A Complete Guide to Four Labour Codes: Key Reforms, Compliance Checklists & Impact on India’s Workforce

Labour laws have long shaped India’s economic journey, advancing growth, empowerment, and social justice. Reforms evolve over time to suit changing conditions and worker requirements. By consolidating 29 fragmented statutes into a unified framework, the Four Labour Codes mark a decisive transformation, simplifying compliance, expanding protections and social security, and extending coverage to the unorganised and gig sectors while balancing employer flexibility with worker rights.

Implemented on 21-11-2025, together, they aim to balance flexibility for employers with protection for workers, while reducing compliance burdens.

Ministry of Labour and Employment has notified multiple enforcement dates for 4 Labour Codes. Key provisions were brought into effect in phases during 2021, 2023, and 2025, along with the repeal of several earlier labour laws.

Read more about the different enforcement dates of Four Labour Codes in detail.

Rationale behind adopting Labour Codes

The codification of Labour Laws was required to overcome multiple overlapping of laws and establish a coherent, future ready framework for India’s evolving economy. It simplifies compliance, strengthens enforcement, and replaces outdated colonial era provisions.

The aim was to simplify registration and licensing via Single Registration, License, and Return, easing compliance and boosting jobs. The Second National Commission urged grouping laws into 4—5 codes, and the Labour Ministry pursued this after wide consultations from 2015—2019. Consequently, the Code on Wages was notified in August 2019, followed by the remaining three Codes in September 2020.¹

The table below highlights key differences between the earlier labour laws and the new Labour Codes:

Basis	Earlier Labour Laws	Labour Codes
Number of Statutes	29 laws with 1,436 Rules	4 Codes with 351 Rules
Registration	8 separate registrations	Single
License	4	Single
Returns	31	Single (Electronic)
Compliance Filing	Monthly & state-specific	Annual consolidated returns
Inspection Mode	On-site paper audits	Risk-based digital inspections2
Grievance Redressal	Multiple tribunals	Unified facilitation centres

Decoding the Labour Codes

A. Code on Wages, 2019:

The Code on Wages, 2019 (Wages Code) consolidates and modernises India’s wage regulations into a single statute, subsuming four earlier legislations. Its primary objective is to guarantee fair, timely, and equitable payment to all workers³, irrespective of sector or type of employment, while ensuring uniformity in definitions and introducing a national floor wage to strengthen wage security and reduce disputes.

Read More about Implementation Details.

The Four Laws subsumed by Code on Wages, 2019 are:

B. Code on Industrial Relations, 2020:

The Industrial Relations Code, 2020 (IR Code) consolidates and amends laws on trade unions, retrenchment, and industrial disputes, providing uniform definitions. It is pro-labour, pro-employment, and pro-growth, fostering industrial harmony, inclusive participation, and ease of doing business.⁴

Read More about Implementation Details.

Laws Subsumed by Code on Industrial Relations, 2020 are:

C. Code on Social Security

The Code on Social Security, 2020 (Social Security Code) consolidates multiple laws into one framework, ensuring universal protection and extending coverage to organised, unorganised, gig, and platform workers with digitisation and portability at its core.⁵ It modernise benefit schemes like Employee State Insurance Corporation (‘ESIC’) and the Employee Provident Fund (‘EPF’) , promotes ease of doing business through simplified compliance, and unifies diverse labour laws to expand worker benefits. By strengthening implementation with transparent digital systems, it balances social security with streamlined governance.

Read More about Implementation Details.

Laws Subsumed by Code on Social Security. 2020 are:

D. Occupational, Safety, Health and Working Conditions Code, 2020

The Occupational Safety, Health and Working Conditions Code, 2020 (OSHWC Code) unifies 13 labour laws into a comprehensive framework for workplace safety, health, and welfare. It establishes uniform standards including an 8hour day/48hour week baseline, mandatory appointment letters, and risk-based compliance. The Code applies across factories, mines, plantations, transport, and service sectors. By simplifying registration and inspections, it reduces regulatory complexity while strengthening worker protection and welfare facilities.

Read More about Implementation Details.

Laws Subsumed by Occupational, Safety, Health and Working Conditions Code, 2020 are:

Key Changes and Impact of the Four Labour Codes:

Standardised Definitions:

• A uniform definition of “Wages” with a 50% cap on exclusions ensures fair calculation of gratuity, retrenchment compensation, and social security, preventing manipulation. The term ‘wages’ to include basic pay, dearness allowance, and retaining allowance.

• Section 2(zr) of IR Code expands “Worker” to include sales promotion staff, journalists, and supervisors earning up to ₹18,000, extending protections.

