COMPLETE GUILD TO INDIA’S NEW LABOUR CODES

INTRODUCTION

The New Labour Codes came into effect on November 21, 2025. The government of India implemented four key New Labour Codes, namely The Code on Wages, 2019, Industrial Relations Code, 2020, Code on Social Security, 2020 and the Occupational Safety, Health and Working Conditions Code, 2020, replacing 29 existing central labour laws.

Previously, labour regulations in India were derived from a fragmented array of 29 different laws, many outdated and ill-suited to contemporary economic realities. Such complexities-imposed compliance burdens on employers and added uncertainty for workers, particularly amid evolving forms of employment, such as gig work. The new codes aim to address these challenges by consolidating legal frameworks and modernizing labour protections.

The key reasons behind this reform include:

1. Simplifying compliance: A large no. of separate labour laws made it hard for employers to follow all requirements, so a simplified framework was needed.
2. Improving enforcement: having multiple authorities overseeing different labour laws created complexity and made enforcement difficult, highlighting the need for a unified system.
3. Updating the old laws: since many labour statutes were created before independence, they no longer matched current economic and technological conditions, making modernization necessary.[i]

CONSOLIDATION OF EXISTING LABOUR LAWS INTO FOUR NEW LABOUR CODES:

NEW LABOUR CODES	AMALGAMATION OF
	The Payment of Wages Act, 1936
The Code on Wages, 2019	The Minimum Wages Act, 1948
	The Payment of Bonus Act, 1965
	The Equal Remuneration Act, 1976

NEW LABOUR CODES	AMALGAMATION OF
	Trade Unions Act, 1926
The Industrial Relations Code, 2020	The Industrial Employment (Standing Orders) Act, 1946
	The Industrial Disputes Act, 1947

NEW LABOUR CODES	AMALGAMATION OF
	The Employees’ Compensation Act, 1923
	The Employees’ State Insurance Act, 1948
	The Employees’ Provident Funds And Miscellaneous Provisions Act, 1952
The Code on Social Security, 2020	The Employment Exchanges ( Compulsory Notification Of Vacancies) Act, 1959
	The Maternity Benefit Act, 1961
	The Payment Of Gratuity Act, 1972
	The Cine-Workers Welfare Fund Act, 1981
	The Building And Other Construction Worker’s Welfare Cess Act, 1996
	The Unorganised Workers’ Social Security Act, 2008

NEW LABOUR CODES	AMALGAMATION OF
	The Factories Act, 1948
	The Plantations Labour Act, 1951
	The Mines Act, 1952
	The Working Journalists and other Newspaper Employees (Conditions of Service and Miscellaneous Provisions) Act, 1955
	The Working Journalists (Fixation of Rates of Wages) Act, 1958
	The Motor Transport Workers Act, 1961
The Occupational Safety, Health and Working Conditions Code, 2020	The Beedi and Cigar Workers (Conditions of Employment) Act, 1966
	The Contract Labour (Regulation and Abolition) Act, 1970
	The Sales Promotion Employees (Conditions of Service) Act, 1976
	The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979
	The Cine-Workers and Cinema Theatre Workers (Regulation of Employment) Act, 1981
	The Dock Workers (Safety, Health and Welfare) Act, 1986
	The Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996.

Comparison: 29 Labour Laws vs. 4 New Labour Codes:

a) Rules: These are the detailed instructions issued under a law explaining how that law should be implemented.

• Earlier, there were 1,436 rules, making compliance lengthy and complicated.
• The new labour codes reduce this to 351 rules, making the system more manageable.

b) Returns: Returns are reports that employers must submit to the government (monthly/annual) about workers, wages, safety measures, etc.

• Earlier, 31 different returns were required.
• Now, there is only one electronic return, reducing paperwork.[1]

c) Forms: Forms are official documents employers must fill out for various labour related activities registrations, inspections, records, etc.

• Old laws required 181 forms.
• New labour codes cut this down to 73, simplifying procedures.

d) Registers: Registers are mandatory records of employers, including attendance, wages, overtime, accidents, etc.

