India Enforces Labour Codes – Key Highlights of Labour Codes

Ahlawat & Associates, our member firm in India, has shared an important update on the Government of India’s move to begin the phased enforcement of the four labour codes — one of the most significant changes to labour law in recent years.

On November 21, 2025, the Government of India notified the enforcement of the 4 (four) labour codes called the Code on Wages, 2019 (“Wages Code”); the Code on Social Security, 2020 (“SS Code”); the Occupational Safety, Health and Working Conditions Code, 2020 (“OSH Code”); and the Industrial Relations Code, 2020 (“IR Code”) (hereinafter collectively referred to as “Codes”). Together, these labour code legislations consolidate 29 (twenty-nine) central labour laws on wages, industrial relations, social security and occupational safety, welfare and working conditions.

As on the date of enforcement, all provisions of the IR Code and OSH Code stand duly notified and in force. In contrast, only certain provisions of the Wages Code and the SS Code have been brought into effect. The remaining provisions shall be notified in subsequent phases upon finalisation of the rules.

KEY HIGHLIGHTS ON WAGES CODE

• Minimum wages will apply for all employees across both organize and unorganize sectors, irrespective of industry, category, or nature of employment, which was previously restrict to scheduled employments.
• The definition of ‘wages’ has been modified and now includes basic pay, dearness allowance, and retaining allowance. A detailed list of exclusions is provided which now also includes ‘house rent allowance’. A new proviso has been introduced which specifies that if allowances and contributions (which are excluded from the definition of wages) exceed 50% (fifty percent) or such other percentage as may be notified by the central government, the excess amount shall be deemed as part of wages.
• The Wages Code prohibits discrimination on the basis of gender in matters relating to recruitment, wages, or employment conditions for same or similar work perform by employees.
• ‘Floor wage’ has been introduce which shall be set by the central government on the basis of minimum living standards, with possible variation across geographical areas. The state governments must ensure that the minimum wages fix by them are not lower than the floor wage.
• The Wages Code mandates that where an employee’s employment comes to an end on account of removal, dismissal, retrenchment, resignation or closure of the establishment, the employer must ensure that all wages payable to such employee are paid within 2 (two) working days from the date of such employee’s removal, dismissal, retrenchment, or resignation.
• The employers are require to adhere with the provisions of timely payment of wages for all employees, irrespective of wage limits which was previously only applicable to employees earning upto INR 24,000 (Indian Rupees Twenty-Four Thousand) per month.

KEY HIGHLIGHTS ON IR CODE

• One of the most sought after reforms is with respect to the definition of ‘industry’ which is now broader and encompasses all systematic employer-worker activities, regardless of profit or capital with specific exclusions for organizations engaged in charitable, social or philanthropic service, sovereign activities of the government, and domestic service.
• The definition of ‘worker’ has been expanded to include sales promotion employees, and supervisory employees earning up to INR 18,000 (Indian Rupees Eighteen Thousand) per month, with a view to ensure that the basic labour rights are accessed by a wider segment of the workforce. Accordingly, the companies shall re‐classify and identify affected employees under the new ‘worker’ definition so that all eligible staff receive statutory protections.
• A ‘re-skilling’ fund shall by notification from the appropriate government be set up to assist in training retrenched workers, under which each industrial establishment must deposit a sum equal to 15 (fifteen) days of wages for every retrenched worker. This amount is require to be transfer to the worker’s account within 45 (forty-five) days from the date of retrenchment.
• The thresholds for prior permission from the appropriate government for lay-offs, retrenchment and closure have been increased from 100 (one hundred) to 300 (three hundred) or more workers.
• The applicability of certified standing orders has been increased from 100 (one hundred) to 300 (three hundred) workers.
• Registered trade unions with 51% (fifty-one percent) or more workers will now be recognized as the ‘sole negotiating union of workers,’ where there are more than 1 (one) registered trade unions functioning in an industrial establishment. If the 51% (fifty-one percent) threshold is not met in any of the registered trade unions of the industrial establishment, then a ‘negotiating council’ shall comprise representatives of all registered trade unions that have secured at least 20% (twenty percent) of the workers’ support on the verified muster roll.
• Definition of ‘strike’ has been amended and now includes mass casual leave within its ambit where on a given day, more than 50% (fifty percent) workers take casual leave. Strikes and lockouts are prohibited in an industrial establishment unless notice has been given within 60 (sixty) days before such strike or lockout, and the mandatory 14 (fourteen) day waiting period has elapsed from giving such notice.
• Any concerned party to an industrial dispute can now directly move to the tribunal if the matters cannot be solved within 90 (ninety) days by a conciliation officer.
• The ‘grievance redressal committee’ (required to be constituted where the industrial establishment has 20 (twenty) or more workers) have to now comprise of 10 (ten) members (with equal representation from the workers and the employer) instead of the earlier 6 (six), and women employees shall get adequate representation, which is not less than the proportion of women workers to the total workers.

