New Delhi, Nov. 28 -- In a landmark development, the Government of India has implemented four Labour Codes with effect from November 21, 2025, bringing labour reforms enacted by the Parliament into reality. Following this, different views and news articles have surfaced in the media on its impact, driving debates and discussions on this pertinent issue. This piece is aimed at clearing some of the confusion being created about the efficacy of the Codes. The Government has consistently strived to uphold the dignity of labour through various labour laws and a strong social security framework. However, in order to bring about economic transformation among the labour class, the availability of meaningful employment opportunities is a prerequisite, and in a labour-surplus economy like India, it is unrealistic for the Government to generate employment for all. This is where the private sector plays a crucial role, provided an enabling socio-legal framework and progressive, forward-looking labour laws are in place that reflect the aspirations of a 21st-century India.
For decades, India's labour ecosystem was governed by 29 central laws-many of which date back to the pre-independence era. To overcome the challenges of multiplicity, complexity, and outdated provisions, and in line with the recommendations of the Second National Commission on Labour (2002), the Government of India initiated one of the most far-reaching reforms in the country's labour history by enacting four comprehensive Labour Codes-the Code on Wages, 2019, the Code on Social Security, 2020, the Industrial Relations Code, 2020, and the Occupational Safety, Health and Working Conditions Code, 2020. Remarkably, these reforms mark a major milestone with the right sequencing after the 1991 liberalisation and structural adjustment policies, bringing a modern, innovation-driven framework for a progressive labour ecosystem and industrial growth.
The Labour Reform: Through rationalisation and modernisation of previous labour laws, the four Labour Codes have significantly streamlined the regulatory framework. The number of sections has been reduced from 1,228 under the previous 29 Acts to just 480, while the number of rules has come down from 1,436 to 351, forms from 181 to 73, and registers from 84 to merely 8. This significant consolidation and harmonisation will enhance both ease of living for workers and ease of doing business for employers across the country.
One of the most notable reforms under the Code on Wages is the universalisation of minimum wages, making them applicable to all employees across both the organised and unorganised sectors, which was earlier restricted to specific 'scheduled employments' under the previous Acts. The 'floor wage', to be determined by the Central Government, will reduce regional imbalance as the states cannot set the minimum wage below the nationally defined threshold. Another progressive change is the replacement of the traditional labour 'inspector' with the 'inspector-cum-facilitator', with the mandate to guide and create awareness, marking a clear shift away from the rigid and often criticised "inspector raj". Furthermore, all four Codes have decriminalised minor offences and introduced compounding provisions for first-time violations, signalling a move from a punitive to a corrective and trust-based regulatory approach.
The Industrial Relations (IR) Code introduces the concept of Fixed Term Employment (FTE), ensuring that fixed-term workers receive the same benefits as permanent employees, including gratuity after one year of service. This reform provides industries with much-needed flexibility to hire according to operational requirements while safeguarding the rights and welfare of workers. This will reduce contractualisation. The 14-day notice period before strikes and lockouts by the workers will promote industrial peace and harmony, which, under the previous law, was applicable only to public utility services. This change will encourage the resolution of disputes through dialogue and negotiation rather than disruption. Additionally, the Code provides statutory recognition to trade unions-something missed out in the media analysis-through the 'Negotiating Union' or 'Negotiating Council', thereby strengthening collective bargaining mechanisms and promoting labour welfare. The Code also revises the threshold for prior government approval in cases of retrenchment, lay-offs, and closures from the existing 100 workers to 300 workers in factories, mines, and plantations.
The most ambitious reform carried out in this process is through the Code on Social Security, which formally recognises gig and platform workers for the first time. With this, India becomes one of the first countries in the world to extend legal and social protection to this emerging workforce. It also provides for the creation of a Social Security Fund with multiple financing mechanisms to support unorganised workers, including gig and platform workers, through various welfare schemes, thereby taking a major step toward inclusive and equitable labour welfare.
Likewise, the OSH Code, which governs the provisions related to workplace safety, welfare, and working conditions of workers, introduces single registration, single licence, and single return-a major step toward ease of doing business in the country-with licence validity for five years. Importantly, it promotes gender equality by allowing women to work in all sectors and during night shifts, with their consent and adequate safety measures. It also mandates free annual health check-ups for workers and the issuance of appointment letters to all employees, leading the way to formalisation. Additionally, the Code raises the applicability thresholds, thereby reducing the compliance burden on smaller establishments. For instance, for the applicability of contract labour, the threshold increased from 20 to 50; for applicability of factory provisions, from 10 to 20 workers and 20 to 40 workers (with and without power, respectively). These changes collectively create a more streamlined, worker-friendly, and business-conducive regulatory environment.
Towards a Vikshit Bharat: The four labour codes collectively seek to strike a balance between the welfare of workers and the flexibility of industry and employers. By streamlining definitions, digitising compliance, and promoting gender neutrality, the four labour codes are designed to usher in an equitable labour ecosystem, matching the country's aspiration of a Vikshit Bharat by 2047. The Institute for Studies in Industrial Development's (ISID) India Industrial Development Report 2024-25 suggests that there is a significant manufacturing opportunity available in India with the Government of India's policies of 'Making-for-India and Making-for-the-World', which are labour, skill, and resource-intensive. The country has the potential to more than double the manufacturing value added (MVA) from USD 717 billion in 2024 to USD 1.45 trillion by 2030, out of the USD 7.5 trillion GDP, therefore eventually creating millions of decent jobs, both direct and indirect. Implementation of the four Labour Codes will complement the effort to provide industries with much-needed flexibility and deregulation, along with the mandates of universal labour welfare and social security for our workforce.
The writer is the Director, Labour Reforms, Ministry of Labour and Employment, GoI. Views expressed are personal
Published by HT Digital Content Services with permission from Millennium Post.