India brings Labour Codes into force to modernise workforce

In a significant policy shift, the government on Friday implemented the four Labour Codes, pending since 2020, introducing measures such as timely minimum wages for all and universal social security, including for gig and platform workers, while allowing longer work hours, wider fixed-term employment, and revised retrenchment rules that increase operational flexibility for employers.

While the four Labour Codes — the Code of Wages (2019), Industrial Relations Code (2020), Code on Social Security (2020) and Occupational Safety, Health and Working Conditions Code (2020) — which were passed by Parliament five years ago, were notified on Friday to replace 29 fragmented laws with a unified framework, rules that will bring them into effect with immediate enforcement will be issued shortly.

Key reforms include mandatory appointment letters to workers to support formalisation and job security; universal social security coverage including for gig, platform, contract and migrant workers through PF, ESIC and insurance benefits; statutory minimum wages and timely payment across all sectors; expanded rights and safety provisions for women, including night-shift work and mandatory grievance committees; and free annual health check-ups for workers aged 40 and above.

The Codes had earlier drawn criticism from trade unions over unclear provisions on retrenchment and the possibility of discretionary behaviour during implementation by central or state governments.

They raise the threshold for mandatory government approval for closures, layoffs or retrenchment. Against the previous provision, where establishments employing 100 or more workmen required approval, the new code raises the cap to 300 workmen.

The Codes also increase working hours in factories from nine to 12 hours and in shops and establishments from nine to 10 hours.

The next step is framing the rules. As labour is a concurrent subject, the Centre and states have to frame laws and rules. Most states have already carried out labour-related changes over recent years, except West Bengal.

These Codes will serve as a strong foundation for universal social security, minimum and timely payment of wages, safe workplaces and remunerative opportunities for our people, especially Nari Shakti and Yuva Shakti.

— Narendra Modi (@narendramodi) November 21, 2025

Social-security coverage had expanded from 19 per cent in 2015 to over 64 per cent in 2025. The enforcement of the Labour Codes marks the next stage of reforms — broadening worker protection, easing business operations and promoting a pro-worker labour ecosystem.

These Codes, Prime Minister Narendra Modi said, “will serve as a strong foundation for universal social security, minimum and timely payment of wages, safe workplaces and remunerative opportunities for our people, especially Nari Shakti and Yuva Shakti…”

“It will build a future-ready ecosystem that protects the rights of workers and strengthens India’s economic growth. These reforms will boost job creation, drive productivity and accelerate our journey towards a Viksit Bharat.”

Modi also said that “it is one of the most comprehensive and progressive labour-oriented reforms since Independence. It greatly empowers our workers. It also significantly simplifies compliance and promotes ‘Ease of Doing Business’.”

According to Labour Minister Mansukh Mandaviya, the Labour Codes will formalise employment, strengthen worker protection and make the labour ecosystem simpler, safer and aligned to global standards.

The four codes have 29 labour laws codified in them: four laws in the Wage Code, nine in the Social Security Code, 13 in the Occupational Safety, Health and Working Conditions Code, and three in the Industrial Relations Code.

They contain social-security provisions such as a floor wage and a requirement for employers to contribute to social security. The Codes propose fixing a National Floor Level Minimum Wage and redefining the break-up of wages to increase the share of the basic pay component, enabling higher provisioning for social security for establishments, especially in the service sector.

Aggregators employing gig workers have to contribute 1–2 per cent of annual turnover for social security, with the total contribution not exceeding 5 per cent of the amount payable by the aggregator.

Critics say linking social benefits to the size of the establishment would exclude many informal workers who work in small units or carry out home-based work.

Systemic reforms in the Codes include a national floor wage, gender-neutral work policies, the Inspector-cum-Facilitator model for compliance, faster dispute resolution through two-member tribunals, and a National Occupational Safety, Health (OSH) Board to harmonise safety standards.

Mandaviya said the Codes will guarantee minimum wages for all workers, appointment letters for the youth, equal pay and respect for women, social security for 40 crore workers, gratuity for fixed-term employees after one year of employment, free annual health check-ups for workers above 40 years, double wages for overtime, full health security for workers in hazardous sectors and social justice for workers as per international standards.

“These reforms are not just ordinary changes, but a major step taken by Prime Minister Shri Narendra Modi for the welfare of the workforce. These new labour reforms are an important step towards a self-reliant India and will give new momentum to the goal of a developed India by 2047,” he said on X.

The ESIC coverage and benefits are extended pan-India — voluntary for establishments with fewer than 10 employees, and mandatory for establishments with even one employee engaged in hazardous processes.

Fixed-term employees will receive all benefits equal to those of permanent workers, including leave, medical and social security.

The Codes define “gig work”, “platform work” and “aggregators” for the first time.

Aadhaar-linked Universal Account Numbers will make welfare benefits accessible, fully portable and available across states regardless of migration.

Plantation workers will be covered under the OSHWC Code and the Social Security Code.

Digital and audiovisual workers, including journalists in electronic media, dubbing artists and stunt performers, will now be entitled to full benefits.

(With inputs from agencies)