Labour Law 2.0 – A Complete Overhaul of the Country’s Employment Framework
After years of legislative work and trial rules, the Central Government, through a series of notifications dated November 21, 2025, finally implemented the four labour codes — the Code on Wages, 2019 (“Wages Code”), the Industrial Relations Code, 2020 (“Industrial Code”), the Code on Social Security, 2020 (“Social Security Code”), and the Occupational Safety, Health & Working Conditions Code, 2020 (“OSH Code”) (collectively, the “Labour Codes”) — consolidating 29 (twenty nine) central labour laws under a single, modernised statutory framework. As of November 21, 2025, the Industrial Code and OSH Code have been fully enforced, while the Wages Code and Social Security Code have been partially enforced. However, the rules and schemes under the Labour Codes are yet to be notified.
This move aims to simplify compliance, extend core protections across categories of workers, and bring the labour-law architecture closer to current work models, including gig and platform work.
Key introductions and reforms under the Labour Codes:
Among other principles and provisions,
- The Wages Code introduces a uniform definition of “wages”, universal minimum wage principles, strict timelines for wage payment, compounding of offences and decriminalization of certain first time offences.
- The Industrial Relations Code reworks collective dispute resolution, trade union recognition, and introduces fixed term employment, expanded definition of ‘worker’, ‘industry’ and ‘strike’, work from home provision, clearer rules around strikes, layoffs and retrenchment.
- The Social Security Code expands social security coverage (including for gig and platform workers) and the definition of ‘dependants’, revises employer/employee contribution mechanisms and seeks broader benefits portability.
- The OSH Code updates safety/health obligations, expands statutory obligations across sectors, mandated free annual health check-ups for employees and introduces new compliance, record-keeping requirements and a wider definition of ‘migrant workers’.
A closer look at the key changes:
- Universal minimum wages and timely payment — The Wages Code move towards a universal minimum-wage floor (removing some historical segmentation of categories of workers) and strengthen the obligation for timely payment of wages, with clearer enforcement routes. For workers, this is intended to reduce wage disparity and curb delayed payments. For employers, it requires a review of payroll structures, wage components, and statutory deductions to ensure full compliance.
- Social security widened to new categories — One of the headline reforms is formal recognition of gig and platform workers for social-security access (pension, medical cover, etc.). This expands the statutory safety net but also creates fresh contribution and registration obligations for entities that engage such workers.
- Industrial relations rebalanced — The Industrial Relations Code introduces a more structured system of dispute resolution and modifies thresholds and procedures around strikes, lockouts, layoffs and retrenchment. It continues to recognize fixed-term employment and strengthens the framework around it – including the requirement to issue appointment letters and to extend statutory benefits at par with permanent employees. Notably, now the fixed-term employees become eligible for gratuity after just completing 1 (one) year of continuous service. Employers should reassess retrenchment/closure thresholds and union-engagement practice.
- Health, safety and modern workplace norms — The OSH Code updates employer obligations on workplace safety, periodic health checkups and working-condition standards (including provisions that interact with remote or hybrid work). Also the applicability threshold has been increased from 10 to 20 workers (with power) and 20 to 40 workers (without power), reducing compliance burden for smaller units.
- Administrative simplification — and new compliance design — Consolidation reduces overlap and simplifies licences, inspections and maintenance of registers. But the shift also introduces new centralised registers and digital interfaces; corporates should treat this as a compliance redesign exercise rather than merely paperwork reduction.
Practical takeaways for employers
- Immediate legal housekeeping – update employment contracts (wage composition, fixed-term clauses, social security status), payroll systems, and HR policies to reflect new definitions and wage rules.
- Map worker categories – identify gig, platform, contract, part-time and fixed-term workers and determine social-security and wage implications for each.
- Health & safety readiness – conduct occupational safety, health and working conditions gap assessments; document health check programmes and safety audits where required.
- Plan for transition friction – expect guidelines, rules and administrative notifications to be rolled out — keep compliance personnel ready to act fast.
Conclusion
The notified Labour Codes represent the most significant shift in India’s labour law regime since the colonial era. Historically, labour regulations were fragmented across numerous legislations, creating a framework that was complex, inconsistent, and often difficult for both employers and workers to navigate. The new Labour Codes aim to change this by introducing clarity, uniformity, and consolidation into the regulatory landscape.
For workers, the new regime promises wider coverage, stronger wage protections, and more predictable social security benefits. For employers, the Labour Codes offer a simplified and standardised compliance framework, though accompanied by certain expanded responsibilities. As with any major reform, the Labour Codes bring both advantages and challenges: while consolidation reduces ambiguity and streamlines compliance, broader employer obligations may increase administrative effort in the short term.
The real test now lies in implementation — updating employment contracts, payroll structures, social-security registrations, and workplace safety systems to align with the Labour Codes and the rules that will follow. Proactive mapping of existing practices and early policy adjustments will help minimise risk and ensure a smoother transition.
The coming months will ultimately reveal how effectively these legislative reforms translate into practice and whether they achieve the balance of protecting workers’ rights while facilitating ease of doing business.
Authors: Rohit Dhingra, Vishnu Nair
Publication Date: December 03, 2025
