Labour Code Notified: Key Provisions, Changes and Significance
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Background and Need for Labour Reforms
In a historic decision, the Government of India has announced that the four Labour 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 are being made effective from 21st November 2025, rationalising 29 existing labour laws. 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.
Key Provisions
Key changes include an increased threshold for government approval of layoffs from 100 to 300 workers, new provisions for fixed-term employment, and the ability for women to work night shifts with consent and safety measures:
Code on Wages, 2019
Minimum wages: Establishes a statutory right to a minimum wage for all workers, ending previous limitations to scheduled employment.
Timely payment: Mandates that employers pay wages on time.
Uniformity: Creates a uniform definition of “wages” across different sectors.
Industrial Relations Code, 2020
Fixed-term employment: Provides fixed-term employees with the same benefits as permanent employees, including gratuity after one year.
Dispute resolution: Streamlines the process for resolving industrial disputes.
Thresholds: Revises thresholds for standing orders and strikes to modernize labor relations.
Code on Social Security, 2020
Universal social security: Extends social security benefits like PF, ESIC, and insurance to all workers, including gig and platform workers, who previously lacked coverage.
Gig and platform workers: Aggregators may be required to contribute to a welfare fund for these workers.
National database: Plans for a national database for unorganized and migrant workers to help them access benefits.
Occupational Safety, Health and Working Conditions Code, 2020
Working hours: Sets normal working hours at 8 per day and 48 per week, with double pay for overtime (with worker consent).
Appointment letters: Mandates appointment letters specifying job details, wages, and social security to enhance transparency and security.
Health and safety: Requires free annual health check-ups for workers over 40 and establishes safety committees for larger establishments.
Women’s rights: Permits women to work at night with consent and safety measures, prohibits gender discrimination, and allows for up to 26 weeks of maternity leave with crèche facilities.
Migrant workers: Provides benefits like equal wages and PDS portability, along with allowing claims for pending dues up to three years.
Changes made by the Labour Code 2025
| Features | Old Labour Laws | New Labour Codes |
| Number of Laws | Fragmented into 29 separate acts. | Consolidated into four codes. |
| Compliance | Multiple registrations, licenses, and returns were required for various laws. | A simplified framework with a single registration, single license, and single return for establishments. |
| Wages | Wages No uniform definition, leading to inconsistent application. | A uniform definition of “wages” is standardized across all codes. Minimum Wages Coverage varied across different industries. |
| Appointment Letters | Generally, not mandatory. | Mandatory for all workers, specifying job details, wages, and social security information. |
| Layoff Threshold | Government approval required for layoffs in establishments with 100 or more workers. | Threshold increased to 300 workers, giving more flexibility to larger companies. |
| Women’s Employment | Restrictions on night work existed in many sectors. | Women can work in all types of establishments and during night hours with consent and safety measures in place. |
| Fixed-Term Employment | Not a recognized concept. | Introduced for the first time, recognizing the need for flexibility in modern work arrangements. |
| Social Security | Limited coverage, especially for gig and informal workers. | Broader applicability of schemes like PF and ESI; extended coverage to gig and platform workers; and introduced voluntary coverage options. |
| Working Hours | Standardized to 8 hours a day in some laws, but varied across statutes. | Permitted daily working hours up to 12, as long as the weekly limit of 48 hours is maintained. |
Significance of the Labour Code 2025
Special Provisions and Progressive Measures
- It increases Maternity benefit leave from 12 to 26 weeks; it has made crèche facilities mandatory in large establishments.
- Women empowered with rights to work in all establishments and at night (with safety provisions).
- The inspector role is now more of a facilitator with online and web-based inspections.
Benefits for Workers and Industry
- Guarantee of minimum wages and social security for 50 crore workers including fixed-term employees.
- Faster dispute redressal, safety at the workplace, and comprehensive welfare coverage.
For Employers
- Reduced compliance burden and simplified licensing.
- Enhanced ease of doing business and investment-friendly environment.
Conclusion
These Labour Codes set a new benchmark in Indian labour history, aligning national labour practices with global standards while putting welfare, flexibility, and equity at the centre of governance.
FAQs
1. When will the Labour Codes come into effect?
The Labour Codes are being made effective from 21st November 2025, consolidating 29 existing labour laws.
2. What are the key changes introduced by the Labour Codes?
Major changes include a uniform definition of wages, increased layoff threshold from 100 to 300 workers, fixed-term employment with benefits, extended social security to gig workers, and provisions for women to work night shifts with safety measures.
3. Why are the Labour Codes significant for UPSC preparation?
They represent a landmark reform in Indian labour history, aligning national labour practices with global standards while emphasizing welfare, flexibility, and equity — key themes for governance, economy, and social justice questions in UPSC exams.
