2025 | Vol 1(1) | November

Labour reform in India: Evaluating the impact of the four new labour Codes on workers’ rights

Adarsh Kumar Pal, Student of Gujarat National Law University, Gandhinagar, India

Contact at: adarshups72@gmail.com

Abstract

This article provides an analysis of the merging of 29 Central labour laws into four labour Codes in India. The Code on Wages 2019 (Wage Code 2019), the Code on Social Security 2020 (SS Code 2020), the Occupational Safety, Health and Working Conditions Code 2020 (OSH Code 2020), and the Industrial Relations Code 2020 (IR Code 2020). It assesses their prospective and actual effects on the rights of workers. Relying chiefly on a practitioner-focused manual and the Government of India’s rollout statement the paper describes the modifications brought by the Codes (broadened coverage, consistent definitions of ‘wages’ social security provisions for gig and platform workers, formalization via appointment letters entitlements for fixed-term staff and occupational safety standards) and examines the probable impacts, on various worker categories: formal employees, fixed-term and contract workers, gig/platform workers, women, migrant laborers and MSME personnel. The article balances the reforms’ worker-centric promises (universal minimum wages, social security portability, expanded OSH duties) against governance and design concerns (rule-making gaps, implementation heterogeneity across states, inspection capacity, fiscal and compliance burdens, and ambiguity in key definitions). It concludes with pragmatic policy recommendations to strengthen enforcement, close rule-making gaps, and ensure that statutory gains translate into lived improvements for workers.

Keywords: Labour Codes, wages, occupational safety, gig workers, fixed-term employment, social security

1 Introduction

From 2019 to 2020 the Indian Union Parliament passed four labour codes aimed at streamlining, updating and unifying a dispersed collection of 29 central labour laws. The declared goals were extensive: enhance workers’ welfare guarantee wage payments, broaden social security inclusion (especially for gig and platform workers) and establish a more consistent compliance framework for employers.[1] The Codes replace or subsume long-standing statutes such as the Payment of Wages Act 1936, the Minimum Wages Act 1948, the Employees’ Provident Funds and Miscellaneous Provisions Act 1952, the Factories Act 1948, and a range of social security and industrial relations enactments. The government formally announced the operational implementation of the Codes with effect from 21 November 2025, marking a decisive policy shift in Indian labour governance.[2]

2 Overview of the four labour codes: Purpose and headline changes

Wage Code 2019: Introduces a uniform definition of “wages”, a national floor wage, and expands timely wage/payment obligations across all employees (no cut-off for monthly salary). It mandates equal remuneration for the same work and streamlines bonus and wage compliance rules.

SS Code 2020: Amalgamates multiple social security laws and brings gig and platform workers within the social security conversation. It creates structures like a National Social Security Board (NSSB) and envisions electronic registration and portability of social security benefits.

OSH Code 2020: Extends OSH obligations to establishments with 10+ workers, prescribes duties for employers (hazard elimination, annual health checks, welfare facilities), and sets uniform working hours and leave entitlements.

IR Code 2020: Reframes collective bargaining, recognition of unions and dispute resolution mechanisms (including tribunals and conciliation).[3]

Each Code is accompanied by an expectation that detailed rules and schemes will be notified by the appropriate governments; that rule-making is both central and state-level in places, creating potential heterogeneity.

3 Impacts on specific worker categories

3.1 Universal minimum wages and the national floor wage

The Wage Code 2019 introduces a national floor wage which is potentially transformational: it creates a minimum reference that state minimum wages must consider, thereby reducing the variance and potential “race to the bottom” between states. For low-paid workers, this increases predictability and raises the statutory floor for compensation. However, states will still notify minimum wage schedules, so how ambitious the floor is set will determine the reform’s practical impact.[4]

3.2 Timely wages, electronic payment and remedy timelines

The Wage Code 2019 requires timely payment of wages (and introduces short deadlines for final settlement after resignation), and formally recognizes electronic payment methods - meaningful protections in sectors that have used delayed or informal payment schedules. It also extends longer limitation periods for claims (e.g., claims can be filed within three years), improving access to remedy for delayed payments.

