India’s labour landscape has undergone a major transformation with the implementation of four new labour codes, replacing 29 earlier laws. These reforms came into effect on November 21 and are designed to modernise workplace regulations, simplify compliance, and enhance employee welfare.
The four new labour codes include:
- Code on Wages, 2019
- Industrial Relations Code, 2020
- Code on Social Security, 2020
- Occupational Safety, Health and Working Conditions Code, 2020
These changes affect full-time employees, contractual staff, part-time workers, gig workers and platform-based professionals, making this one of the biggest workforce reforms in decades.
Major Changes Under the New Labour Codes
Minimum Wages for All
Every employee, whether in organised or unorganised sectors, is now guaranteed a statutory minimum wage. The central government will set a national floor wage to ensure uniformity across states.
Wage Structure and Take-Home Salary
A standard definition of “wages” now requires basic salary to be at least 50% of total compensation.
This may reduce take-home salary for some employees but will increase contributions to:
- Provident Fund (PF)
- Gratuity
- Other long-term benefits
This results in stronger long-term financial security and retirement savings.
Social Security for Gig and Platform Workers
For the first time, delivery partners, app-based workers, freelancers and gig workers are covered under social security. Aggregator companies must contribute to a dedicated welfare fund that supports:
- Life insurance
- Disability benefits
- Health benefits
Gratuity Eligibility Reduced
Fixed-term employees are now eligible for gratuity after 1 year of service instead of 5 years, improving financial protection for short-tenure workers.
Mandatory Appointment Letters
All employers must provide appointment letters to workers, including those in informal or gig roles. This ensures proof of employment, wage details and entitlement transparency.
Double Wages for Overtime
Employees working beyond standard hours must be compensated at double the normal wage rate.
More Employee Leave Benefits
The eligibility threshold for paid annual leave has been reduced from 240 working days to 180 days, enabling quicker access to leave.
Women Allowed Night Shifts
Women can now legally work night shifts (before 6 AM or after 7 PM), provided:
- Consent is given
- Adequate transport and safety measures are ensured
Gender-based wage discrimination is explicitly prohibited.
Work-From-Home Option
Remote work is now officially recognised, particularly in service-based sectors, enabling greater flexibility.
Free Annual Health Check-ups
Employees aged 40 and above are entitled to free annual health examinations, promoting preventive workplace healthcare.
Timely Salary Disbursement
Employers must follow strict wage timelines such as:
- Monthly wages: Within 7 days of the following month
- On resignation or termination: Within two working days
Accidents During Commute Covered
Travel between workplace and home is now considered part of employment. Employees injured during commuting will be eligible for compensation.
What This Means for India’s Workforce
These new labour codes aim to create a fair, transparent and employee-focused working environment, while also promoting ease of doing business. Whether in a traditional job, contract role or digital work model, millions of workers across India will now have better protections, benefits and clarity in employment terms.
