India is the 4^th largest economy in the world with its 500 million people in the workforce. The contribution of Indian workforce in the world has never been an enigma. This huge young workforce needs a structure to function. The government has formulated four comprehensive Labour codes to aid the functioning of our huge workforce. The new four Labour codes are consolidation of twenty-nine Labour laws for a more streamlined framework.

The new four comprehensive Labour codes are:

1.    The Codes on Wages, 2019

2.    The Industrial Relations Code, 2020

3.    The Code on Social Security, 2020

4.    The Occupational Safety, Health and Working Conditions Code, 2020

The main objective of consolidating and streamlining the previous twenty-nine laws into four Labour Codes is to simplify the compliances. It will not only help the employer but also the employee to follow the framework. Apart from streamlining enforcement and the framework, the consolidation of new Labour Codes also aims at modernizing the outdated laws. The laws have been passed in the times with different needs and priorities, whereas the new Labour Codes cater to the new generation and economy. The new concept ‘Single Registration, Single License and Single Return’ has been introduced by the Codes to rationalize the functioning of the workforce.

Code 1: The Code of Wages, 2019

This code consolidates The Payment of Wages Act, 1936; The Minimum Wages Act, 1948; The Payment of Bonus Act, 1965; and The Equal Remuneration Act, 1976.  It aims at simplifying and unifying the wage related compliances for the workforce. This Code has brought the unorganized sectors in the purview of the minimum wage. Previously it only covered approximately 30% of the workers which came in the scheduled employments. It is aimed to bring uniformity and adequacy nationwide by setting minimum floor wage based on the minimum living standards.

The Code of Wages, 2019 apart from fixing the minimum wage, also covers the overtime work done by the employees. The overtime fixation is fixed at twice the usual rate for work done beyond the working hours. The inspector under the previous codes has been changed into the Inspector-cum-facilitator. This is done with the intention of spreading guidance and awareness and give the inspector more of an advisory role.

Code 2: Industrial Relations Code, 2020

The Code consolidates Trade Unions Act, 1926, the Industrial Employment (Standing Orders) Act, 1946 and the Industrial Disputes Act, 1947. This Code targets the industrial disputes, unions and investigation. It fixes the term of employment and time bound contracts and further helps the workforce to bring transparency and parity in wages. Previously, the employees were eligible for gratuity after five years of employment. Whereas, with this Code the employees get eligible for gratuity after one year of employment.

The Industrial Relations Code, 2020 also covers the retrenchment compensation and the threshold for layoffs. It mandates the fifteen days’ worth of salary to be credited within forty-five days of retrenchment. The Code has enhanced the upper threshold for layoffs to be 300 employees, which was 100 previously. The government might also enhance the threshold further. The trade union comes under the purview of this Code. It mandates 51% membership to form a negotiating union. Whereas, if this percentage isn’t met with any of the council, the Code has the provision of negotiating council with support of at least 20% of worker support. The Code mandates 14 days prior notice to the employers before organizing a strike or lockouts. It also allows the parties to approach the tribunals after failed conciliation of ninety days.

The Code ensures that everyone at the workplace is treated fairly. It promotes equal representation for workers and does not allow any kind of discrimination, whether based on gender, caste, religion, or anything else. As all the four Labour Codes are in tune with the new generation’s demand and priorities, it allows work from home as well with the consent of both employer and the employee.

Code 3: The Code on Social Security, 2020

This Code consolidates The Employee's Compensation Act, 1923; The Employees' State Insurance Act, 1948; The Employees' Provident Funds and Miscellaneous Provisions Act, 1952; The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959; The Maternity Benefit Act, 1961; The Payment of Gratuity Act, 1972; The Cine-Workers Welfare Fund Act, 1981; The Building and Other Construction Workers' Welfare Cess Act, 1996 and; The Unorganised Workers' Social Security Act, 2008. This Code provides social security to all the workers including the gig workers, platform workers and unorganized workers. It extends a safety net to all the workers and their families to help them in their tough times.

The Code on Social Security, 2020 mandates the application of Employee’s State Insurance Coverage (ESIC) pan India, except the criteria of “notified areas.” Workplace with hazardous occupation has to mandatorily apply the ESIC. The Code sets a limit within which a PF enquiry could be initiated. The EPFO can begin an investigation only for issues that happened within the last five years. They cannot open an inquiry for something older than five years. The enquiry needs to be finished within 2 years (extendable by 1 year).

The Code under its provision, allows the self-assessment of cess liabilities. Earlier, the notified government authorities used to conduct the assessment leading to a lot of paperwork and delay.

