New Labour Codes 2025 — What Changed for Employees and Employers

On 21 November 2025, the Government of India implemented 4 new labour codes, replacing 29 fragmented and outdated labour laws. The four codes are:

• The Code on Wages, 2019

• The Industrial Relations Code, 2020

• The Code on Social Security, 2020

• The Occupational Safety, Health and Working Conditions (OSH) Code, 2020

  
  

Labour is a concurrent list subject — both the Central and State Governments govern it. The Central Government provides the broad framework through these codes, within which State Governments formulate applicable rules.

Code on Wages

• Definition of wages is now uniform across all States and Codes — ending years of confusion and litigation.

• Broader definition of employees now includes unorganised sector workers, gig workers, contract workers and platform workers.

• Minimum wages, equal wages and the right to timely payment are reinforced.

Industrial Relations Code

• Fixed Term Employees (contract employees) now have the same rights as permanent employees, including eligibility for gratuity after one year of continuous service.

• Every industrial establishment must give at least 14 days' notice before a strike — previously required only for Public Utility Services.

• Worker Re-skilling Fund: employers must contribute an amount equal to 15 days' wages for every retrenched employee, to be paid within 45 days.

Code on Social Security

• Allowances exceeding 50% of total remuneration will now be counted as wages — meaning higher PF and gratuity deductions for employees, and higher employer contributions.

• Gig workers and platform workers are now covered under social security measures including insurance and employment benefits.

• Digital aggregators must contribute 1% to 2% of their annual turnover to a dedicated Social Security Fund.

• A new Inspector cum Facilitator role will guide entrepreneurs on compliance before issuing notices or penalties.

Occupational Safety, Health and Working Conditions (OSH) Code

• Single licence to facilitate ease of doing business.

• Mandatory appointment letters for every employee — formalising the informal economy.

• Women can legally work night shifts in all establishments including factories and mines, subject to written consent and safety protocols.

• Overtime requires written consent from the employee and must be paid at twice the normal rate.

• Inter-state migrant workers are entitled to travel allowance for one hometown trip per year.

• Free annual health check-up mandatory for employees above 40 years of age.

• Canteens mandatory for establishments with more than 100 workers; crèches mandatory for more than 50 workers.

The intent behind these codes is to consolidate old laws and make them relevant to current times. Whether they deliver on their promise of ease of business for owners and ease of living for employees remains to be seen.

Read the full January 2026 issue → An Accountant Writes | Vol 1, Issue 1