• Earlier, 84 registers were required.
• Now only 8 are needed, reducing the administrative burden.

e) Registration: Many labour laws earlier required separate registrations under each Act.

• 8 different registrations were needed.
• Under the new labour codes, a single registration covers all, easing compliance.

f) License: Certain activities (like engaging contract workers) required multiple different licences under separate laws.

• Old system had 4 different licences.
• New labour codes combines them into one licence, saving time and effort.

g) Compounding: Compounding means settling certain offences by paying a monetary penalty instead of going through a full legal prosecution.

• This option did not exist earlier.
• The new labour codes introduce compounding for the first time, helping resolve minor violations faster.

h) Improvement Notice: This is an official notice given to an employer instructing them to fix a violation or improve workplace conditions before penal action is taken.

• Old labour laws did not have this mechanism.
• The new labour codes introduce improvement notices, encouraging correction instead of immediate punishment.[i]

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MAJOR CHANGES MADE IN NEW LABOUR CODES:

1^st Code: The Code of Wages, 2019

1. Universal Minimum Wages: The new labour code guarantees minimum wages for all employees in both organised and unorganised sectors, unlike the earlier law which covered only scheduled employment.
2. Decriminalisation: Certain first-time offences now attract monetary fines instead of imprisonment, promoting a more compliance-oriented approach.
3. Inspector-cum-Facilitator: The new labour code introduces a guidance oriented compliance mechanism, replacing the traditional inspector system.
4. Overtime pays: All employees must receive overtime wages at least twice the normal rate for work beyond prescribed hours.
5. Compounding of offences: First time, non-serious offences may be settled through compounding, while repeat offences within five years cannot be compounded.
6. Universal wage payment rules: Provisions for timely wage payment and restrictions on deductions now apply to all employees, regardless of wage ceilings.
7. Employer liability: Employers are responsible for ensuring wage payment, and entities can be held liable for unpaid wages
8. Gender equality: Employers are prohibited from discriminating based on gender, including transgender identity, in recruitment, wages and working conditions.
9. Wage Fixation Criteria: Minimum wages will be set considering skill levels, geographic location, and working conditions such as temperature, humidity, or hazards.

2^nd Code: The Industrial Relations Code, 2020

1. Fixed Term Employment: Allows time bound jobs with full benefits; gratuity after one year.
2. Wider definition of Industry: Covers all organized employer employee activities, even without a profit or capital motive.
3. Re-Skilling Fund: Employers must deposit 5 days’ wages for each retrenched worker to support retraining.
4. Industrial Tribunal: Two-member tribunals for faster dispute resolution.
5. Direct Tribunal Access: Parties can approach tribunals if conciliation fails within 90 days.
6. Women’s Representation: Requires proportional participation of women in grievance committees.
7. Trade Union Recognition: A union with 51% membership becomes the Negotiating Union; otherwise, a Negotiating Council is formed.
8. Standing Orders: Mandatory only for establishments with 300+ employees.
9. Strike/Lockout Notice: Mandatory 14 day notice required for all establishments.
10. Strike definition expanded: Mass casual leave counted as a strike.
11. Expanded Worker Definition: Includes sales staff, journalists, and supervisors earning up to ₹18,000/month.
12. Work from home: Allowed in the service sector by mutual consent.
13. Decriminalization & Compounding: Minor offences can be settled with a monetary penalty.
14. Digital processes: Enable online records, registration, and communication for transparency and efficiency.

