India’s labour law framework has just undergone its most significant reform in decades. With effect from 21 November 2025, the Government of India has implemented four Labour Codes that replace and rationalize 29 central labour laws. For employers, this is not only a legal development. It changes how you formalize employment, design compensation, manage contractors and gig workers, and demonstrate compliance.
This article explains the key features of the new regime using the official Press Information Bureau (PIB) note as the base reference and translates them into management implications.
From 29 Laws to 4 Labour Codes
Many of India’s labour statutes were framed between the 1930s and 1950s, when the economy and forms of work looked very different. They evolved in a fragmented way and created overlapping, sometimes outdated requirements.
The Government has now brought 29 central labour laws under four 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 (OSH) Code 2020. The stated objective is to modernise labour regulation, enhance worker welfare and align India’s labour ecosystem with global standards, while supporting a “future ready” workforce and more resilient industries.
For businesses, the immediate consequence is that the central reference points for labour law in India are now these four codes. During the transition, however, rules, regulations, schemes and notifications under existing labour Acts continue to remain in force until they are replaced or aligned. Management teams therefore need an updated map of which provisions apply to their establishments in each state.
Formalization of Employment: Appointment Letters as the New Norm
One of the most visible changes is the move towards formalisation. Prior to the reforms, many segments of the workforce did not receive formal appointment letters. The new framework makes written appointment letters mandatory for all workers.
The PIB note highlights that written proof of employment is expected to improve transparency, perceived job security and clarity of terms. For employers, this is both an obligation and an opportunity. Standardised appointment letters, aligned to the codes and to state specific rules, reduce ambiguity around role, wage, benefits, working hours and notice periods. They also create a stronger evidentiary base if disputes arise later.
A practical first step for any employer is to ensure that every worker, including those in smaller units and those previously hired informally, has an appointment letter that accurately reflects current terms and complies with the new codes.
Universalization of Minimum Wages and Timely Payment
Under the earlier regime, minimum wages applied only to scheduled industries or specified employments. Large sections of the workforce remained outside that protection. The Code on Wages extends the statutory right to minimum wages to all workers, backed by a national floor wage determined by the central government.
The press note emphasises that minimum wages and timely payment will support financial security, reduce stress and boost morale. It also stresses that timely payment of wages, including payment during leave, is now a mandatory feature, with clear expectations on wage cycles.
For employers, this means revisiting wage structures against the applicable minimum wage rates in each state and category and confirming that payroll processes deliver consistent and timely payments. Where earlier pay practices relied heavily on allowances or incentive components, the interaction with the new wage definition in the codes needs to be understood to avoid inadvertent non-compliance.
Expanded Social Security Coverage and Preventive Healthcare
The Code on Social Security significantly widens the coverage net. The PIB note states that under this code all workers, including gig and platform workers, are to receive social security coverage, with access to provident fund, ESIC, insurance and other benefits.
A major shift is in ESIC coverage. Earlier, ESIC applied only in notified areas and largely excluded very small establishments. Now ESIC benefits are extended across India, with voluntary coverage available for establishments with fewer than ten employees and mandatory coverage even where a single employee is engaged in hazardous processes. This is intended to expand social protection materially for workers in smaller units and higher risk activities.
The codes also introduce a clear push towards preventive healthcare. Employers must provide all workers above 40 years of age with a free annual health check-up. Similar obligations apply to contract workers and workers in hazardous industries, where free annual check-ups and higher safety standards are stressed.
From a management perspective, this requires integration of healthcare and social security obligations into HR budgets, vendor contracts and site level practices. It is no longer sufficient to treat ESIC and health checks as optional benefits; they are statutory features of labour law in India for a broad set of workers.
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Gig and Platform Workers, Contract Workers and Fixed Term Employment
For the first time, the codes define gig work, platform work and aggregators. Aggregators are required to contribute between 1 and 2 percent of their annual turnover, capped at 5 percent of the amounts paid to gig and platform workers, to fund social security. Aadhaar linked universal account numbers are intended to make benefits portable across states and employers.
The note also underscores a stronger framework for fixed term employees and contract workers. Fixed term employees are to receive the same benefits as permanent staff, including leave, medical benefits and social security. They become eligible for gratuity after one year of service, compared to the earlier norm of five years. Principal employers must ensure health and social security benefits for contract workers and provide free annual health check-ups.
For organisations that rely heavily on contractors, temporary staff and platform-based models, these are not marginal details. They change the economics of engagement models and clarify that responsibility for core protections cannot simply be outsourced. Employers will need to review their contractor agreements, aggregator roles, engagement policies and internal cost models to remain compliant while retaining flexibility.