KEY HIGHLIGHTS ON OSH CODE

• Appointment letters are now formalize, and every employee shall be given appointment letters which shall specify information including but not limited to the details of the job, wages, and social security. Employees who have not been issued appointment letters before or as on date of commencement of the OSH Code have to be issued appointment letters within 3 (three) months.
• The threshold for annual leave entitlement for a ‘worker’ has been reduced to 180 (one hundred eighty) days.
• Overtime work is only allowed with the consent of the ‘worker’ at twice the rate of normal wages.
• The registration has now been unified with a uniform threshold of 10 (ten) or more ‘workers’ (including factory).
• The definition of ‘inter-state migrant workers’ has been expanded to cover workers employed directly, through contractors, or who migrate on their own. Establishment in which 10 (ten) or more inter-state migrant workers are employ or were employ on any day during the preceding 12 (twelve) months, shall be governed by the provisions applicable to inter-State migrant workers.
• The definition of ‘audio-visual worker’ has been expanded to also include dubbing artists and stunt persons. The definition of ‘working journalists’ has been expanded to include electronic media or digital media journalists.
• Women can now work in all types of establishments during night shifts i.e. before 6 (six) A.M. and beyond 7 (seven) P.M., however consent of such employed women needs to be obtained and appropriate safety measures holidays and working hours along with other condition to be observe by the employers as may be prescribe by the Central Government in the rules under the OSH Code.
• The revise contract labour framework under the OSH Code introduces clearer definitions of core and non-core activities and permits the use of contract labour even in core functions in situations where; (i) the normal functioning is such that core work is ordinarily outsourced; (ii) the activities do not require full-time worker for the major portion of the working hours in a day or for longer periods, as the case may be; and (iii) involves situations where there is sudden increase in workload which needs to be completed in a specified time.
• The OSH Code provides for certain duties for the employer including but not limited to (i) ensuring that workplace is free from hazards which cause or likely to cause injury or occupational disease to the employees; (ii) comply with the occupational safety and health standards as may be declare under the OSH Code or the rules; and (iii) provide annual health examination or test free of costs to such employees as may be prescribe by the appropriate government.

KEY HIGHLIGHTS ON SS CODE

• Definitions of ‘aggregator’ (means a digital intermediary or marketplace for a buyer or a user of service, to connect with seller or service provider), ‘gig worker’ (means a person who performs work or participates in a work arrangement outside of traditional employer-employee relationship and is paid for the same), and ‘platform worker’ (means a person engaged in or undertaking work arrangement for organizations or individuals using an online platform and is paid for the same) are include in the SS Code.
• Aggregators are require to contribute a minimum of 1% (one percent) but not exceeding 2% (two percent) of their annual turnover to social security schemes (for matters related to life and disability, accident insurance, old age protection etc.) which the central government may frame and notify from time to time. This is relevant for the companies who have or intend to engage gig workers and platform workers. However, the central government is yet to frame scheme and accordingly, the obligations that are required to be undertaken by the employers will be specified.
• The SS Code provides that the chapters related to Employees’ Provident Fund and Employees’ State Insurance Corporation under the said Code can be voluntarily extended and also withdrawn where there is agreement in that regard between employer and the majority of employees.
• A new concept of ‘fix term employment’ has been recognise to allow engagement of workers though written contracts of employment for a fix period. Such workers doing same or similar nature of work as permanent workers, will receive statutory benefits available to permanent workers, proportionately, as per their period of service rendered. Furthermore, they shall be eligible for gratuity upon completion of 1 (one) year of service instead of the erstwhile requirement of 5 (five) years (practically 4 (four) years 240 (two hundred and forty) days) of service.
• The SS Code has also introduce the concept of career centres replacing employment exchanges wherein the employer in every establishment would be require to report the vacancy to such career centre as may be specified in the notification by appropriate government.

IMPLEMENTATION OF LABOUR CODES

The 4 (four) labour codes coming into effect marks a significant restructuring of India’s labour law framework by consolidating several decades of fragmented central legislation into a unified regime governing wages, industrial relations, social security, and occupational safety. Further, the Codes aim to balance various objectives through uniform thresholds (compounding of offences, streamline definitions including those of workers, wages, etc.) and digital compliance systems which align with the ease of doing business while also strengthening and expanding protections for workers.

While the central government has enforce substantive portions of these Codes and the transition will be fully effectuated in a phased manner when the State rules and procedural details are notified. During the transition period, employers must ensure compliance with both existing regulations and the new labour codes until the transition is complete. This transition period will give employers the opportunity to align their internal policies, agreements, and human resource processes according to the principles of the codes while the procedural compliance will be formalise once the rules are framed.