• Section 2(p) of IR Code broadens “Industry” to cover any systematic activity between employer and worker, regardless of profit motive or capital, bringing nonprofit and low investment sectors under scope.

• Definition of Inter-State Migrant Workers expanded to include direct, contractor-based, and self-migrating workers, OSHW Code. Benefits include journey allowance, portability of BOCW fund benefits, ration portability, and grievance helplines.

• Expanded definitions of Working Journalists & AV Workers include electronic/digital media journalists, dubbing artists, stunt persons, and audio-visual workers, granting them recognition and protections.

Wages and working hours:

• Earlier, minimum wages covered only “scheduled employments,” about 30% of workers. Section 5 of Wages Code, now grants all employees a statutory right to minimum wages, extending protection to organised and unorganised sectors, ensuring wage security and safeguarding against exploitation.

• Section 9 of Wages code introduces a statutory floor wage set by the Central Government, based on minimum living standards like food, housing, and clothing. States will keep their minimum wages above this baseline, with regular revisions to reflect inflation, reduce disparities, and ensure fairness.

• Appropriate governments can fix minimum wages for hourly, daily, or monthly periods across varied work categories, considering skill, region, and job difficulty. Wages include a basic rate plus allowances, with mandatory revisions at least every five years to stay relevant.

Workers/ Employees:

• Minimum wages now apply to all employees, supported by a statutory floor wage that prevents states from undercutting pay. Wage determination based on skill, geography, and job arduousness promotes fairness and incentivises upskilling. ⁶

• Standardised across labour codes with wages, forming at least 50% ceiling on exclusions (such as HRA, overtime, commissions, or special allowances), ensuring fair PF, gratuity, and compensation calculations

• The IR Code streamlines union recognition: 51% membership grants sole negotiating status; else, a council forms.

• Section 13 of Wages Code defines normal working hours will be limited to 48 per week, with a daily cap of 12 hours including breaks; annual leave eligibility reduced from 240 to 180 days. A weekly paid holiday is required, and Section 14 mandates overtime at twice the normal rate, ensuring fair pay, preventing exploitation, and safeguarding worker health.

• Section 17 of Wages Code mandates timely wages, daily at shift end, weekly before holiday, fortnightly within 2 days, monthly within 7 days, and termination dues within 2 days.

• Employees below the wage ceiling who work at least 30 days in a year are entitled to an annual bonus of 8.33%—20% of wages, ensuring economic justice, profit sharing, and boosting morale, loyalty, and motivation among workers.

• Model Standing Orders in service sectors explicitly allow work from home, subject to mutual agreement between employer and employee. This enhances flexibility, particularly benefiting women and those seeking better work—life balance.

• Fixed-term employees now receive gratuity after 1 year and enjoy parity in benefits with permanent staff.

• ESIC and EPFO extended nationwide; commuting accidents recognised; hazardous occupations broadly covered, including journalists, stunt performers, and audiovisual workers.

• Applicability for EPFO coverage extended to all establishments with ≥20 employees, reducing litigation and expanding retirement savings.

• ESIC benefits extended to in-laws and dependent siblings, broadening coverage.

• Nationwide coverage, voluntary membership for <10 employees, mandatory for hazardous work, optional for plantations. Limitation on EPF inquiries (5 year start, 2 year completion).

• Reduced deposit for appeals (25% vs. 40—70%).

• Self-assessment of construction cess for faster collection.

• Fixed term employment is formally recognised, with such workers entitled to parity in wages, benefits, and social security with permanent employees, including eligibility for gratuity.

• Workers, under Section 62 of IR Code, in all establishments will now give 14 days’ notice before striking. Previously limited to public utility services, this requirement now applies universally, ensuring predictability and reducing sudden disruptions.

• Social Security Code recognizes for the first-time with schemes for life, disability, health, maternity, and pension benefits, for gig and platform workers.

• Informal, contractual, migrant, gig, platform, and self-employed workers gain wage parity, social security coverage, journey allowances, portability of benefits, and grievance helplines.

• National and State Social Security Boards will be established, and creation of a Social Security Fund will also be done.

• Aadhaar verified national database of unorganised, gig, migrant workers to map skills and platform workers with portability of benefits across India.

• The Core and non-core activities defined, under OSHW Code. The contract labour allowed in certain core activities under specified conditions. Threshold for applicability raised from 20 to 50 workers. Principal employers responsible for welfare facilities and unpaid wages.

• Accidents while travelling to/from work now deemed employment related for compensation.