Women, Youth and Sector Specific Protections
A strong theme in the PIB note is the emphasis on women’s participation and equal opportunity. Previously, women’s employment in night shifts and in certain occupations such as underground mining was restricted. Under the new framework, women can work at night and in all types of work across establishments, subject to their consent and mandatory safety measures. The codes prohibit gender discrimination in wages and job opportunities and extend the definition of family for female employees to include parents in law, broadening dependent coverage.
Youth and MSME workers are highlighted as separate beneficiary groups. The note points out that all youth workers will now receive minimum wages and appointment letters, and that payment of wages during leave is mandatory. For MSME workers, the reforms ensure social security coverage, minimum wages, standard working hours, double overtime wages, paid leave, timely wages and access to basic facilities like canteens and rest areas.
Beyond these, the document provides detailed illustrations for beedi and cigar workers, plantation workers, audio visual and digital media workers, mine workers, hazardous industry workers, textile workers, IT and IT enabled services staff, dock workers and export sector workers. These examples underline that the codes are designed to address the realities of different sectors, not just generic factory environments.
For employers, especially in sectors like IT, media, plantations, export manufacturing or hazardous industries, it is important to look at these sector specific descriptions and map them to current practices. For example, IT and ITES employers are reminded that salary release by the seventh of each month is mandatory, and that equal pay and timely resolution of harassment or wage disputes are formally embedded in the new framework.
Compliance Architecture and Dispute Resolution
The PIB note explains that the codes are not only about rights and benefits; they also reshape the compliance and enforcement architecture. A key feature is the move to single registration, single licence and single return across many requirements, replacing multiple overlapping filings.
The inspector system is recast as an inspector-cum-facilitator model, with an emphasis on guidance, awareness and support for compliance, rather than a purely punitive role. Dispute resolution is expected to become faster and more predictable through two-member industrial tribunals and a clearer path to approach tribunals after conciliation.
Safety governance is also strengthened through the creation of a National OSH Board to set harmonised standards and the requirement for safety committees in establishments with 500 or more workers. Slightly higher applicability limits for factories are mentioned as a way to ease regulatory burden on very small units while retaining safeguards for workers.
For employers, this means that while some procedural burdens will reduce over time, expectations on the quality of underlying records, self-auditing and responsiveness to facilitative inspections will increase. Labour compliance becomes a more data driven, governance linked function rather than a form filling exercise.
A Step Change in Social Protection
The press note sets the reforms in a broader social protection trajectory. It states that over the past decade India has expanded social security coverage from about 19 percent of the workforce in 2015 to more than 64 percent in 2025 and frames the four Labour Codes as the next major step in that direction. With expanded social security, stronger protections and portability of entitlements across states and sectors, the codes are presented as placing workers, especially women, youth, unorganised, gig and migrant workers, at the centre of labour governance.
At the same time, the document highlights that by reducing compliance burden and enabling more flexible, modern work arrangements, the codes are intended to support employment, skilling and industry growth. The underlying message is that labour law in India is being repositioned as both pro worker and pro enterprise.
For leadership teams this dual objective is an important signal. Regulatory expectations will not be limited to avoiding violations; there will be increasing interest from investors, buyers, lenders and regulators in how organisations use the new framework to provide decent work, support diversity and manage workforce transitions responsibly.
How HMSA can help
HMSA can help businesses translate the new Labour Codes into practical, low-risk workforce strategies and HR systems. We work with promoters, CXOs and HR leaders to map exactly how the Codes and state rules apply to their locations and workforce mix, then realign appointment letters, HR policies, compensation structures and contractor arrangements accordingly.
Our support typically covers rationalizing workforce categories (workers, managers, fixed term, contract labour, gig/platform), updating documentation for wages, working hours, ESIC/EPF, gratuity, maternity and annual health check-ups, and strengthening safety, welfare and grievance mechanisms. We also integrate labour compliance and workforce risk into business planning, restructurings, and due diligence so that clients are not only compliant on paper but also reduce future disputes and build a more resilient platform for growth.
Opinion
The implementation of the four Labour Codes is not just a legal housekeeping exercise. It represents a structural reset of labour law in India. The statutory map is simpler, but the expectations from serious employers are clearly higher, especially around formalization, social security, preventive healthcare and data-backed compliance. Organizations that treat these changes as an opportunity to clean up contracts, rethink engagement models and strengthen safety and welfare will be better placed in the long run than those that only aim to “tick the box”.
Reference: PIB, Ministry of Labour & Employment
