The New Labour Codes in India Explained

The labour codes in India are four central laws, 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 consolidate about 29 earlier central labour laws into a simpler framework. Each code covers one broad theme: wages, industrial relations, social security, and workplace safety and working conditions.

The Ministry of Labour and Employment prepared the codes to reduce the overlap, differing definitions and compliance burden of a large body of older Acts, some of which dated back to the colonial period. Supporters describe them as a long-awaited modernisation, while trade unions and other critics have raised concerns about worker protections. Because labour is a subject on the Concurrent List, the codes work through rules framed by both the Centre and the states. 15 October 2026

Key Takeaways

• The four labour codes of India, namely the Code on Wages 2019, the Industrial Relations Code 2020, the Code on Social Security 2020 and the OSH Code 2020, merge about 29 central labour laws.
• The Code on Wages, 2019 extends the legal entitlement to minimum wages and timely payment to workers across sectors, and gives the Centre power to fix a national floor wage.
• The Industrial Relations Code, 2020 raises the threshold for prior government permission for layoffs, retrenchment and closure to establishments with 300 or more workers, and formally recognises fixed-term employment.
• The Code on Social Security, 2020 is the first Indian central law to define gig workers and platform workers and to provide for aggregator contributions to a social security fund.
• The OSH Code, 2020 combines the rules on factories, mines, contract labour, migrant workers and several other categories into a single law on safety, health and working conditions.
• Labour appears on the Concurrent List of the Constitution, so both Parliament and state legislatures can legislate on it, and the codes depend on rules made by the Centre and the states.

What are the four labour codes and why were they introduced?

The four labour codes are consolidated Acts that replace dozens of separate central labour statutes with one law each for wages, industrial relations, social security and occupational safety. They were introduced to simplify compliance, reduce inconsistent definitions across laws and extend legal protection to more categories of workers.

Before the codes, India had a large number of central and state labour laws, each with its own definitions of terms such as “employee”, “worker”, “wages” and “establishment”, and with different thresholds, registrations and returns. Employers argued that this created confusion and a heavy compliance burden, particularly for small and medium businesses. Workers’ organisations argued that many laws covered only a minority of the workforce, since a very large share of Indian workers are employed in the informal economy, outside the reach of most protections.

The idea of grouping laws into a few codes goes back to the Second National Commission on Labour, which reported in 2002. The Code on Wages Bill was introduced in Parliament in 2017 and became law in 2019. The three other codes were introduced in 2019, examined by a parliamentary standing committee, reintroduced in 2020 and passed by Parliament in September 2020 in the form in which they are known today.

Which earlier laws do the labour codes replace?

The labour codes replace about 29 central labour laws, which the government has grouped under the four codes by subject. The table lists the main laws absorbed by each code.

The consolidation reduces the number of separate registrations, licences, returns and inspections that an establishment has to manage. The codes also introduce common definitions, so that a term such as “wages” or “employer” has one meaning across the Wages Code and the Social Security Code.

What does the Code on Wages, 2019 change?

The Code on Wages, 2019 regulates the payment of wages, minimum wages, bonus and equal remuneration, and it extends these protections to all employees irrespective of the sector or the wage level. Earlier, the Minimum Wages Act, 1948 applied only to scheduled employments listed by governments, which left many workers outside the legal safety net.

Universal minimum wage and floor wage

The Code on Wages, 2019 provides that minimum wages apply to every employee in the covered establishments, rather than only those in scheduled employments. The Central Government can fix a national floor wage, and state governments cannot set minimum wages below that floor. The floor wage can vary across geographical areas, and the minimum wage is to be reviewed at intervals not exceeding five years.

Common definition of wages

The Code on Wages, 2019 defines “wages” to include basic pay, dearness allowance and retaining allowance, and it excludes specified items such as bonus, house rent allowance, conveyance allowance and employer contributions to retirement funds. The definition limits the excluded components to 50 per cent of total remuneration, so if they exceed that proportion the excess is added back to wages. This definition matters because it affects provident fund contributions, gratuity and other benefits calculated on wages, which can lead to a higher share of pay being counted for these purposes.

Other provisions

• Timely payment: wages must be paid within a prescribed time after the wage period, and the Code on Wages provides for payment through bank transfer or other electronic means.
• Equal remuneration: employers cannot discriminate on grounds of gender in wages or conditions of recruitment for the same or similar work.
• Overtime: overtime work must be paid at a rate not less than twice the normal rate of wages.
• Bonus: the provisions on statutory bonus are carried over from the Payment of Bonus Act, 1965 with changes in coverage.

What does the Industrial Relations Code, 2020 change?