• The Factories with ≥500 workers, BOCW employers with ≥250, and mines with ≥100 workers will be required to constitute safety committees with employer and worker representatives.

• The OSHWC Code mandates risk assessments, biosafety containment, exposure monitoring, and medical exams to prevent occupational diseases.

• Certified workers, accident reporting, empowered safety officers, and safety committees build transparency and a participatory culture.

Employer:

• Section 43 of Wages Code makes employers directly liable for wage payments, including proprietors and firms. Section 50(3) requires wage slips for transparency, while Section 12 ensures piece-rate workers earn at least the minimum time rate, protecting vulnerable sectors.

• Establishments with 300+ workersare mandated to draft standing orders; threshold raised from 100, ensuring flexibility.

• With prior approval from government the threshold in cases of lay off, retrenchment, or closure has been increased from 100 to 300 workers, providing employers more operational flexibility while safeguarding larger workforces.

• Cooperative compliance through inspector-cum-facilitators, third-party audits, compounding of minor offences, and digitalisation of processes enhance governance.

• Career Centres modernise job matching, while digitalisation reduces compliance costs, increases transparency, and speeds up approvals.

• Employers can issue appointment letters in prescribed format, detailing designation, wages, and social security, ensuring transparency and reducing disputes.

• Employers will provide safe workplaces, annual health check-ups, and welfare facilities.

• Mandatory crèche facilities for establishments with ≥50 workers.

• Employers will be required to provide free annual health check-ups for all employees; plantation employers can opt into ESIC for medical services.

• Employers gain single-window clearances, centralized licensing, digitized returns, and stronger emergency plans with drills and spill-response systems.

Gender Inclusion:

• Wages Code has introduced provisions for Gender Inclusive Employment Policies:

  • Section 3 prohibits discrimination based on gender, including transgender identity, in recruitment, wages, and employment, guaranteeing equal pay for equal work.

  • Section 42 mandates 1/3rd women members in Central and State Advisory Boards, ensuring inclusive policymaking and fair wage representation.

• Under IR Code, the Grievance Redressal Committees are mandated to include women in proportion to their workforce share, ensuring gender-sensitive dispute resolution.

• Women Centric Maternity benefits (26 weeks, adoption/surrogacy coverage), work from home flexibility, simplified certification, medical bonus, nursing breaks, and mandatory crèche facilities.

  • Women are provided larger scope to work in all establishments, facilities, and transport.

  • Women permitted night work with safeguards, promoting gender equality and workforce participation.⁷

  • Women workers are entitled to a ₹3,500 medical bonus if care isn’t provided, plus two daily nursing breaks until the child is 15 months old.

  • Equal pay for equal work, maternity benefits, and representation of women in advisory boards foster inclusivity and higher participation.

Offences and Disputes

• First time offences punishable only with fines can now be compounded by paying 50% of the maximum fine. This shift focuses from punishment to compliance, fostering cooperation, reducing fear driven enforcement, and encouraging adherence to wage laws.

• Compounding of offences (50% or 75% of max fine).

• Decriminalisation: 30-day improvement notice, fines replacing imprisonment.

• Under OSHW Code, the Courts can direct at least 50% of fines imposed for contraventions to be paid as compensation to injured workers or their families.

• Time-bound dispute resolution mechanisms reduce litigation delays and industrial unrest, while strike notice requirements ensure predictability and stability.

Ease of doing Business:

• The Code enables electronic record keeping, registration, and communication. Digital filings reduce manipulation and corruption, improve transparency, and accelerate compliance processes. This lowers administrative costs, reduces paperwork, and enhances efficiency.

• Unified single registration replaces multiple registrations, simplifying compliance and creating a centralised database.

• Electronic single registration, single return, and single all-India licences valid for 5 years with deemed approvals.

• Licensing thresholds are raised (from 10→20 with power, from 20→40 without power).

• Time-bound approvals (30 days) for factory construction or expansion, with deemed permission.

• A single tripartite National Occupational Safety and Health Advisory Board replaces six earlier boards, setting uniform national standards mandatory for states.

Implementation Roadmap of Four Labour Codes

For effective implementation of the Four Codes, here’s a code wise description for workers, employers, employees and structured departments to know:

Wage Code Compliance

• Restructure CTC so at least 50% qualifies as wages; recalibrate PF, gratuity, and bonus.

• Monitor floor wage notifications and state minimum wage revisions; update pay structures every five years.

• Align payroll SOPs with overtime provisions (double rate) and strict wage payment timelines.

• Digitise registers and returns; adopt single electronic return mechanisms.

