What changed: Four new labour codes come into force
On 21 November 2025, the Government of India implemented four landmark labour statutes — the Code on Wages, 2019, Industrial Relations Code, 2020, Code on Social Security, 2020 and Occupational Safety, Health and Working Conditions Code, 2020 — replacing 29 older labour laws.
Together, these codes aim to modernise India’s labour regulations, simplify legal compliance, and extend benefits to a broader swathe of workers — including gig, contract and informal-sector employees. Their rollout marks the biggest revision of the country’s labour-law framework in decades.
What the reforms offer — and who benefits
- Universal minimum wages and wage fairness: The Wage Code promises a statutory minimum wage for all, along with a centrally defined “floor wage,” to reduce regional pay disparities.
- Social security for more workers: Employees — including gig and platform workers — are now covered under formal social-security provisions, including health benefits and annual medical checkups.
- Formal employment terms: Employers must provide written appointment letters; fixed-term employees are eligible for gratuity after just one year (vs. five earlier) and other benefits similar to permanent staff.
- Flexible working hours & safety norms: The OSH code sets standards for safer workplaces, while allowing for flexibility in shift-patterns fairly suited to modern industries.
- Formalising informal and gig economy: By bringing informal workers, contractual staff, and platform-economy labour under common codes, the reforms aim to extend statutory protections to those previously outside mainstream labour law.
Analysts see these changes as a push toward better social security, worker rights and standardisation — a move that, if implemented well, could benefit millions across sectors.
Why unions, workers and some states are resisting
However, not everyone welcomes these reforms. Key criticisms and protests have already emerged:
- Job security fears: The Industrial Relations Code raises the threshold for requiring government approval for layoffs from 100 to 300 workers — meaning firms with fewer than 300 employees can now lay off staff more easily. Critics argue this will weaken job security and make layoffs more arbitrary.
- Collective bargaining concerns: Trade unions claim the new laws limit the ability to strike or organise labour; some believe the reforms tilt power toward employers.
- Implementation gaps & real-world complexity: While statutory benefits have widened on paper, workers fear that in informal or small enterprises the protections may not be enforced properly — especially given administrative burdens and compliance costs.
- Unease among states and labour bodies: Some states — reflecting regional labour-market conditions — have called for withdrawal or reworking of the codes. As many as ten major trade-union organisations have staged nationwide protests.
- Cost burden on small firms: Smaller enterprises and MSMEs worry that mandated benefits, health-checkups, social-security coverage and compliance obligations may raise their operational costs significantly.
What businesses and industry think
Industry bodies have given a mixed, but somewhat welcoming, response. The Confederation of Indian Industry (CII) in Andhra Pradesh hailed the reforms as “a major milestone” that could enhance a “future-ready workforce.” Supporters argue that legal clarity, simpler compliance and formalisation will attract investment and stimulate job creation.
They see benefits especially for export-driven manufacturing, startups, gig-economy firms and businesses that rely on contract/flexible labour — sectors vital to India’s economic ambitions.
Why the debate reflects a deeper tension
At its core, the reform represents a balancing act:
- On one side, flexibility, formalisation, modernisation and economic growth;
- On the other, job security, collective bargaining, and protection for workers in unorganised sectors.
The success of the new regime will depend crucially on how the codes are implemented in practice — whether states notify the required rules in time, whether enforcement bodies are equipped, and whether firms adapt without compromising workers’ rights.
What to watch next
- Union response: With nationwide protests already underway, union actions — strikes, negotiations, or political pressure — could shape future amendments or soften parts seen as anti-worker.
- State-level implementation: Some states may resist full rollout; tracking which states adopt the codes and how strictly they enforce them will be critical.
- Impact on informal & gig workers: Whether the promised social security — minimum wages, written contracts, health coverage — actually reaches millions in the unorganised sector and gig economy.
- Business sentiment and hiring: Whether firms respond to regulatory clarity with fresh hiring and investment, or scale back operations anticipating higher costs.
- Judicial and legal challenges: Expect litigation over controversial provisions — layoffs, union rights, contract-worker benefits, compliance burdens — which may shape the final shape of labour regulation.
Final word
India’s labour-law overhaul is historic — ambitious in scope, radical in scale, and divisive in reception. For workers, businesses and policymakers alike, the coming months will be a test: can a framework reshaped for the 21st-century economy deliver both flexibility and fairness? The answer will shape India’s workforce, industries and socio-economic fabric for decades.
