India’s Labour Codes 2025: Compliance Guide for Employers

From 21st November 2025, India enters a new phase in its labour ecosystem. With 29 outdated labour laws consolidated into four unified Labour Codes, the way organizations manage compliance, employee rights, and workplace governance will change significantly. 

For HR teams and business leaders, this reform directly impacts appointment letters, wage structures, social security coverage, and compliance operations. For workers, especially those in the gig economy, fixed-term roles, and the unorganized sector, it brings structured protection and expanded access to welfare benefits. 

At its core, the new Labour Codes aim to simplify compliance while strengthening workforce safeguards, creating a framework aligned with modern employment realities.

India’s Labor Law Codes 2025: At a Glance

These reforms bring consistency across states, reduce compliance complexity, and align India’s labour landscape with global standards. 

This blog breaks down what the new Labour Codes really mean, how they change the compliance landscape, and what employers and workers should prepare for as India adapts to this new framework. 

But before understanding what has changed, it is important to look at why this reform became necessary. 

Why India Needed Labour Law Reform?

India’s earlier labour laws dated back to the 1930s-1950s, an era of limited industrialization and rigid employment structures. These laws were no longer equipped to support today’s dynamic work environment, now defined by digital platforms, remote roles, and AI-driven industries.

Employers faced multiple registrations, overlapping inspections, and inconsistent interpretations, while gig and informal workers remained largely excluded from social security protection.

The new Labour Codes address this gap by enabling: 

• Structured protection for gig and contract workers 
• Simplified compliance frameworks 
• Uniform regulation across sectors and states 
• Greater alignment with the Aatmanirbhar Bharat vision

In simple terms, India moves from fragmented regulation to a clearer, more predictable labour ecosystem. 

India’s Labor Codes 2025: Before vs After Snapshot

This transformation reshapes how organizations approach HR operations and labour compliance. It also signals a shift towards formalizing employment practices and improving long-term workforce accountability.

The Four Labor Codes: What’s Changing In 2025?

While the consolidation of 29 labour laws into just four Labour Codes may appear substantial, the intent is not to complicate the system but to simplify it. 

Each code addresses a specific dimension of work: wages, industrial relations, social security, and workplace safety. Together, they aim to create a more predictable and balanced employment framework for both employers and workers. 

Code on Wages, 2019

The Code on Wages ensures that every worker in India receives fair and timely compensation, irrespective of sector or employment type. It creates uniformity in how wages are defined, calculated, and paid. 

Key provisions: 

• Universal minimum wages applicable to all workers across sectors.
• National Floor Wage set by the Central Government, below which states cannot fix wages.
• Guaranteed gender-equitable pay, extending protection to transgender workers. 
• Overtime payable at twice the normal rate for work beyond prescribed hours. 
• Mandatory wage payment by the 7th of every month. 
• Strict prohibition on unauthorized deductions. 
• Revised wage definition ensures that at least 50% of total remuneration is considered for wage computation. 

Industrial Relations Code, 2020

The Industrial Relations Code modernizes employer-employee relationships and introduces greater clarity in dispute resolution, trade union functioning, and employment flexibility. 

Key features: 

• Fixed Term Employment (FTE) with full parity to permanent employees, including gratuity after one year. 
• Re-skilling Fund requiring employers to contribute 15 days’ wages for every retrenched worker.
• Trade union recognition based on 51% membership, or creation of a Negotiating Council where multiple unions exist. 
• Faster dispute resolution through two-member Industrial Tribunals. 
• Work-from-home provisions for service sectors with mutual consent. 
• Expanded definition of “worker” to include sales staff, journalists, and supervisors earning up to ₹18,000 per month. 
• Layoff approval threshold raised from 100 to 300 workers (state governments can increase further).
• Standing orders are now mandatory for establishments with 300 or more employees. 
• Mandatory 14-day notice for strikes and lockouts across all establishments. 
• Broader definition of strikes to include mass casual leave. 
• Proportional representation of women in grievance redressal committees. 

Code on Social Security, 2020

This code brings gig workers, platform workers, and unorganized sector employees under formal social security coverage for the first time.

