India’s labor laws are being reformed in one of the largest ways ever encountered. By merging 29 previous labor laws into 4 main Labour Codes, the government took this step to simplify regulations, enhance the employees’ conditions, and make it more comfortable to do business in the country. Although implementation has been delayed, these codes are expected to reshape how salaries, working hours, and employee benefits function across India.
This guide explains the new labour laws in simple, clear language helpful for employees, HR professionals, employers, and students preparing for exams.
What Are the 4 New Labour Codes in India?
The government merged all old labour laws into the following four codes:
| Labour Law | Description |
| Code on Wages, 2019 | Minimum wages, payment of wages, bonus, and equal pay. |
| Occupational Safety, Health and Working Conditions (OSH) Code, 2020 | Safety standards, working hours, leave, health conditions. |
| Industrial Relations (IR) Code, 2020 | Trade unions, strikes, layoffs, grievance handling. |
| Social Security Code, 2020 | PF, ESIC, gratuity, maternity benefits, gig worker protection. |
Key Changes Under the New Labour Law
- Take-Home Salary Will Decrease, But PF Increases
Under the new Wage Code, basic salary must be at least 50% of total CTC.
Impact:
- Higher PF contribution → Bigger retirement savings
- Lower in-hand salary
- Higher gratuity benefits
For example: If your CTC is ₹40,000, then basic must be ≥ ₹20,000. PF is calculated on basic, so PF contribution goes up.
- New Rules for Working Hours
The OSH Code introduces big changes to daily and weekly working hours.
Key Points:
- 48-hour weekly limit stays the same
- Companies can choose 4-day work week, but each day can be up to 12 hours
- Overtime allowed up to 125 hours per quarter
- Mandatory 30-minute break after every 5 hours of work
This gives companies more flexibility while ensuring employee protection.
- More Clarity on Leaves
The new rules simplify leave structures.
Important Changes:
- Leave eligibility becomes uniform
- Employees can carry forward up to 30 days of earned leave
- One day earned leave for every 20 days worked
- Maternity benefits continue under old rules (26 weeks for eligible mothers)
- Faster Hiring and Easier Termination Rules for Companies
Under the IR Code:
- Companies with up to 300 employees can lay off or retrench without government approval (previous limit: 100 employees)
- Strikes require 14-day prior notice
- Grievance redressal committee is mandatory for firms with 20+ employees
This aims to promote industrial peace and reduce legal disputes.
- Social Security for Gig Workers and Platform Workers
For the first time ever, India’s labour laws include protections for:
- Delivery partners
- Cab drivers
- App-based freelancers
- Online platform workers
They will be eligible for schemes related to:
- Health
- Accident protection
- Life insurance
- Old-age benefits
This is an important step considering the growth of the gig economy.
Comprehensive Breakdown of the Four Labour Codes in India
India’s new labour codes aim to simplify regulations, protect workers, and support employers with modern, flexible labour laws. Here is a clear and detailed breakdown of all four codes:
Code on Wages, 2019
The Code on Wages applies to all employees, including those in the unorganised sector. It replaces multiple older wage-related laws to create one uniform system.
Key Features:
- Universal Minimum Wage – A minimum wage will apply to every type of worker in India, ensuring no employee is underpaid.
- Equal Pay for Equal Work – No discrimination based on gender—women must be paid the same as men for the same work.
- On-Time Payment of Wages – Employers must pay salaries within a fixed timeline. Late payments can attract penalties.
- Floor Wage by Central Government – The central government will set a national floor wage, and states cannot fix wages below this limit.
It ensures a basic living standard for all workers across the country, regardless of state or sector.
Occupational Safety, Health and Working Conditions (OSH) Code, 2020
This code focuses on worker safety, health, and welfare. It applies to factories, mines, construction sites, transport, and more.
Key Features:
- Digital Records of Workers – Employers must maintain digital registers of employees, making compliance clearer and more transparent.
- Mandatory Welfare Facilities – Workplaces must provide:
- Canteens
- Washrooms
- Medical rooms
- Drinking water
- Creche facilities (where applicable)
- Free Annual Health Check-Ups – Certain categories of employees, especially in hazardous or high-risk work will get free health screenings.
- Stricter Rules for Hazardous Industries – Businesses dealing with chemicals, explosives, mines, or heavy machinery must follow advanced safety standards.
Industrial Relations (IR) Code, 2020
This code aims to balance worker rights and employer flexibility while encouraging smoother industrial operations.
Key Features:
- Single Law for Trade Unions & Industrial Disputes – All rules related to strikes, layoffs, union formation, and disputes are brought under one framework.
- No Sudden Strikes – Workers must give a mandatory notice period before strikes. This prevents sudden disruptions in industries and protects national productivity.
- Companies Can Modify Standing Orders Easily – Standing orders include company rules on conduct, leave, discipline, etc. The new code allows companies to change these rules more easily, helping them stay updated.
- Faster Dispute Resolution – Specialised tribunals and faster processes ensure that labour issues are resolved without long delays.
Social Security Code, 2020
This code merges all major social security laws to provide comprehensive protection to workers across sectors.
Key Features:
- Provident Fund (PF) – More workers, especially contract and unorganised workers will be covered under PF.
- Employees’ State Insurance (ESI) – Additional establishments and workers will get access to medical insurance.
- Gratuity – Fixed-term employees are now eligible for gratuity, even if they don’t complete 5 years.
- Maternity Benefits – Women receive enhanced maternity protections, including medical bonuses and job security.
- Employee Compensation – Financial support in case of workplace injury or death.
- Social Security for Gig & Unorganised Workers – For the first time, gig workers and platform workers such as:
- Swiggy, Zomato delivery partners
- Ola, Uber drivers
- Freelancers
Every step in this direction will strengthen the livelihoods of millions of people who previously did not have huge financial protection.
How Will These New Labour Laws Impact Employees?
| Positive Impacts | Higher PF & retirement savingsBetter safety and working conditionsStandardised minimum wagesClear leave structureBenefits extended to gig workers |
| Challenges | Reduced take-home salaryStricter rules on overtimeHigher compliance for employees working long shifts |
How Will These New Labour Laws Impact Employers?
| Advantages | Simplified compliance (4 codes instead of 29 laws)Flexibility in setting work hoursEasier retrenchment process for mid-sized companiesReduced legal disputes |
| Challenges | Increased cost of social security contributionsNeed to restructure salary componentsChange in HR policies and documentation |
Conclusion
India’s labor scenario has undergone a drastic change with the introduction of the New Labor Codes. The government intends through a merger of various laws to provide a labour system that is up-to-date, free from secrecy, and equitable and thus the new system will be advantageous to both workers and employers. Although the full implementation is yet to take place, a comprehension of these changes by now will assist every stakeholder in the preparatory phase and also guide them in making their respective financial or HR choices based on the information received.
Frequently Asked Questions
The four new labour codes are the Code on Wages, Industrial Relations Code, Social Security Code, and Occupational Safety, Health and Working Conditions (OSH) Code. These consolidate 29 previous labour laws to make compliance easier and improve employee welfare.
Yes. Under the Wage Code, basic salary must be at least 50% of total CTC, which means PF and gratuity contributions will increase. As a result, take-home salary may reduce, but long-term savings like PF will grow.
Not yet. Although all four codes have been passed by Parliament, their implementation has been delayed because states are still finalising their rules. The codes are expected to be enforced soon once both central and state rules are fully aligned.
Disclaimer: The information provided in this article is for general educational and awareness purposes only. Labour laws in India fall under the Concurrent List, meaning both the Central and State Governments must issue final rules before the new labour codes are fully implemented.
