Rules, Rights & Rites -1 - Implementation of the Four Labour Codes.
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Outlines the key
points from the Press Information Bureau (PIB) release, dated November 21,
2025, regarding the implementation of the Four Labour Codes.
- The Government of India announced
that the Four Labour Codes are being made effective from November
21, 2025. These codes rationalize 29 existing labour laws.
·
The four specific codes that have been made effective are:
- The Code on Wages, 2019
- The Industrial Relations Code,
2020
- The Code on Social Security, 2020
- The Occupational Safety, Health
and Working Conditions Code, 2020.
·
The implementation of the Codes aims for a
"Transformational Change" with the following goals:
- Better wages, safety, social
security, and enhanced welfare for India's workforce.
- Modernizing labour regulations and
aligning the labour ecosystem with the evolving world of work.
- Laying the foundation for a
protected, future-ready workforce and stronger, resilient industries.
- Aligning India's labour ecosystem
with global standards and ensuring social justice for all workers.
- Reaffirming the Government's
commitment to a pro-worker, pro-women, pro-youth, and pro-employment
labour ecosystem.
- The Codes further widen the
social-security net and embed portability of benefits across states
and sectors.
- Social security coverage has
dramatically expanded from about 19% of the workforce in 2015 to more
than 64% in 2025.
- The Codes place workers,
especially women, youth, unorganised, gig, and migrant workers,
firmly at the center of labour governance.
- By reducing compliance burden and
enabling flexible, modern work arrangements, the Codes are expected to boost
employment, skilling, and industry growth.
- During the transition, the
relevant provisions of the existing labour Acts and their
respective rules, regulations, notifications, standards, schemes, etc., will
continue to remain in force.
- The Government will continue to
engage the public and stakeholders in the framing of the corresponding
rules, regulations, schemes, etc. under the Codes.
Comparison between the Old Rules and the New
Labour Codes, focusing on the most significant changes:
|
Feature |
Old Rules (29 Separate Laws) |
New Four Labour Codes (Coded Laws) |
|
I. Compliance & Administration |
||
|
Number of Laws |
29 different Central Labour Laws. |
Consolidated into 4 Codes (Wage, IR, Social Security, OSHWC). |
|
Compliance Structure |
Complex, fragmented system requiring multiple registrations (up to 8),
licenses (up to 4), forms (181), and returns (31). |
Unified, simplified structure: One Registration, One
Licence, and One Electronic Return. |
|
Inspection System |
Traditional "Inspector Raj" with discretionary and often
punitive enforcement. |
Inspector-cum-Facilitator System: Role shifts to guidance,
awareness, and compliance support, often via randomized, web-based
inspections. |
|
II. The Code on Wages, 2019 |
(Replaces 4 Acts, including Minimum Wages Act, 1948) |
|
|
Minimum Wage Coverage |
Applied only to specific "scheduled employments," covering
approximately 30% of the workforce. |
Universal Minimum Wage: Statutory right to minimum wages extended
to all employees (organized and unorganized sectors). |
|
National Wage Floor |
No national benchmark; wages varied widely based on state and region. |
National Floor Wage (NFW): Central government sets a floor wage based
on minimum living standards; no state can fix minimum wages below this NFW. |
|
Definition of "Wages" |
Vague, differing definitions across laws, allowing employers to
suppress Basic Pay to minimize PF/Gratuity contributions. |
Uniform Definition: Mandates that Basic Pay, Dearness
Allowance, and Retaining Allowance must constitute at least 50% of
the total remuneration (CTC), ensuring higher statutory contributions (PF,
Gratuity, Bonus). |
|
Gender Equality |
Equal pay provisions were scattered and less comprehensive. |
Explicit Prohibition of Discrimination:
Prohibits gender-based discrimination (including transgender identity) in
recruitment, wages, and employment conditions for similar work. |
|
Overtime Pay |
Varied rules across sectors. |
Universal Overtime Mandate: Employers must pay overtime wages at least twice
the normal rate for work beyond regular hours. |
|
III. The Industrial Relations Code, 2020 |
(Replaces 3 Acts, including Industrial Disputes Act, 1947) |
|
|
Retrenchment/Closure Threshold |
Establishments with 100 or more workers needed prior government
approval for layoffs, retrenchment, or closure. |
Raised Threshold: Approval required only for establishments
with 300 or more workers, offering greater operational flexibility for
mid-sized firms. (States can raise this further). |
|
Fixed-Term Employment |
Not formally defined with comprehensive benefits parity. |
Formalized: Fixed-term employees are granted full
parity in wages and benefits as permanent employees, including
eligibility for gratuity after just one year of service (instead of
five). |
|
Appointment Letters |
No mandatory requirement; informal arrangements were common. |
Mandatory: Employers must issue formal Appointment
Letters to all workers, promoting formalization, transparency, and access
to benefits. |
|
IV. The Code on Social Security, 2020 |
(Consolidates 9 Acts, including EPF & ESIC Acts) |
|
|
Social Security Coverage |
Limited, primarily focused on organized sector; gig/platform workers
were excluded. Coverage around 19% in 2015. |
Universalization: Extends social security coverage to all
workers, including the unorganized sector, Gig Workers, and Platform
Workers, with aggregators contributing to a dedicated welfare fund.
