Labour Codes: Long in the making, a much-awaited reform
More comprehensive than the labour law amendments by states; companies will have to align practices as trade unions continue opposition
- Nov 22, 2025,
- Updated Nov 22, 2025 11:55 AM IST
One of India’s landmark reforms — the Labour Codes — has finally come into effect after nearly a decade of work and discussions, and has been a key reform priority of the NDA government, even though they continue to evoke contrasting reactions from companies and trade unions.
In a nutshell, the four Labour 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 Code, 2020 — which became effective on November 21, 2025, have simplified, codified, and modified 29 Central labour laws, some of which date back to the pre-Independence era.
Key provisions of the Codes include guaranteed minimum wages, granting fixed-term employees benefits equal to permanent workers (including leave, medical, and social security), defining gig and platform workers and providing them benefits, and introducing reforms for women employees, including enabling them to work at night.
But the journey and implementation of the four Codes have not been smooth. Several states had already notified various provisions of these laws by amending their respective state legislations. Since labour is a subject in the Concurrent List, both the Centre and states can make laws on it, and around 18–25 States/UTs had already amended their existing Labour Acts and implemented labour reforms.
However, these amendments were largely in their respective Factories Acts and Shops and Establishments Acts and were not considered comprehensive enough. The notification of the four Labour Codes means they will now be implemented at the national level, providing greater clarity to employers, reducing compliance requirements such as multiple registrations, and bringing more workers within the ambit of social security.
Way back in 2014, the NDA government, in its first term, began the process of reforming the country’s decades-old labour laws, which were seen as a stumbling block to investments due to provisions restricting hiring and firing and a multitude of compliances. Various amendments were made to the Factories Act, Child Labour Prohibition Act, and Payment of Bonus Act during 2015 and 2016.
The four Codes were subsequently brought in and enacted by Parliament in 2019 and 2020. Over 31 States and Union Territories published draft rules required to notify the Codes, but actual implementation did not take place due to vociferous opposition from trade unions and some states, as well as concerns by employers’ associations on provisions such as using 50% of the total remuneration to compute wages, ensuring consistency in calculating gratuity, pension, and social security benefits.
Faced with opposition, concerns also emerged that a hurried implementation could lead to a situation similar to that surrounding the Farm Laws, which had to be repealed. Over the last few years, the labour ministry held numerous consultations with trade unions and industry chambers to build consensus and ensure a smooth rollout. Officials have repeatedly clarified that any concerns can be addressed during the drafting of regulations for the Codes.
However, a majority of trade unions has opposed the notification of the Labour Codes, calling them anti-worker. The Joint Platform of Central Trade Unions expressed strong condemnation of the “blatantly unilateral implementation of anti-worker, pro-employer labour codes” and has called for protests on November 26.
Experts, meanwhile, have welcomed the Codes and said they have the potential to improve the country’s ease of doing business by reducing labour-law compliance burdens and enabling companies to operate more efficiently.
“Following with interest developments of India's new Labour Codes announced today, including on social protection and minimum wages. Social dialogue among government, employers, and workers will remain essential as reforms are implemented to ensure they’re positive for workers and business,” Gilbert F. Houngbo, Director General, International Labour Organization, said in a post on X.
Companies will now have to quickly align their HR practices with the new Codes.
Akhil Chandna, Partner and Global People Solutions Leader at Grant Thornton Bharat, noted that although industry had anticipated a transition period, the notification makes the implementation immediate. “Employers across sectors should therefore promptly assess and align their internal policies, HR practices, and operational processes with the applicable provisions of the Codes. A review of compensation and benefits structures will also be essential, particularly in light of the revised and uniform definition of ‘wages’ under the new framework,” he pointed out.
It is also important to note that state-specific Shops and Establishments Acts are not subsumed under the new Labour Codes. This may lead to overlaps in areas such as leave entitlements, working hours, and overtime, requiring careful compliance by employers, he said.
One of India’s landmark reforms — the Labour Codes — has finally come into effect after nearly a decade of work and discussions, and has been a key reform priority of the NDA government, even though they continue to evoke contrasting reactions from companies and trade unions.
In a nutshell, the four Labour 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 Code, 2020 — which became effective on November 21, 2025, have simplified, codified, and modified 29 Central labour laws, some of which date back to the pre-Independence era.
Key provisions of the Codes include guaranteed minimum wages, granting fixed-term employees benefits equal to permanent workers (including leave, medical, and social security), defining gig and platform workers and providing them benefits, and introducing reforms for women employees, including enabling them to work at night.
But the journey and implementation of the four Codes have not been smooth. Several states had already notified various provisions of these laws by amending their respective state legislations. Since labour is a subject in the Concurrent List, both the Centre and states can make laws on it, and around 18–25 States/UTs had already amended their existing Labour Acts and implemented labour reforms.
However, these amendments were largely in their respective Factories Acts and Shops and Establishments Acts and were not considered comprehensive enough. The notification of the four Labour Codes means they will now be implemented at the national level, providing greater clarity to employers, reducing compliance requirements such as multiple registrations, and bringing more workers within the ambit of social security.
Way back in 2014, the NDA government, in its first term, began the process of reforming the country’s decades-old labour laws, which were seen as a stumbling block to investments due to provisions restricting hiring and firing and a multitude of compliances. Various amendments were made to the Factories Act, Child Labour Prohibition Act, and Payment of Bonus Act during 2015 and 2016.
The four Codes were subsequently brought in and enacted by Parliament in 2019 and 2020. Over 31 States and Union Territories published draft rules required to notify the Codes, but actual implementation did not take place due to vociferous opposition from trade unions and some states, as well as concerns by employers’ associations on provisions such as using 50% of the total remuneration to compute wages, ensuring consistency in calculating gratuity, pension, and social security benefits.
Faced with opposition, concerns also emerged that a hurried implementation could lead to a situation similar to that surrounding the Farm Laws, which had to be repealed. Over the last few years, the labour ministry held numerous consultations with trade unions and industry chambers to build consensus and ensure a smooth rollout. Officials have repeatedly clarified that any concerns can be addressed during the drafting of regulations for the Codes.
However, a majority of trade unions has opposed the notification of the Labour Codes, calling them anti-worker. The Joint Platform of Central Trade Unions expressed strong condemnation of the “blatantly unilateral implementation of anti-worker, pro-employer labour codes” and has called for protests on November 26.
Experts, meanwhile, have welcomed the Codes and said they have the potential to improve the country’s ease of doing business by reducing labour-law compliance burdens and enabling companies to operate more efficiently.
“Following with interest developments of India's new Labour Codes announced today, including on social protection and minimum wages. Social dialogue among government, employers, and workers will remain essential as reforms are implemented to ensure they’re positive for workers and business,” Gilbert F. Houngbo, Director General, International Labour Organization, said in a post on X.
Companies will now have to quickly align their HR practices with the new Codes.
Akhil Chandna, Partner and Global People Solutions Leader at Grant Thornton Bharat, noted that although industry had anticipated a transition period, the notification makes the implementation immediate. “Employers across sectors should therefore promptly assess and align their internal policies, HR practices, and operational processes with the applicable provisions of the Codes. A review of compensation and benefits structures will also be essential, particularly in light of the revised and uniform definition of ‘wages’ under the new framework,” he pointed out.
It is also important to note that state-specific Shops and Establishments Acts are not subsumed under the new Labour Codes. This may lead to overlaps in areas such as leave entitlements, working hours, and overtime, requiring careful compliance by employers, he said.