India Implements Four Labour Codes, Ushering in Major Overhaul for Wages, Workforce Welfare, and Compliance

New Delhi (India) November 22: India's labour landscape was subjected to its most significant reset since independence on November 21, 2025, when the government finally implemented four new labour codes. The codes on wages, industrial relations, social security, and occupational safety and health, impose a modernised, consolidated framework on India's previous structure of 29 disparate laws, some of which date back decades.  

Four Labour Codes Provide Relief

The Centre said, "By modernising labour regulations, enhancing workers' welfare and aligning the labour ecosystem with the evolving world of work, this landmark move lays the foundation for a future-ready workforce and stronger, resilient industries driving labour reforms for Aatmanirbhar Bharat," in the statement.

For the Indian workforce, this means clearer wages, increased protections, and more opportunities for coverage. For compliance, it means a simpler, unified system, instead of navigating the maze of old filings, licences, and multiple inspections.  

Unified Definition of Wages Brings Clarity to Pay Structures and Benefits

One of the most immediate changes flows from the codification of a standard definition of wages, which now applies across all labour laws. This clearly impacts how companies structure wages, allowances, and benefits. It also impacts gratuity, which was previously based on a standard, fixed period of service.  

For fixed-term employees, who comprise a large portion of India's modern workforce, the new rules mean they can now receive gratuities after just one year of service, instead of the previous five years. This is a major change in sectors that rely on contract or project-based cycles in employment.  

Rules Offer Flexibility in Work Hours

Employers now have the option to staff workers for shifts between 8 and 12 hour day as long as the total does not surpass to 48 hours per week.

Previously, maximum daily shifts were capped a 9 hours. Overtime will be paid at a rate double that of the base hourly rate.

Industrial Relations Code Simplifies Disputes and Enhances Worker Protection

The Industrial Relations Code purpose of objectives was to present a more simplified approach for resolving disputes, union recognition and also to allow enterprises the flexibility to reduce working hours without jeopardizing worker protection.

In this code, work-from-home arrangements in relation to the services that will be provided will be provided for. It encompasses a broader definition for the term "worker." It also establishes tribunals that will have two members for purposes of facilitating dispute resolution in a more expedient manner. Workers involved with retrenchment will also receive a wage for 15-days of participation to facilitate reskilling from a new fund to use in transitioning jobs.

Unified Definition of Wages Brings Clarity to Pay Structures and Benefits

The Occupational Safety Code establishes a broader definition for migrant workers and formally recognizes workers who work in digital and audio-visual professions and employs it work protections for hire workers. It also mandates safety committees for larger workplaces.

The government can also apply work protection provisions to occurrences with only a single employee of an establishment. In specific conditions, if there were an accident at work through where the employee was subsequently performing work, it will now be deemed occupational.

Many experts agree the changes are well overdue; however, the test will be in the implementation as states begin to provide their final rule making and shape the rules for the specific workforce characteristics in their states.