally prescribed floor wage, ensuring a uniform baseline across India.
Why This Matters
For decades, minimum wage compliance was governed by the Minimum Wages Act, 1948. Under the new Code, wage structuring flexibility has significantly reduced.
Employers should immediately revisit:
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Salary break-ups
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Bonus and incentive calculations
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PF and gratuity-linked wage components
Code on Social Security: Expanded Coverage and New Liabilities
The Code on Social Security, 2020 is one of the most impactful reforms for modern employers.
Inclusion of Gig and Platform Workers
For the first time, gig workers and platform workers are formally recognised. Aggregators may be required to contribute to social security funds at notified rates, as clarified by the Employees’ State Insurance Corporation
👉 https://www.esic.gov.in
Commuting Accidents Now Covered
A critical provision treats certain commuting accidents as employment injuries, provided there is a clear nexus with employment.
Coverage may apply if:
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The route taken is reasonable
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The timing aligns with work hours
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The accident is directly connected to employment
Employer Implications
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Higher ESIC exposure
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Increased accident reporting obligations
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Greater documentation and investigation requirements
Social security compliance now extends beyond payroll to how, when, and where employees work.
Industrial Relations Code: Hiring, Firing, and Disputes
The Industrial Relations Code, 2020 governs trade unions, standing orders, layoffs, retrenchment, and termination.
Appointment Letters Are Now Mandatory
Every employer must issue a formal appointment letter to all employees, including contractual and fixed-term staff. This formalises the employer-employee relationship.
Without proper documentation:
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Illegal termination claims become harder to defend
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Employers face higher litigation risk
Standing Orders Threshold Increased
Establishments with up to 300 workers can hire or retrench employees without prior government approval—provided due process is followed.
Fixed-Term Employment Normalised
Fixed-term workers must receive the same wages and benefits as permanent employees performing similar work, though retrenchment compensation does not apply at contract end.
Occupational Safety, Health and Working Conditions Code (OSH)
The OSH Code, 2020 merges 13 safety-related laws into a single framework covering factories, construction, mines, and service establishments.
New Compliance Requirements
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Mandatory health check-ups for workers above 40 years
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Women permitted in night shifts, subject to consent, safety measures, and transport
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Single registration and licence for establishments operating across states
Employer Responsibilities
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Workplace risk assessments and safety audits
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Clean working conditions and welfare facilities
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Digital maintenance of safety and inspection records
Non-compliance can lead to penalties, prosecution, or closure, enforced by State Labour Departments under the Code.
Practical Compliance Tips for Employers (2025)
To stay compliant under the new Labour Codes, employers should:
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Audit wage structures against the new wage definition
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Update appointment letters, HR manuals, and standing orders
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Train HR and payroll teams on new thresholds and reporting rules
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Strengthen workplace health and safety monitoring systems
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Review insurance coverage for commuting and employment injuries
Labour compliance is no longer just an HR task—it is a board-level governance and risk issue.
Conclusion: Compliance Is the New Competitive Advantage
India’s labour law framework has been redesigned to reflect modern workplaces, digital employment models, and enhanced worker welfare. While the four Labour Codes simplify the law on paper, they significantly raise expectations for employer accountability.
For Indian employers in 2025, compliance is not about avoiding penalties—it is about building stable, transparent, and future-ready workplaces. Organisations that adapt early will reduce legal risk, improve workforce trust, and gain a competitive edge in an increasingly regulated employment environment.
