Explore India’s new Labour Codes—wages, social security, gig workers, PF, gratuity, hiring, layoffs, compliance, and business impact in 2025.

India’s long-awaited labour reforms have replaced 29 fragmented labour laws with four unified Labour Codes. The core objective is to modernize compliance, increase worker protection, and boost ease of doing business in a digital, platform-based economy. These codes overhaul how salaries, hiring, employee rights, social security, and workplace safety are managed across both the organized and unorganized sectors.

🔥 The Four Labour Codes at a Glance

1. Code on Wages (2019)

Centralizes wage definitions, minimum wage, bonuses, and payment timelines.

2. Industrial Relations Code (2020)

Regulates layoffs, strikes, unions, and dispute resolution.

3. Code on Social Security (2020)

Expands EPFO/ESIC, introduces social security for gig and platform workers.

4. Occupational Safety, Health & Working Conditions Code (2020)

Standardizes working conditions, safety norms, and welfare provisions.

Coverage: salaried employees, contractors, platform workers, delivery partners, freelancers, temporary staff, and fixed-term employees.

🚀 Key Changes That Impact Employees

1. Basic Salary Must Be ≥ 50% of CTC

This is the single most disruptive reform in India’s salary structure.

• Basic pay must be at least 50% of total compensation
• Allowances cannot exceed 50%

Impact on employees

• Higher Provident Fund and gratuity contributions
• Lower in-hand salary
• Stronger long-term retirement savings

Example (₹60,000 CTC)

• Old: Basic ₹20,000 → PF ₹4,800
• New: Basic ₹30,000 → PF ₹7,200

➡️ This prevents companies from inflating allowances to reduce statutory benefits.

2. Universal Minimum Wage

For the first time, a National Floor Wage applies across:

• Organized sector
• Unorganized workers
• Contract staff
• Gig and platform workers

States cannot legally set wages below the central benchmark — a major boost for low-income workers.

3. Mandatory Timely Payments

• Daily wage: end of shift
• Weekly wage: before weekly holiday
• Monthly wage: within 7 days of the following month

This reduces payroll delays, exploitation, and informal wage practices.

4. Working Hours: 8–12 Hours With Weekly Cap

• Legal range per day: 8 to 12 hours
• Weekly maximum: 48 hours
• Overtime: 2× basic wage

Why it matters: Enables 4-day compressed work models while ensuring workers get paid for overtime.

5. Social Security for Gig & Platform Workers

A first in Indian labour history.

Includes:

• Disability and accidental insurance
• Social security funds
• PF-like contributions

Beneficiaries:
Delivery riders, ride-hailing drivers, freelance designers, tutors, service professionals, etc.
This formalizes India’s fast-growing gig economy.

6. Gender Parity & Women’s Workforce Participation

• Equal pay for equal work
• Women may work night shifts if safety conditions are met:
  • Secure premises
  • Transport arrangements
  • Written consent

This is designed to boost female participation in corporate and industrial sectors.

7. Mandatory Annual Health Checkups

Workers above age 40 get free yearly health checkups — a preventive approach to long-term workforce wellbeing.

8. Gratuity for Fixed-Term Workers

No more 5-year eligibility requirement.
Fixed-term employees now qualify in 1 year, protecting India’s project-based and startup workforce.

🌟 Benefits for Employees

• Bigger PF corpus and stronger pension
• Earlier gratuity eligibility
• Universal minimum wage protection
• First-ever legal recognition for gig/platform workers
• Strong maternity and paternity norms
• Mandatory appointment letters
• Enforced equal pay standards
• Health support for employees aged 40+

⚠️ Concerns Raised by Labour Groups & Unions

1. Higher Layoff Threshold

• Old rule: Govt approval required when company > 100 employees
• New rule: Threshold raised to 300

➡️ Companies can restructure more freely — workers fear job insecurity.

2. Restrictive Strike Provisions

• 15-day mandatory notice
• 51% minimum workforce support

Labour bodies argue this undermines collective bargaining power.

3. The “12-Hour Day” Debate

Even with weekly caps, there’s concern:

• Longer shifts may become normalized
• Burnout and fatigue may rise
• Safety and accident risks could increase

4. Dilution of Inspector Raj

• Inspectors function more like advisors
• Employers get 30 days to fix violations

Workers say this reduces accountability, favouring business interests.

💼 What Employers Gain Under the New Labour Codes

1. Simplified Compliance Framework

• 29 laws merged into 4 codes
• Single registration
• Digital filings
• Self-certification

Fewer legal ambiguities → fewer compliance bottlenecks.

2. Boost to Ease of Doing Business

• Flexibility in fixed-term hiring
• Standard employment contracts
• Lower inspector harassment
• Reduced litigation risk

Helps startups, MSMEs, manufacturing, tech and service sectors scale faster.

3. Predictable Labour Costs

• Standardized salary structures
• Consistent PF and gratuity contributions
• No room to manipulate allowances

Financial predictability = better investment planning.

4. Single-Window Labour Portal

• Registrations
• Social security management
• Unified filings

HR teams move from manual paperwork to digital compliance.

⚖️ Balanced Verdict: Short-Term Shock, Long-Term Stability

For Employees:

• Short-term: Lower in-hand salary, pressure on EMIs
• Long-term: Higher retirement wealth, PF growth, formal protections

For Employers:

• Short-term: Higher salary liabilities
• Long-term: Simplified compliance, predictable legal risks, workforce scalability

India’s new labour architecture formalizes gig work, migrant labour, platform jobs, and digital skill economies, positioning the country for global competitiveness.

📊 Old Labour Laws vs New Labour Codes (2025)

Aspect	Old Rules (Pre-2025)	New Labour Codes
Legislation	29 separate laws	4 unified codes
Salary definition	No 50% rule	Basic ≥ 50% of CTC
PF / Gratuity	Inconsistent	Standardized, higher
Gig workers	Not recognized	Social security included
Leave entitlement	After 240 days	After 180 days
Overtime	Often unenforced	Mandatory double pay
Night work (women)	Restricted	Allowed with safety
Fixed-term gratuity	No provision	Eligible after 1 year
Layoff threshold	100 workers	300 workers
Strike rules	Flexible	15-day notice, 51% support
Compliance	Inspector-led	Digital + advisory

What’s Next?

If you’re a young professional:

Expect tighter cash-flow today but stronger retirement wealth tomorrow.

If you’re mid-career with EMIs:

Short-term discomfort, but predictable long-term savings and gratuity.

If you’re an employer or startup founder:

Simple hiring and compliance — but higher payroll obligations.India’s Labour Codes are not incremental tweaks — they’re a structural reset.
They formalize informal labour, strengthen worker protections