The Industrial Relations Code, 2020 governs trade unions, the conditions of employment in industrial establishments and the resolution of industrial disputes, and it merges three laws of the 1920s and 1940s. It contains some of the most closely debated changes among the four codes.

Thresholds for layoff, retrenchment and closure

The Industrial Relations Code, 2020 requires prior government permission for layoff, retrenchment or closure only in industrial establishments with 300 or more workers. Under the earlier Industrial Disputes Act, 1947, the threshold was 100 workers. The appropriate government can raise the threshold further by notification. Supporters argue that this gives firms flexibility to adjust their workforce, while critics argue that it weakens job security for workers in mid-sized firms. The code requires compensation for retrenched workers, and an employer must also contribute to a worker reskilling fund an amount equal to 15 days’ wages of each retrenched worker.

Standing orders and fixed-term employment

The requirement to have certified standing orders, which set out the terms of service, applies to industrial establishments with 300 or more workers. The Industrial Relations Code, 2020 also recognises fixed-term employment as a form of engagement, as explained below.

Strikes and unions

The Industrial Relations Code, 2020 extends the requirement of prior notice for strikes, which was earlier confined to public utility services, to all industrial establishments. Workers must give at least 14 days’ notice of a strike, and a strike cannot take place while conciliation proceedings or tribunal proceedings are pending, or for a specified period after they end. The code treats mass casual leave by a specified proportion of workers as a strike.

The code also provides for recognition of a sole negotiating union if it has the support of 51 per cent or more of the workers, and for a negotiating council of unions if no single union reaches that level. Establishments with 20 or more workers must set up a grievance redressal committee. Disputes that are not resolved by conciliation go to industrial tribunals, which have a two-member structure with a judicial and an administrative member.

What does the Code on Social Security, 2020 provide?

The Code on Social Security, 2020 consolidates nine earlier laws on provident fund, health insurance, gratuity, maternity benefit, employee compensation and related schemes, and it brings gig workers, platform workers and unorganised workers into a legal framework for social security. It is meant to widen coverage beyond the organised sector, which has traditionally been the main beneficiary of such benefits.

Gig and platform workers

The Code on Social Security, 2020 is the first central law in India to define a gig worker as a person who works or earns outside a traditional employer-employee relationship, and a platform worker as a person who does so through an online platform. Digital platforms that connect workers to customers, called aggregators, may be required to contribute a percentage of their annual turnover, within a prescribed range of 1 to 2 per cent and capped at 5 per cent of the amount paid to such workers. The money goes to a social security fund used for schemes for gig and platform workers. A National Social Security Board advises the Central Government on the design of schemes for gig, platform and unorganised workers.

Registration and portability

Unorganised, gig and platform workers can register on a government portal linked to Aadhaar to access schemes on life and disability cover, health and maternity benefits, old age protection and similar areas. Benefits are intended to be portable across states, which is important for migrant workers.

Other changes

• Gratuity: fixed-term employees become eligible for gratuity after one year of service, rather than the five years generally required for regular employees.
• Coverage of insurance: the Employees’ State Insurance scheme can be extended across the country and to additional classes of establishments, including hazardous occupations irrespective of the number of employees.
• Provident fund: the Code on Social Security consolidates the provident fund framework and keeps a threshold for compulsory coverage of establishments by size.

What does the Occupational Safety, Health and Working Conditions Code, 2020 cover?

The Occupational Safety, Health and Working Conditions Code, 2020 (the OSH Code) combines 13 earlier laws on workplace safety, health, hours and welfare into one framework applicable to factories, mines, docks, building and construction sites, contract labour, inter-state migrant workers, beedi and cigar workers, and other establishments.

• Single registration and licence: the OSH Code provides for one registration for an establishment, replacing multiple registrations under separate laws, and a common licence for contractors.
• Thresholds: a factory is defined as a premises with 20 or more workers where power is used, or 40 or more where it is not, which is higher than the thresholds in the Factories Act, 1948. The provisions on contract labour apply to establishments with 50 or more contract workers, with a general prohibition on using contract labour for core activities, subject to exceptions.
• Women workers: women may work at night, between 7 pm and 6 am, with their consent and with safeguards prescribed by the appropriate government.
• Migrant workers: the definition of inter-state migrant worker has been widened to include workers who migrate on their own, and employers are required to give an annual journey allowance to travel to their home state.
• Health: certain categories of workers are entitled to a free annual health check-up, and employers must issue appointment letters.
• Enforcement: inspectors are redesignated as inspector-cum-facilitators, who advise employers as well as inspect them, with web-based, randomised inspections.

How are fixed-term employees treated under the labour codes?

