India announced four consolidated labour codes from 21 November 2025, marking one of the biggest overhauls of its labour regulations since Independence. The Code on Wages (2019), Industrial Relations Code (2020), Code on Social Security (2020), and Occupational Safety, Health and Working Conditions Code (2020) will replace 29 central labour laws, many of which date back several decades.
The reform aims to bring India's labour rules closer to global standards by offering clearer regulations, wider social-security coverage and a framework better suited to modern employment conditions.
According to a press release of the Ministry of Labour and Employment, key changes include mandatory appointment letters for all workers, a national floor wage, and statutory minimum-wage coverage across all sectors. The Codes also provide free annual health check-ups for workers above 40 and expand Employees' State Insurance (ESI) benefits across the country. Women will be allowed to work night shifts with consent and safety measures in place, and businesses will benefit from unified compliance through single registration, licensing and filing.
The reforms extend protection to fixed-term staff, contract workers, gig and platform workers, and those in high-risk sectors. Fixed-term employees will receive the same benefits as permanent staff, including eligibility for gratuity after one year. Gig workers will gain social-security access for the first time, supported partly through a mandatory 1–2% contribution from platform aggregators. Workers in hazardous industries will receive compulsory annual health screenings, and units with more than 500 workers must set up safety committees.
Officials said the changes are designed to reduce compliance burdens for MSMEs and boost India's competitiveness as a manufacturing hub. Investors have long raised concerns about fragmented labour rules, and the government expects the simplified framework to improve ease of doing business. The Codes also introduce a reskilling fund for retrenched workers and expand ESIC coverage to smaller and hazardous establishments.
During the transition, existing rules and notifications will stay in force. Both the Centre and states are now expected to finalise operational guidelines in consultation with industry and labour groups. The government said the reforms build on a decade-long expansion of India's social-security net—from covering around 19% of the workforce in 2015 to more than 64% in 2025—and aim to support a future-ready workforce for a globally competitive economy.
New labour codes set to boost manufacturing by easing regulations and expanding workforce protections
According to Nikkei Asia, India's newly implemented labour codes are poised to transform the manufacturing sector by easing regulatory constraints and facilitating larger-scale operations. By raising the employee layoff threshold from 100 to 300 without needing prior government approval, the reforms may prompt firms to expand production. This change is anticipated to boost employment and enhance India's appeal as a manufacturing investment alternative to China. Additionally, by streamlining compliance—cutting labour regulations by 75% and reducing required registers and forms by 90% and 60%—these reforms significantly alleviate operational challenges for manufacturers.
The new codes require minimum wages, timely payments, formal appointment letters, and extended social security, including for gig workers. They permit women to work night shifts, opening higher-paying opportunities. Experts believe these reforms could formalize the informal economy and reduce bureaucracy, potentially impacting enterprises more than the GST reform. Industry groups support the modernization for improving labour-capital-entrepreneur dynamics, but labour unions are against certain aspects like increased retrenchment limits and are planning nationwide protests.
Article edited by Joseph Chen