3.3 Social security for gig/platform workers and portability

Arguably the politically significant development is the formal acknowledgment of gig workers and platform workers within the SS Code 2020 along with the legal framework enabling schemes to include these workers. The Codes foresee contributions from aggregators and the establishment of a National Social Security Board tasked with formulating sector- schemes; they also provide for portability through a universal account number. An important advancement, for migrant and mobile workers.[5]

3.4 Rights for fixed-term and contract workers

Contractual employees are entitled to salaries and perks equivalent to those of staff; gratuity rights are granted on a pro-rata basis (and for fixed-term employees qualification criteria are eased, allowing sooner receipt of gratuity). This policy overturns years of casualization by enhancing rights for employment.[6]

3.5 Occupational safety and women’s participation

OSH Code 2020 improvements include mandatory annual health checks for certain workers, clearer employer duties to remove hazards, and the removal of categorical bans on women working night shifts now allowed with consent and safety measures. For women workers, the combination of equal remuneration provisions and OSH safeguards promises greater access to higher-paid and night-shift work.[7]

3.6 Formalization (appointment letters) and single-window compliance

Mandatory appointment letters for all workers (specifying designation, wages, social security entitlements) promote formal employment recognition. The shift to single registration, single license and single return is intended to reduce repetitive filings and encourage compliance.

4 Distributional effects: The impact on various worker categories

Regular union-affiliated and permanent employees are likely to gain from explicit wage specifications, enhanced grievance procedures as per the IR Code 2020 and broader OSH protections when minimum criteria are satisfied. They might experience wage frameworks and prompt salary disbursements. Nonetheless if the criteria for union recognition become stricter at the state level the power of bargaining could change this is a matter that necessitates ongoing observation.[8]

Temporary and contract employees secure parity in benefits, such as proportional gratuity lowering employers’ motivation to rotate staff on short-term contracts to dodge long-term obligations.[9] Nevertheless successful results largely hinge on enforcement. Main employers might try to reclassify workers or boost dependence on contractors highlighting the need for regulatory criteria and thorough verification.

Eventually, gig and platform workers are going to be recognized as a separate workforce category. The contributions of the aggregators to social security funds will be guaranteed to be transferable through universal account numbers and this being a major plus point for migrant gig workers. Still, the actual improvement in security will depend on how the contributions will be divided among the platform’s workers and the government and how the non-contributory benefits will be included. Women, migrants, and informal sector workers might benefit from the equal pay provisions that have been made stronger, from the possibility of taking voluntary night shifts with the safety measures in place, from the enhanced grievance mechanisms, and from the maternity/social assistance schemes. Portability reforms and career centres replacing employment exchanges could mean a lot to migrant workers, but this would be if there is strong outreach and accessible grievance redress. Informal workers are theoretically included within social security schemes, yet in practice, the coverage will rely on the massive registration campaigns and the funding structure that the National and State Social Security Boards come up with.[10]

5 Critical challenges in implementing the new labour Codes

While the new labour Codes reflect substantial progress on paper, the real test lies in converting legal entitlements into meaningful improvements for workers. Several structural and operational concerns highlight why implementation requires close scrutiny.

Though the new labour Codes are printed to be substantial progress, the major problem is making these legal commitments into daily capabilities for laborers. The implementation of several issues reflects the necessity of very close and constant monitoring of the process.

A primary obstacle is the ambiguity of rules and the varying levels of preparedness in the different states. Governments have not yet provided the final rules for many major features. Among these are the national minimum wage, social security for the gig sector, safety at workplaces, and the actual interpretation of the new definition of wages.[11] The absence of these rules may prompt states to take different paths and consequently cause confusion.

Another worry is the transition to the inspector-cum-facilitator model. The plan is that inspectors will assist employers before resorting to punishments. For this to be effective, inspectors have to be properly trained and electronic systems have to operate without a hitch. In states where there are few personnel or where the budget is inadequate, the facilitation may turn out to be only nominal, the inspections may be sporadic, and, consequently, enforcement may be weak. This would lead to the workers being exploited and the employers not complying with the law.[12]

The Codes also expand their scope so that they cover more workers, which aids the latter but puts a burden of compliance on the smaller companies. Now the micro, small, and medium enterprises are subjected to the minimum wage and safety regulations even if they only have ten workers.[13] With no proper backing, they might find it hard to cope.