Fixed-term employees are workers hired directly by an employer for a defined period under a written contract, and the labour codes give them the same working hours, wages, allowances and statutory benefits as permanent employees doing similar work. The Industrial Relations Code, 2020 formally recognises this category in all sectors.

Earlier, fixed-term hiring was permitted only in particular sectors under the standing orders rules. The change gives employers a direct engagement option without using contractors, and it allows the contract to end at the close of the term without that counting as retrenchment, although notice of non-renewal and any dues must be handled as the law requires. The Code on Social Security, 2020 makes fixed-term employees eligible for gratuity after one year rather than five.

Supporters of fixed-term employment say that it can bring more workers into direct, regulated employment. Critics say that it may be used to replace permanent jobs with repeated short contracts. The final impact depends on rules, enforcement and how employers use the provision.

Who is responsible for implementing the labour codes, and what is their status?

Both the Central Government and state governments are responsible for implementing the labour codes, because labour is on the Concurrent List of the Seventh Schedule, and each code allows the “appropriate government” to make rules. For establishments such as railways, mines, ports and certain central public sector bodies, the Centre is the appropriate government, while for most other establishments it is the state.

The codes became law in 2019 and 2020, but their commencement was delayed for several years while the Centre and the states worked to draft and finalise rules, and the dates for enforcing the provisions were separately notified. The Centre announced in November 2025 that the four codes were being brought into force, and the work of finalising rules, replacing earlier schemes and aligning state rules has continued since. The practical position can vary by state and by provision, so readers should consult the latest official notifications of the Ministry of Labour and Employment and their state governments for the current legal position.

The delay reflects the federal structure. A state can set higher thresholds or add conditions within what the codes allow, and each state has to frame rules suited to its own administrative machinery. This process has also raised questions about uniformity across states, which was one of the goals of consolidation in the first place.

What are the arguments for and against the labour codes?

The arguments for the labour codes focus on simplification and wider coverage, while the arguments against them focus on possible erosion of job security and union rights. Views differ among employers, workers’ organisations, economists and policymakers.

Central trade unions have opposed several provisions, and some have called protests and general strikes against them. The government has maintained that the codes protect workers’ interests while making compliance easier. Economists often note that the impact will depend heavily on how states write their rules and how well the laws are enforced, since most Indian workers are in informal employment where compliance is already hard to monitor.

How does the new system compare with the old one?

The new system of four labour codes differs from the earlier system mainly in the number of laws, the reach of coverage and the thresholds for key protections. The table below presents a summary comparison of selected features.

Bottom Line

The labour codes in India reorganise about 29 central laws into four codes on wages, industrial relations, social security and workplace safety, with new coverage for gig and platform workers and more flexibility on retrenchment and fixed-term hiring. Their real-world impact depends on how rules are made and enforced by the Centre and the states, and the debate between simplification and worker protection is likely to continue.

Frequently Asked Questions

What are the four labour codes in India?

The four labour codes in India are 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. Together they consolidate about 29 earlier central labour laws. Each code deals with one area: wages, industrial relations, social security, and safety and working conditions.

Which laws did the labour codes replace?

The labour codes replace laws such as the Minimum Wages Act, 1948, the Industrial Disputes Act, 1947, the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 and the Factories Act, 1948. In all, about 29 central laws were merged. The government grouped them by subject into wages, industrial relations, social security and occupational safety.

What is the main change for gig and platform workers?

The main change is that the Code on Social Security, 2020 gives gig workers and platform workers a legal definition and a route to social security benefits for the first time in central law. Aggregators can be required to contribute a share of their turnover to a social security fund. The actual benefits depend on schemes notified by the government.

Do the labour codes make it easier to fire workers?

The labour codes make it easier for larger establishments to restructure, because the Industrial Relations Code, 2020 requires prior government permission for layoffs, retrenchment and closure only where there are 300 or more workers, up from 100. Retrenched workers still receive compensation, and employers must contribute to a reskilling fund. Critics see weaker job security, while supporters see more flexibility and hiring.

What is fixed-term employment under the labour codes?

Fixed-term employment is direct employment for a set period under a written contract, recognised across sectors by the Industrial Relations Code, 2020. Fixed-term employees must get the same wages, hours and statutory benefits as comparable permanent employees. They can receive gratuity after one year of service under the Code on Social Security, 2020.

Have the labour codes come into force?

The labour codes have been enacted by Parliament, and the Central Government announced their implementation in November 2025, but the detailed rules have to be framed and operationalised by the Centre and the states. Because labour is on the Concurrent List, the position can differ by state and by provision. The latest official notifications of the Ministry of Labour and Employment give the current legal position.

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