The four labour codes — Code on Wages, 2019, Industrial Relations Code, 2020, Code on Social Security, 2020 and the Occupational Safety, Health and Working Conditions Code, 2020 – were notified on November 21. File.
| Photo Credit: Sushil Kumar Verma

The story so far: On November 21, Union Labour Minister Mansukh Mandaviya announced the implementation of four Labour Codes — the Code on Wages, 2019, Industrial Relations Code, 2020, Code on Social Security, 2020 and the Occupational Safety, Health and Working Conditions (OSHWC) Code, 2020. Parliament had passed these codes between 2019 and 2020.

Why is the process taking time?

As labour is in the concurrent list, both the States and Centre have the power to makes Rules. The Centre published draft Rules for each code between July 7, 2020 and November 19, 2020; and as on July 2025, 32 States and Union Territories have also pre-published draft Rules under the four Labour Codes. According to a statement in Parliament during the last Monsoon session, West Bengal and Lakshadweep have not pre-published draft Rules under any Labour Codes. Delhi has pre-published draft Rules only under the Code on Wages. Tamil Nadu is yet to pre-publish draft Rules under the Code on Social Security. The Centre stated that the delay in implementing the Rules was mostly because of the lag in States.

Editorial | Labour and honour: On the four Labour Codes, the path ahead

What are the key features?

The Code on Wages repeals the Payment of Wages Act, 1936, the Minimum Wages Act, 1948, the Payment of Bonus Act, 1965 and the Equal Remuneration Act, 1976. The Industrial Relations Code amalgamates the Trade Unions Act, 1926, the Industrial Employment (Standing Orders) Act, 1946 and the Industrial Disputes Act, 1947. The Code on Social Security nullifies nine Acts including the Employees’ Compensation Act, 1923, the Maternity Benefit Act, 1961 and the Unorganised Workers’ Social Security Act, 2008. The OSHWC Code repeals Acts such as the Factories Act, 1948, the Mines Act, 1952, and the Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979. The Government repealed and codified 29 Acts that decided the structure of labour rights from the colonial period to the first United Progressive Alliance government.

What are the major changes?

According to the Government, the Labour Codes promote formalisation of employment, expand social security coverage, ensure minimum and timely wages for more workers, provide for engaging more women in the workforce and reduce compliance burden for employers. Some of the other features include mandatory appointment letters to all workers, social security such as provident fund and State insurance for all workers including gig and platform workers, and a statutory right for minimum wage payment. Women can now work at night and in all types of work across establishments, and they will have equal opportunities in high-paying roles. A national floor wage will be set to ensure no worker receives a wage below the minimum living standard. Gender-neutral pay and job opportunities, prohibiting discrimination against transgender persons, and “shifting enforcement towards guidance, awareness and compliance support rather than punitive action,” are some of the other features.

How have employers responded?

Almost all employers’ organisations have welcomed the Codes. The president-designate of the Confederation of Indian Industries R. Mukundan told The Hindu that the labyrinthine labour law framework needed to be simplified, harmonised and modernised. “The Labour Codes do exactly that. They will create jobs, ensure social protection and maintain industrial harmony in a fast advancing economy,” he said. He argues that the uniformity across States, digital filings, reduced disputes and the emphasis on flexibility will make India a more attractive destination for doing business. However, representatives of micro, small and medium enterprises (MSMEs) are sceptical. The Association of Indian Entrepreneurs (AIE) fear that the new Labour Codes may significantly increase operating costs for MSMEs and disrupt business continuity across key sectors. “While AIE fully supports progressive labour reforms and the need for a modern workforce framework, the organisation has cautioned that the immediate impact on MSMEs could be severe unless governments provide clarity, transitional support, and flexible implementation mechanisms,” it said in a statement. It is seeking a transitional grace period with reduced penalties for MSMEs.

What are the concerns of trade unions?

Barring the Bharatiya Mazdoor Sangh (BMS), all Central Trade Unions (CTUs) are opposed to the Labour Codes. Ten CTUs and associated federations organised strikes against the proposed Labour Codes in 2019, 2020, 2022, 2023 and on July 9, 2025. The BMS has welcomed the implementation of two Labour Codes, the Code on Wages and Code on Social Security, and has questioned provisions in the Industrial Relations Code and the OSHWC Code.

The CTUs worry that the codes will take away several federal rights, including the right to decide minimum wages in the States. The floor wage, according to them, is a joke played on workers as in the past too, the Centre had failed to address the demands and realities of workers. On social security, the CTUs argue that 93% of the workers are not covered under any social security and the codes have no provision to improve the scenario. Also, the threshold of workers for factory licence has been increased and this will exclude a lot more workers from the social security and minimum wages provisions, allege trade unions.