• Engage with Inspector cum Facilitators for advisory inspections and transparent adherence.

Industrial Relations Code Compliance

• Maintain verified union membership records and protocols for negotiating councils.

• Adopt or update model standing orders for establishments with 300+ workers.

• Calculate and deposit Reskilling Fund (15 days’ wages) for retrenchment with documentation.

• Systematise strike/lockout notices and track conciliation timelines.

• Ensure digital recordkeeping, e-filing of returns, and women’s representation in grievance committees.

Social Security Code Compliance

• Confirm EPF applicability for establishments with 20+ employees; apply ESI thresholds including contractor counts.

• Register under EPFO/ESIC, maintain electronic records, and adopt digital filing of returns.

• Set up ledgers to compute aggregator contributions (1—2% of turnover, capped at 5% of payouts) and remit properly.

• Ensure fixed term employees qualify for gratuity after one year of continuous service.

• Provide maternity entitlements, crèche facilities, and flexible work options where required.

• Integrate Aadhaar/UAN, onboard unorganised workers on the e-Shram portal, and maintain accurate data for portability of benefits.

• Cooperate with Inspector cum Facilitators under the technology based inspection system.

OSHWC Code Compliance

• Register establishments electronically under the unified system; digitise registers and secure single licences/returns.

• Issue appointment letters to all employees in prescribed format with wages, designation, and social security details.

• Configure HR/time systems to comply with 8-hour day / 48-hour week baseline and double wages for overtime with consent.

• Provide mandatory welfare facilities: drinking water, crèches, canteens, restrooms, first aid, annual medical check-ups, PPE standards, and incident reporting.

• Register contractors where applicable, ensure welfare facilities for contract labour, and pay wages directly if contractors’ default.

• Cooperate with Inspector cum Facilitators, allow third party audits, and comply with safety committee requirements for larger establishments.

  Read More about Implementation Details.

Conclusion

Applying Labour Codes uniformly can look challenging due to varied state capacities, compliance costs for smaller firms, and the integration of unorganised, gig, and migrant workers into national systems. Overtime and fixed term rules require careful monitoring, while resistance from employers used to older laws highlights the need for strong digital systems and awareness.

Yet, the four Labour Codes mark a historic shift toward simplification, transparency, and inclusivity. Their success rests on effective digital implementation, balanced enforcement, and cooperation among all stakeholders.

Frequently Asked Questions on the Four Labour Codes

1. Why were these Codes introduced?

   To simplify and consolidate 29 existing labour laws into four streamlined Codes, making compliance easier and worker protections stronger.

2. Are appointment letters mandatory for all workers?

   Yes. The OSHWC Code requires written appointment letters for every worker, formalising employment relationships.

3. What is the uniform definition of “wages” under the Codes?

   “Wages” = Basic Pay + Dearness Allowance + Retaining Allowance. Exclusions (HRA, bonus, etc.) cannot exceed 50% of total remuneration; excess is added back. This impacts PF, gratuity, overtime, and bonus calculations.

4. How does the Wage Code affect salary structures?

   Employers will ensure ≥50% of CTC qualifies as wages. This often increases PF and gratuity contributions, potentially reducing take-home pay unless CTC is adjusted.

5. What changes are there for EPFO and ESIC coverage?

   Coverage is expanded to more workers, including gig and platform workers, with options for voluntary enrolment.

6. What provisions are made for women workers?

   Women can work night shifts with safety measures, and crèche facilities are mandatory for establishments with 50+ workers.

7. Are fixed-term employees eligible for gratuity?

   Yes, they are entitled to gratuity after completing 1 year of continuous service.

8. How do the Codes ensure timely payment of wages?

   Under the Wages Code, wages will be paid promptly, daily at day’s end, weekly on the last working day, fortnightly within 2 days, and monthly before the 7th.

9. What are the rules for working hours and overtime?

   Employees cannot work beyond 8 hours a day or 48 hours a week, with double pay for overtime.

10. Are annual health check-ups compulsory?

    Yes, OSHW Code mandates free annual medical examinations for workers aged over 40 years in specified establishments.

11. What benefits do workers get under the new Codes?

    Workers are assured timely wage payments and floor wage is introduced. Fixed-term employees qualify for gratuity after 1 year. Eligibility for Bonus: 30 days completing in a year. Gig and platform workers gain social security, while those above 40 get annual health check-ups and double wages for overtime. Migrant workers receive equal benefits, docks will be registered as establishments, and women workers benefit from 26 weeks maternity leave, crèche support, flexible work, and safe night-shift opportunities.