3^rd Code: The code on Social Security, 2020

1. Gig & Platform workers Covered: defines aggregators, gig workers, and platform workers. Aggregators must contribute 1-2% of turnover (capped at 5% of worker payments) for their social security.
2. Time-bound EPF (Employees’ Provident Fund) inquiries: EPF cases must start within 5 years and finish within 2 years (extendable by one). Suo-moto reopening of the case is removed.
3. Expanded ESIC (Employees’ State Insurance) Coverage: ESIC now applies across India. small established with fewer than 10 workers can opt in voluntarily. Coverage is mandatory for hazardous jobs and plantation workers.
4. Reduced EPF Appeal Deposit: Employers need to deposit only 25% of the disputed amount when appealing EPFO orders.
5. Social Security Fund: A dedicated fund will support unorganized, gig, and platform workers with health, life, disability, and old-age benefits. Money from compounded offences goes into this fund.
6. Expanded Dependents: Includes maternal grandparents and, for female employees, dependent parents-in-law.
7. Uniform Wage definition: Wages include basic pay, dearness allowance, and retaining allowance; at least 50% of total pay must count as wages for social security calculations.
8. Commuting Accidents: Travel between home and workplace is treated as employment-related for compensation.
9. Gratuity for fixed-term workers: eligibility after one year of continuous service, instead of five.
10.  Inspector-cum-Facilitator: Online, algorithm-based inspections with a focus on guidance rather than harassment.
11. Decriminalization: Some offences now carry monetary fines instead of jail. Employers get 30 days’ notice before legal action.
12. Compounding of Offences: First time minor offences can be settled by paying 50%-75% of the maximum fine.
13. Digital Compliance: Records, registers, and returns can be maintained electronically.
14. Vacancy Reporting: Employers shall report vacancies to specified career centres before recruitment, promoting transparency in employment opportunities.

4^th Code: The Occupational Safety, Health and Working Conditions Code, 2020

1. Unified Registration: A single electronic registration for establishment with 10+ workers replaces multiple registrations, creating a centralized database.
2. Hazardous Work: The government may apply the Code to any hazardous workplace, even with just one worker.
3. Migrant & Formalization: Definition expanded to include direct, contractual, and self-migrating workers. Benefits include annual travel allowance, portability of ration and social security, and a toll-free helpline.
4. Health & formalization: Free annual health check-ups and mandatory appointment letters to increase transparency.
5. Women’s Employment: Women may work in all sectors and night shifts with consent and safety measures.
6. Media Workers Covered; “working journalists” and “cine workers” now include electronic and audio-visual media employees.
7. National Database: A national registry to be developed for unorganized and migrant workers to support job matching and welfare delivery.
8. Safety Committees: Mandatory in establishments with 500+workers.
9. Social Security Fund: A welfare fund for unorganized workers financed by penalties and compounding fees.
10. Victim Compensation: At least 50% of fines in injury/death cases must be paid to victims or their families.
11. National Safety Board: One tripartite advisory board replaces six earlier bodies for uniform safety standards.
12. Decriminalization & Compounding: Minor offences can be settled by paying 50-70% of the maximum fine; imprisonment replaced with monetary penalties.
13. Contract Labour Reforms: Applicability threshold raised from 20 to 50 workers; all-India license valid for 5 years; auto-generated licenses, introduced for contract labour, beedi/cigar manufacturing and factories; and Contract Labour replaced with a designated authority.
14. Working Hours: Capped at 8 hours/day and 48 hours/week; overtime requires consent and double wages.
15. Contract Labour Welfare: Principal employers must ensure health and safety facilities and pay wages if contractors default.
16. Simplified Compliance: Establishment will follow a “one license, one registration, one return” system.
17. Inspector-cum-Facilitator: Inspector now guide establishments to ensure compliance rather than only enforcing penalties.
18. Revised Factory Threshold: Factory applicability raised to 20 workers (with powers) and 40 workers (without power).

CONCLUSION

The new Labour Codes modernize India’s Labour system by simplifying compliance, reducing paperwork, and improving worker protection. With clearer rules and streamlined processes, they aim to create a more efficient, transparent, and worker-oriented labour environment that supports both employers and employees.

Author- Priyanshi Tiwari, 4th Year Law Student, Prestige Institute of Management and Research, Gwalior.

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[1]https://return.shramsuvidha.gov.in/Pages/annual_return#:~:text=Annual%20Return%20for%208%20Central,be%20filed%20through%20this%20Portal.

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[i] https://www.pib.gov.in/PressReleseDetailm.aspx?PRID=2192524

[ii] https://www.pib.gov.in/PressReleseDetailm.aspx?PRID=2192524