Moreover, there are still some clarifications needed. Words like wages, employee, worker, gig worker, and platform worker are still ambiguous. This may cause intentional loophole- seeking behaviour where employers change the classification of workers or alter wages so that they are not required to make contributions. Such methods must be prevented by having strong and specific subordinate legislation in place. The financial feasibility is another serious concern. The social security schemes like PF, ESI, etc., which constitute a large workforce, will require vast funding and also powerful administrative systems.[14] The Codes do refer to contributions from aggregators and central schemes but do not provide information on sharing the costs, subsidies, and long-term sustainability. This lack of clarity may result in the benefits being delayed or underfunded. Lastly, access to justice is not evenly distributed. The Codes simplify the dispute resolution process and extend the time for filing claims, but winning depends on the availability of well-resourced tribunals, good legal aid, and simple processes. Without these aids, even the rights that have been legally improved may not lead to actual remedies.

6 Comparative perspective

Numerous nations worldwide, particularly in the EU and among the OECD member countries, are on the way to revamping their labour laws to safeguard non-traditional workers, with a special focus on gig workers. One of the most remarkable features of India's labour reform strategy is the combination of nationwide measures such as the national floor wage and universal social security IDs and flexible, sector-specific schemes.[15] Although this tactic is pragmatic, it has the same downside as in other countries: the strong rights given to workers in the law texts do not always translate into real-life protections. [16]

Hence, it is important to have good rules, reliable institutions, and gradual implementation in order to close this gap. The Codes will not be effective unless several policy steps are taken and addressed.

The first step involves genuine stakeholder collaboration in drafting the regulations. Both Central and State Governments should publish draft regulations along with their assessment of impact on administration and actively collect comments from unions, employer groups, platform worker associations, and civil society. Since most of the operational details are included in the rules, public consultations may diminish conflicts and uncertainties in the future.

The second step is the development of a clear plan of funding for social security expansion. The National Social Security Board along with the Central Government should provide phased projections and sharing models of the costs for schemes of gig, platform, and informal workers. The contributions of aggregators, the role of states, and the duration of subsidies should be described. By having finances in a transparent way, there will be a stronger assurance of reliability in the long run.[17]

The third step consists of making inspectors and digital systems for compliance more effective. Proper training, digital tools for inspection, and a platform for case management that is integrated are very important. The single registration system should connect registration, grievance redressal, and compliance so that both workers and employers enjoy the benefits of an efficient system.[18]

The fourth step involves monitoring very closely worker classification and contracting practices. A specially recruited multi-organization team could keep an eye out for reclassification patterns, contracting chains and gig-economy payment models. Data analysis and regular audits can contribute to the early identification of evasion tactics and also backing up with corrective actions.

The fifth step consists of ensuring portability for users. Universal account numbers should be usable in all states and career centres should be located easily both in the origin and destination places of workers. Smooth transfers of PF, pension and healthcare benefits can greatly reduce the hardships encountered by migrant workers.

The last step is to enhance the institutions of dispute-resolution. Industrial tribunals need to be funded and staffed properly. They should provide online filing, mediation tools, and robust legal-aid clinics as well. If there is no easy access to justice, the workers may not be able to claim the rights protected by the Codes

7 Conclusion

To sum up, the four labour Codes are the largest modification of the Indian labour code in a long time. Protections for living wage, social security, safety at work and industrial relations have been expanded and at the same time, the long-standing issues like gig employment, portability, fixed-term gratuity, appointment letters and a national floor wage have been addressed. The success of the Codes, however, is subject to the real-world implementation and not the mere design of legislation. The fate of the Codes as to whether they will be a boon to workers or not will depend on three factors. The first one is comprehensive and practical rule-making that shuts the loopholes and establishes realistic norms. The second one is financial and administrative backing for inspectors, courts, and the digital systems that would be quite strong. The third one is social security funding that is both clear and stable, especially for workers in the gig and platform category. Their successful implementation with these types of priorities can lead to greater formalisation in India and stronger worker protection. If not, the labour Codes may continue to be an ambitious framework with very limited impact in practice. The next phase of the rules and their implementation must be considered by policymakers, employers and worker groups as the true battleground for worker rights.

References

[1] Press Information Bureau, ‘Labour Reforms in India: Steps Towards Simplification, Security and Sustainable Growth’ (21 November 2024) https://www.pib.gov.in/PressReleasePage.aspx?PRID=2192524&reg=3&lang=2 accessed 27 November2025.