Major changes: 

• Pan-India ESIC and EPF coverage without geographic restrictions. 
• Aggregators to contribute 1–2% of annual turnover (capped at 5% of total worker payments). 
• Dedicated social security fund for gig, platform, and unorganized workers. 
• Gratuity eligibility for fixed-term employees after one year of service. 
• Coverage of accidents during home-to-work travel as employment-related. 
• Universal Account Number (UAN) enabling portability of benefits across states.
• EPF enquiries can be initiated only within 5 years and completed within 2 years.
• EPF appeal deposit reduced to 25% of assessed amount.
• Expanded definition of dependents to include parents-in-law and maternal grandparents.
• Voluntary ESIC for establishments with less than 10 employees, mandatory ESIC for hazardous units even with one worker.
• Mandatory vacancy reporting to career centers prior to recruitment.

Occupational Safety, Health, and Working Conditions Code, 2020

This code merges 13 previous Acts and establishes unified safety, health, and working condition standards across industries. 

Key highlights: 

• Single electronic registration replacing multiple approvals. 
• Expanded migrant worker definition covering direct, contractual, and self-migrated workers. 
• Mandatory annual travel allowance for migrant workers. 
• Development of a national database for unorganized workers. 
• Permission for women to work night shifts with consent and safety ensures. 
• Safety committees are mandatory in establishments with 500+ workers. 
• The contract labour threshold increased to 50 workers. 
• The factory threshold revised to 20 with power and 40 without power. 
• Free annual health check-ups for workers over 40 years. 
• Mandatory appointment letters for all employees. 
• Working hours capped at 8 hours/day and 48 hours/week. 
• At least 50% of fines in cases of injury or death directed to victims or their families. 

Let’s see how these actually benefit the major work groups in India: 

Who Benefits the Most from the New India Labor Laws?

Implementation of the New Labor Codes

The codes take effect from 21st November 2025, but implementation will follow a phased approach driven by state governments through detailed notifications and rule framing. 

Here’s what you can expect during the transition: 

• State-level rule formulation and consultations 
• Digitization of compliance infrastructure 
• Awareness campaigns for employers and workers 
• Creation of national databases for unorganized workers 
• Continued applicability of existing laws until full transition 

During this transition period, the existing labor acts and their rules remain in force for relevance, until the new policy framework is structured and approved. 

This is not just about ticking boxes. Proactive compliance reduces legal risk, builds workforce trust, and improves operational predictability. 

What Workers Should Know About the New Labour Codes

The new Labour Codes are not just legal reforms. They represent a shift towards balanced growth, where productivity and protection coexist. They strengthen employer confidence while formally recognizing India’s evolving workforce.  

For businesses, it means clearer compliance and predictable operations, while for workers, it ensures dignity, safety, and stability. 

Managing these reforms manually can strain HR teams. But with Keka, teams can: 

• Ensure timely wage payments 
• Automate EPF and ESIC compliance 
• Manage appointment letters digitally 
• Track workforce categories 
• Stay updated with compliance requirements 

Frequently Asked Questions (FAQs)

Do the new labour codes apply to small businesses?

Yes, but the codes include provisions to ease compliance for small businesses, including higher thresholds for factory registration (20 workers with power, 40 without), simplified single-window registration, and 30-day compliance notice for first-time offences. 

How do labour codes affect women workers?

Women now have equal pay guarantees, can work night shifts with safety measures, have access to previously restricted jobs (including underground mining), and have mandatory representation on grievance committees. 

What are the penalties for non-compliance with labour codes?

Minor offences now attract monetary fines rather than criminal prosecution. First-time offences are compoundable: 50% of maximum fine for fine-only offences, 75% for fine/imprisonment cases. Employers receive 30-day notice for compliance before legal action. 

What documents do employers need to maintain under labour law codes?

Employers must maintain appointment letters for all workers, wage records, attendance registers, and documentation for statutory compliance including PF, ESIC, and safety protocols. All records can be maintained electronically. 

Are the labour codes the same across all Indian states?

The four central labour codes apply nationwide, but states will frame detailed rules for implementation within their jurisdictions. The Central Government will conduct consultations during rule-framing.