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The new Labour Code explained
New labour codes: Roadmap for effective implementation
To promote ‘ease of doing business,’ the Government of India has pushed labour law reforms to simplify regulations, improve compliance, and boost growth and employment. The Wages Code was notified on August 8, 2019, followed by three other codes on September 23, 2020. All four codes are set to commence on November 21, 2025. There is an anticipation to have central rules and state rules to be finalised and issued over the next 2-4 months.
India’s new Labour Codes represent a fundamental shift in the country’s regulatory and workforce framework. This session provides a clear, structured, and practitioner-oriented perspective on what the changes mean for organisations and how they can prepare effectively.
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New Labour Codes explained: Full webinar on implementation
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New Labour Codes explained: Full webinar on implementation for organisations
The Government of India has implemented 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 (hereinafter collectively referred to as the Labour Codes), with effect from 21 November 2025, aiming to improve the welfare benefits extended to the workforce. The Labour Codes await Central and State rule notifications, so existing regulations continue during the transition.
Labour codes
Code on Wages
(Subsumes 4 Laws)
Code on Social Security
(Subsumes 9 Laws)
Key impact areas for employers
- Cost of social security
- Contribution by the employer
- Workforce classification/hiring models
- Impact on contractual workforce
- Transition plan for statutory compliances (registration/licensing/periodic filings)
- Impact on HR policies and procedures
Key changes
- Ease of compliance
- Changes for business
- Benefits for employees
- Increased cost of compliance
- Contract labour obligations
- Core and non-core activities
- Social security benefits
- Contributions to be made by aggregators
Ease of compliance
- Common registration/register and record
- Single definition of wages, establishment, employer
- Use of technology for inspection/certification
- Inspector-cum-facilitator to undertake
- Inspection and advise
- Common creche facility
Changes for business
- Increased threshold for requirement of standing order/ approval for retrenchment & layoff (300 or more workers)
- Limitation of 5 years for proceeding under social security code
- Increased leverage to employers in the event of strikes/lock-outs
- Notice of change exempted for change in working shift in emergent situations
Benefits for employees
- Permission for women worker to work at night, with consent
- Larger coverage under interstate-migrant workers
- Eligibility to gratuity on fixed term contracts for gratuity
- Mandatory appointment letter
Increased cost of compliance
- Increased burden on employer (PF, Gratuity etc,)
- Gratuity for fixed term employees (completion of 1 year)
- Annual health check up
- Full and final payment within 2 days
- Resignation/dismissal/retrenchment etc.
- Worker Re-Skilling Fund for retrenchment
Contract labour obligations
- Increased threshold of 50 or more contract workmen for requirement of registration
- Validity of license increased to 5 years
- Single license applicable for multiple states
- Redefining and bringing uniformity
Core and non-core activities
- Principal employer to ensure welfare facilities on premises
Social security benefits
- Mandatory national minimum floor wage
- Social security fund for unorganised workers
Contributions to be made by aggregators
- Gig workers, platform workers & FTE eligible for social security
Strategic assessment: Key areas organisations should evaluate
Impact of wage definition and computation of social security contribution and other payouts
Impact on workforce classification
Contract labour and workforce arrangements
HR policies and processes
Key changes in statutory compliances
Workforce classifications
Employee
Broadly covers persons employed on wages in any industry or establishment and often includes managerial or supervisory personnel unless excluded specifically
Worker
Typically manual, unskilled or skilled, technical or operational, clerical; generally excludes those in managerial or administrative roles and highly paid roles
Fixed-term employee
Hired for a fixed, pre-defined period with parity of wages or benefits with permanent workers doing similar work
Contract labour
Persons hired through a contractor to work in an establishment of a principal employer
Apprentice
Engaged for training under the Apprentices Act.
Gig worker
Outside traditional employer–employee relationship; often on task- or assignment-based arrangements.
Platform worker
A subset of gig workers who access organisations or individuals through an online platform.
Inter-state migrant worker
Person recruited in one state for employment in another, meeting wage or tenure thresholds.
Building or other construction worker
Engaged in construction, alteration, maintenance, repair of buildings or other works
Unorganised worker
Home-based, self-employed, or wage workers in the unorganised sector
Motor transport worker
Employed in a motor transport undertaking (drivers, conductors, cleaners, etc., excluding managerial roles).
Sales promotion worker
Engaged to do work relating to promotion of sales or business, or both.
Our commitment to help drive the transition
How we can engage with you
- We can help with detailed impact assessment on key areas.
- Stakeholders’ awareness and alignment sessions.
- Building operational and/or strategic roadmaps
- Extend expert support on complex matters – computation, workforce classifications, etc.
- Drafting or updating relevant policies
- Coordination with cross functional teams as ‘PMO’
- Assist in the implementation of the transition plan
- Updation of contracts, framework, etc.
Latest updates
We are planning to host a series of webinars covering the following in the coming weeks:
- Detailed sectoral impact
- Key topical discussions
- In-depth assessment or strategic view
Dedicated portal on key updates on the topic
Get in touch with us
For any enquiry, please reach out to us at:
in_labourcodes@pwc.com
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