In the spirit of extending the social security to all the workers, the Code has a provision of Social Security Fund. This fund is a dedicated fund formulated to help the gig and platform workers. It will ensure the benefits like health cover, disability cover and old age benefits.

The new rules expand family coverage by including maternal grandparents and, for female workers, dependent parents-in-law as eligible dependents. Wages now have a uniform definition, including basic pay, dearness allowance, and retaining allowance, ensuring consistent calculation of PF, gratuity, and pension benefits.

Code 4: Occupational Safety, Health and Working Conditions Code, 2020.    

This Code consolidates The Factories Act, 1948; The Plantations Labour Act, 1951; The Mines Act, 1952; The Working Journalists and other Newspaper Employees (Conditions of Service and Miscellaneous Provisions) Act, 1955; The Working Journalists (Fixation of Rates of Wages) Act, 1958; The Motor Transport Workers Act, 1961; The Beedi and Cigar Workers (Conditions of Employment) Act, 1966; The Contract Labour (Regulation and Abolition) Act, 1970; The Sales Promotion Employees (Conditions of Service) Act, 1976; The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979; The Cine-Workers and Cinema Theatre Workers (Regulation of Employment) Act, 1981; The Dock Workers (Safety, Health and Welfare) Act, 1986 and; The Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996.

The aim of this new Code is to ensure conservation of workers’ rights, creating working conditions that are friendly for both workers and the employers. According to this Code, an organization with more than 10 employees doesn’t need to register under various labour laws. It propagates the ‘Single Registration, Single License and Single Return’ by having the organization register only once. This would create a simple and unified database and will ease the compliance process. The Code ensures the safety of the workers engaged in the hazardous occupation even if only one worker is involved in the whole organization. The workers who have migrated from home to work will receive annual travel allowance to return home once a year, Portability of public distribution system benefits and social security across states and access to a toll-free helpline.

Health check-ups, formal appointment letters, and safety committees promote worker well-being and transparency. Working hours are capped at eight per day and 48 per week, with overtime paid at double the rate. This Code ensure welfare and timely wage payment, while offences are now mostly punishable with fines instead of imprisonment, and a social security fund supports unorganized workers. Inspectors act as facilitators to help businesses comply with the law, and a national database tracks workers’ skills and benefits, improving employment access and social security.

Limitations of the Labour reforms and conclusion

The new Labour Rules come with a lot of limitations and scope of improvement. The increase in threshold of the layoffs pose a challenge as it might give aid the trend of ‘hire and fire’. This rule mostly benefits the employer rather than the employees.

The expanded definition of legal strikes which also includes the 14 days prior days’ notice to the employer is likely to dilute the right to strike. The 14 days rule in non-public utility service may shift the power in the pockets of the employers and curtail the rights of the employees.

The increase of share of PF and gratuity contributions from the income is likely to reduce the monthly in-hand income of the employees.

The new Codes still focus on the statutory minimum wage rather than the living wage. The Directive Principle of State Policy (DPDP) enshrined in the Constitution of India contains Article 43 which talks about the living wage, decent working conditions etc. The new Labour reforms fail to set implement this provision, and stick with the minimum wage. This limits the scope of new reforms in meeting the priorities and needs of the new generation.

The new rules requiring contributions to PF, gratuity, and social security funds could increase costs for small and medium enterprises. These added financial obligations may create extra overheads, making it more challenging for smaller businesses to manage expenses.

Since labour is listed under the Concurrent List (Centre + States), many detailed rules need state-level notification. Not all states may do so promptly, leading to inconsistent application, legal uncertainty, or even non-implementation in some region.

The 2025 Labour Codes represent the most comprehensive overhaul of India’s labour laws since independence. On paper, they modernize regulation, widen social security, formalize employment, and promise worker protection and welfare, while reducing legal fragmentation and simplifying compliance. If implemented well, with strong enforcement, state-level coordination, and institutional readiness, the reforms have potential to improve work conditions, extend benefits to informal/gig workers, ensure timely and fair wages, and make the labour market more inclusive and future-ready. However, the risks are real: weakening of job security, dilution of collective bargaining, potential exploitation through fixed-term or contract labour, compliance burden on small firms, uncertain execution for vulnerable workers. Without transparent, robust implementation and protection mechanisms, the reforms may tilt balance in favour of employers over employees, especially the most vulnerable. In effect, the 2025 Labour Codes are a test of governance, institutional capacity and political will. They can deliver transformation, or they may institutionalize precarious, flexible employment under the guise of reform.