On the Industrial Code too, they have issues as there will be “unwarranted restrictions” on the functioning of trade unions, including “limitations on membership, restrictions on outsiders serving as office-bearers, and the introduction of concepts such as the sole negotiating union and the negotiating council.” The right to strike also sees curtailments in the code. Trade unions have questioned the reduction of retrenchment notice pay, limiting the period for workers’ money claims, exclusion of house rent allowance from the definition of “wages”, the overall emphasis on contractualisation and allowing women workers in night shifts in sectors such as mines.

What lies ahead?

The Government has announced that all stakeholders will get 45 days to respond to the draft Rules of the Codes which it will again pre-publish with some modifications. Opposition-ruled States have reservations: Kerala said it will not implement the codes, while Karnataka, West Bengal and Tamil Nadu have also questioned the Centre’s “unilateral” approach. The trade unions have urged the Government to convene the Indian Labour Conference, the tripartite forum that has not met for over a decade, at the earliest. Employers also want to the government to facilitate more discussions at the factory level so that relations are not hampered at a time when businesses are facing challenges globally.

Published – November 30, 2025 02:50 am IST

While the Centre’s decision to put into effect the four Labour Codes has been welcomed across the board, industry bodies and labour experts have said the government must now turn its attention to the implementational challenges. 

Such challenges include the burden these new laws will place on smaller enterprises and the services sector, the problems associated with the overnight implementation of such sweeping changes, and the need for authorities to be conciliatory rather than over-strict with defaulters.

The Centre on Friday (November 21, 2025) announced that the four labour codes it had introduced about five years ago — 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 — would be made effective from November 21, 2025. 

These four codes, rationalising 29 existing labour laws, are aimed at providing India’s working population with greater surety when it comes to appointment letters, social security, minimum wages, timely wage payments, insurance coverage, and health benefits, among others. 

Compliance difficulties

“21 November is a date that has, without much notice or warning, become a landmark date in the context of employment laws and labour relations in India,” Atul Gupta, Partner, labour and employment practice at Trilegal said. “Decades old laws, many from the British era, have been replaced today with the Labour Codes, which have been in the making for several years.”  

However, Mr. Gupta also highlighted the fact that the immediate applicability of the new laws will make compliance somewhat difficult for companies.

“Unfortunately, with no grace period for implementation, organisations will need to take immediate cognisance of the substantive provisions of the Codes that have come into force, even while they wait for Rules to be formalised,” he said. 

Similarly, Rahul Ahluwalia, Founder and Director at Foundation for Economic Development, also said that the new labour codes would reduce the compliance burden for manufacturers, while also providing States greater flexibility on aspects such as retrenchment thresholds and quarterly caps on working hours. 

‘Companies must tread carefully’

That said, Mr. Ahluwalia also said that the new labour codes also raise some new concerns.  

“The services sector will now be affected by a lot of the rigid laws that used to cover only factories earlier,” he explained. “The government will need to stay flexible while ironing out wrinkles of implementation to ensure that we don’t disrupt sectors that are working well, and simultaneously encourage new investment.”

Mr. Gupta in fact cautioned organisations to pause and assess any material employment related actions right now, and seek legal guidance “to ensure that they do not unwittingly fall afoul of these new codes”.

‘MSMEs will need fiscal support’

In a note released following the decision on the labour codes, the Association of Indian Entrepreneurs (AIE), a not-for-profit body advocating on behalf of gig workers, traders, micro entrepreneurs, and the self-employed, said that the new labour codes would significantly increase employment costs for micro and small enterprises. It added that these enterprises would need fiscal support to comply.

“The expanded scope of Employees’ State Insurance Corporation (ESIC), Provident Fund and safety compliance means thousands of micro and small enterprises will see a sharp rise in employee-related expenditure,” AIE said in its statement. 

It added that many MSMEs may be forced to restructure their workforce size, absorb higher social security payouts, invest in safety equipment and periodic medical checks, and upgrade HR systems to comply with new digital requirements.

“All of these are good measures, but [they] need financial support,” AIE argued. “These costs come at a time when MSMEs are already battling high inflation, rising capital costs and market uncertainties.”

‘Implementation must be conciliatory’

Anshul Prakash, Partner at Khaitan & Co, said that a lot would now depend on the implementation by the Centre and the States.

“Much would now depend on the ground level machinery of facilitators at Central and State levels who will be expected to approach the enforcement of these laws with a conciliatory mindset instead of that of prosecution for any non-compliance,” Mr. Prakash said. 

“Practical bottlenecks may come up in respect of Rules under these codes that would need to be made effective by respective State governments,” he added.

Published – November 22, 2025 04:36 pm IST