India has stepped into a new phase of labour governance with the implementation of the four consolidated labour codes the Code on Wages, 2019; the Industrial Relations Code, 2020; the Code on Social Security, 2020; and the Occupational Safety, Health and Working Conditions (OSH) Code, 2020. These came into effect on 21 November 2025, replacing 29 separate central labour laws.
This is a major shift away from scattered, colonial-era laws toward a unified and technology-enabled labour system. The focus is on formalisation, worker dignity, safety, social security and a more predictable environment for businesses. At the same time, the enforcement model under the new system is far stricter. Compliance responsibilities are heavier and fines have increased, which means companies will have to reshape both strategy and daily operations.
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Code on Wages, 2019: Realignment of Compensation and Wage Governance
The Code on Wages brings four earlier laws under one framework. Minimum wage protection now applies to all workers, removing earlier scheduled-employment limits.
Key compliance requirements include:
- A uniform definition of earnings with allowances capped at 50 percent of total compensation
- Minimum wages for all job categories
- Appointment letters for every worker
- Strict timelines for salary disbursement and transparency in deductions
- Fixed deadlines for full-and-final settlements
- A national floor wage set by the Central Government
Impact:
Companies will need to redesign payroll systems, automate overtime and deduction logic and maintain digital records to avoid wage-related disputes.
Social Security Code, 2020: Universal Welfare Framework
This Code merges nine older laws covering PF, ESI, gratuity, maternity benefits and welfare funds. It expands coverage to gig workers, platform workers, fixed-term employees and migrant workers.
Compliance requirements include:
- Social security coverage for all types of workers
- Aggregator contributions of 1 to 2 percent of turnover
- Aadhaar-linked account numbers for portability across states
- Free annual health check-ups for workers aged 40 and above, including contract workers
- Gratuity eligibility after one year for fixed-term workers instead of five
- Principal employers responsible for social security and health benefits of contract labour
- ESIC coverage extended across India, including establishments with fewer than ten employees in hazardous industries
Impact:
HR, contractors, finance and EH&S teams must integrate personnel data into a unified digital HRMS and adjust budgeting for welfare commitments.
Industrial Relations Code, 2020: Stability, Documentation and Transparency
The IR Code aims to strengthen dispute-management systems and introduce more structured processes.
Compliance requirements include:
- Restrictions on strikes during conciliation and a mandatory 14-day strike notice
- Standing Orders for establishments with 300 or more workers (earlier threshold: 100)
- Higher thresholds for layoff, retrenchment and closure approvals, now at 300 workers
- Clear frameworks for trade union recognition and definitions
- Mandatory grievance redressal committees with women’s representation
- Faster dispute resolution through two-member industrial courts
Impact:
HR and legal teams must update employment practices, documentation, internal dispute processes and engagement with unions.
Occupational Safety, Health and Working Conditions Code, 2020
The OSH Code combines thirteen laws related to safety, working hours, leave and welfare. It increases operational responsibilities for businesses.
Operational requirements include:
- A single licence and registration system across India
- Free annual health examinations for all workers, including contract workers and those in hazardous roles
- Permission for women to work night shifts with consent, CCTV coverage and safe transport
- Working hours capped at 8 to 12 hours per day and 48 hours per week, with double wages for overtime
- Digital inspections under the Inspector-cum-Facilitator model
- Safety committees for establishments with 500 or more workers
- Mandatory upgrades for sanitation, drinking water, canteens, first aid and creche facilities
Impact:
Companies will need stronger safety culture, better documentation and improved coordination with contractors and facility teams.
Penalties and Enforcement: Higher Risk and Lower Tolerance
The enforcement structure under the new Codes is sharper and more direct.
- Only first offences can be compounded at 50 percent of the penalty
- Repeat offences within five years cannot be compounded
- Higher penalties for safety-related violations, especially those causing injury or death
- Directors, managers and responsible officers may be held personally liable
- Digital, real-time and evidence-based inspections increase exposure
Conclusion: Compliance as a Strategic Advantage
The new labour system is not only a legal reform but a complete change in governance philosophy. It aims for a safer, more transparent and more equitable labour market. However, simpler laws do not mean simpler compliance. Monitoring is becoming data-driven, penalties are stronger and timelines tighter.
Companies that modernise early through digital compliance systems, transparent workforce practices and proactive governance will benefit from lower litigation risk, greater investor trust and a stronger reputation. Those that respond late may struggle with operational pressure and enforcement.
The new framework tests the maturity of leadership. It calls for more than just ticking boxes. It expects organisations to update practices, strengthen culture and align themselves with the future of work.
(Mr. Amresh Ray is a seasoned ESG & Sustainability Professional, an expert in Labour Laws & Compliance and currently a Research Scholar at IIM Lucknow in the Business Sustainability area.)