In a landmark reform, the Government of India implemented the four new Labour Codes on November 21, 2025, consolidating 29 existing central labour laws into a simplified framework. These codes-the Code on Wages, 2019; the Industrial Relations Code, 2020; the Code on Social Security, 2020; and the Occupational Safety, Health and Working Conditions Code, 2020—aim to modernise labour regulations, expand worker protections, and promote ease of doing business. As the codes are freshly enforced, with central and state rules still being finalised, their full impact is emerging. For employees, the changes bring significant benefits alongside concerns raised by trade unions and analysts.
Key Features of the Four Labour Codes
Positive Impacts on Employees
1. Expanded Social Security Coverage
For the first time, gig workers, platform employees, and unorganised sector workers gain formal recognition and access to benefits like provident fund, gratuity, maternity benefits, and health insurance. Social security now reaches over 64% of the workforce (up from 19% in 2015), with portable benefits across jobs and states.
2. Better Wages and Timely Payments
A universal minimum wage and national floor wage prevent exploitation, especially in low-wage sectors. Fixed-term employees receive pro-rata benefits equivalent to permanent workers.
3. Improved Safety and Working Conditions
Uniform national standards mandate free annual health check-ups (for workers over 40), better facilities (creches, restrooms), and stricter safety protocols, including for contract and migrant workers.
4. Formalisation and Job Security Elements
Digital compliance, single registrations, and mandatory appointment letters bring more workers into the organised sector, enhancing long-term security.
Challenges and Concerns for Employees
Critics, including trade unions, argue that some provisions favour employers:
1. Potential Reduction in Take-Home Salary
Wages are redefined, capping allowances at 50% of total pay—basic pay must be at least 50%. This increases contributions to provident fund and gratuity, boosting retirement savings but reducing monthly take-home pay for many.
2. Eased Layoffs and Reduced Job Security
Establishments with fewer than 300 workers no longer need government approval for retrenchment (up from 100 earlier), potentially making layoffs easier in mid-sized firms.
3. Restrictions on Collective Bargaining
Higher thresholds for union recognition and mandatory 14-day notice for strikes may weaken workers' ability to negotiate or protest
4. Implementation Gaps
With state rules pending, uneven enforcement could delay benefits in some regions.
Conclusion
India's new Labour Codes represent a transformative step toward a more inclusive, modern workforce. Employees stand to gain from broader social security, safer conditions, and fairer wages, particularly in informal and gig economies. However, trade-offs like potential short-term salary impacts and reduced protections against layoffs highlight ongoing debates. As rules are notified and schemes rolled out, the true balance between worker empowerment and business flexibility will become clearer. Employees should stay informed through official portals and consult HR or unions for personalised guidance on changes to pay structures and rights. Overall, these reforms position India for a more equitable and competitive labour market in the years ahead.
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