[2]Comparison of Codes and Earlier Labour Laws (Labour Law Reporter, 2020) file:///mnt/data/Comparison-of-Codes-and-Earlier-Labour-Laws-2.pdf accessed 30 November 2025.

[3]Labour Ministry, The Labour Code (Government of India, 2020) file:///mnt/data/labour_code_eng.pdf accessed 1 December 2025.

[4]‘Labour laws passed by Parliament in 2020 comes into effect today’ The Hindu (Online, 2 December 2025) https://www.thehindu.com/business/Economy/labour-laws-passed-by-parliament-in-2020-comes-into-effect-today/article70307091.ece accessed 2 December 2025.

[5]How will new codes change labour laws — explained’ The Hindu (Online, 2 December 2025) https://www.thehindu.com/business/Economy/how-will-new-codes-change-labour-laws-explained/article70339372.ece accessed 2 December 2025.

[6] Ibid 32 para 1.

[7] Ibid 64 para 4.

[8] The Economic Times, ‘New labour codes may reduce take-home salary, but lower tax outgo’ (Preeti Kulkarni, 3 December 2025) https://economictimes.indiatimes.com/wealth/save/new-labour-codes-may-reduce-take-home-salary-but-lower-tax-outgo/articleshow/125734148.cms?from=mdr accessed 4 December 2025.

[9] Times of India, ‘New labour codes: Paradigm shift in India’s employment regulation - but key is implementation’ (Parizad Sirwalla, 1 December 2025) https://timesofindia.indiatimes.com/business/india-business/new-labour-codes-paradigm-shift-in-indias-employment-regulation-but-key-is-implementation/articleshow/125690438.cms accessed 4 December 2025.

[10] Livemint, “India gets new labour codes: minimum-wage guarantee, gratuity after 1 year, social security for 40 crore workers — full list” (29 November 2025) https://www.livemint.com/news/india/india-gets-new-labour-codes-minimum-wage-guarantee-gratuity-after-1-year-social-security-for-40cr-workers-full-list-11763719159658.html accessed 28 November 2025.

[11]BBC, ‘India new labour codes: Unions ask for rollback after sweeping changes’ (28 November 2025) https://www.bbc.com/news/articles/cpwk28d5yzxo accessed 28 November 2025.

[12] Khaitan & Co LLP, ‘Understanding India’s New Labour Codes: Challenges in Implementation’ (Mondaq, 26 May 2021) https://www.mondaq.com/india/employee-benefits-compensation/1072672/understanding-indias-new-labour-codes-challenges-in-implementation accessed 2 December 2025.

[13]The Wire, ‘Minimum wages under the new labour codes: what the law promises and what it misses’ https://thewire.in/labour/minimum-wages-under-the-new-labour-codes-what-the-law-promises-and-what-it-misses accessed 1 December 2025.

[14] Tom Barnes, ‘Indian Labour Movements under Modi’ in Ivan Franceschini and Nicholas Loubere (eds), Gilded Age (ANU Press 2018) 186–189 http://www.jstor.org/stable/j.ctvgd1hr.41 accessed 2 December 2025.

[15] Nataliia O Melnychuk and others, ‘Conceptual Principles of International Cooperation in Labour Relations’ (2022) 16(2) Work Organisation, Labour & Globalisation 158–172 https://www.jstor.org/stable/48691519 accessed 2 December 2025.

[16] Daniel Calderón-Gómez et al, ‘The Labour Digital Divide: Digital Dimensions of Labour Market Segmentation’ (2020) 14(2) Work Organisation, Labour & Globalisation 7 https://doi.org/10.13169/workorgalaboglob.14.2.0007 accessed 2 December 2025.

[17] Liliia Matraeva et al, ‘The Effects of Digitalization on the Labour Market: The Case of Russia’ (2020) 14(2) Work Organization, Labour & Globalization 31 https://doi.org/10.13169/workorgalaboglob.14.2.0031 accessed 2 December 2025.

[18] Werner Eichhorst et al, Welfare States, Labor Markets, Social Investment and the Digital Transformation (IZA - Institute of Labor Economics 2020) http://www.jstor.org/stable/resrep60430 accessed 2 December 2025.