Coverage is now over 64% (as per 2025 data). |
|
ESIC Coverage (Health Insurance) |
Limited to specific geographical areas and establishments with 10+
employees. |
Pan-India Extension: ESIC coverage is now Pan-India. It
is voluntary for units with <10 workers and mandatory even for
single-worker units engaged in hazardous processes. |
|
PF/ESIC Appeals |
High deposit requirements for appeals (40% to 70%) and lengthy inquiry
timelines. |
Reduced Appeal Deposit: Deposit requirement for filing an appeal
against an EPFO order is reduced to 25% of the awarded amount.
Inquiries are time-bound to be completed within two years. |
|
V. The Occupational Safety, Health and Working Conditions Code, 2020 |
(Replaces 13 Acts, including Factories Act, 1948) |
|
|
Women's Employment |
Restrictions on night shifts and employment in certain occupations
(like underground mining). |
Expanded Rights: Women are permitted to work in all types
of work and during night shifts across all establishments, subject
to their consent and provision of adequate safety protocols. |
|
Annual Leave Eligibility |
Required 240 days of work to become eligible for paid annual leave. |
Reduced Eligibility: Paid annual leave can be availed after
working 180 days in a calendar year. |
|
Health Check-ups |
No general legal requirement for mandatory check-ups. |
Mandatory Check-ups: Employers must provide free annual
health check-ups for workers above 40 years of age. |
|
Working Hours |
Retained the 8-hour workday, 48-hour workweek standard. |
Retains 8-hour/48-hour limit: Introduces flexibility for employers and
workers to agree on 12-hour shifts for four days a week, provided the total
48-hour limit is maintained and double overtime pay is guaranteed. |
·
The Central Trade Unions (CTUs) strongly object to the
newly implemented Four Labour Codes, viewing them as "anti-worker and
pro-employer" legislation that dismantles decades of hard-won worker
rights. They collectively termed the notification a "deceptive
fraud" against the working people of India.
- "Hire and Fire" Policy: This is the most contested issue.
The Industrial Relations Code, 2020 raises the threshold for
requiring prior government approval for layoffs, retrenchment, or
closure from establishments employing 100 workers to 300 workers.
The CTUs argue this gives a "licence to implement layoffs at
will" for the vast majority of mid-sized firms, significantly
weakening job security and introducing a "hire and fire"
regime.
- Curtailment of Right to Strike: The Codes are alleged to snatch
away the right to strike and criminalize collective action by
widening the definition of 'strike' and mandating a 14-day notice period
for all sectors, which makes it harder for workers to negotiate and fight
for their rights.
- Although the 48-hour workweek
remains, the provision allowing 12-hour workdays is viewed as a
measure that will push workers into longer and more exhausting
schedules, increasing pressure and adversely affecting health.
- The formalization of Fixed-Term
Employment is criticized for paving the way for further informalization
and contractualisation of labour, as it allows companies to hire
non-permanent workers for perennial vacancies.
- The CTUs condemn the gross
violation of democratic norms, stating that the government sidelined,
ignored, and refused to hold genuine tripartite consultations with
stakeholders, especially workers and unions, throughout the process. They
point out the repeated failure to convene the Indian Labour Conference.
- The new system, which reportedly
defines "worker" only as those earning below ₹18,000, is argued
to shrink the organized workforce and make it more difficult to
form unions, thereby weakening the collective bargaining power of
employees.
- Despite the government's claim of
universal social security, the CTUs argue that the Codes fail to ensure comprehensive
and mandatory social security for the vast majority of unorganized,
gig, and informal sector workers, claiming that a large section has been
cleverly pushed out of the "worker" definition.
- Although the system is renamed Inspector-cum-Facilitator,
unions fear this will lead to a weak labour inspection system with
less control and monitoring, ultimately diluting industrial safety
compliance.
- The CTUs state the Codes are
solely aimed at appeasing corporate interests and establishing a "jungle
raj" by unilaterally empowering the corporate class under the
deceptive slogan of 'Ease of Doing Business'.
- The implementation was deemed "arbitrary
and undemocratic", especially as the Codes were rushed through
Parliament without debate amidst an opposition boycott.
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