Labour Codes - Key Highlights

The Ministry of Labour and Employment, Government of India notified the enforcement of the 4 labour codes on November 21, 2025, namely the Code on Wages, 2019 (“Wages Code”); the Code on Social Security, 2020 (“SS Code”); the Occupational Safety, Health and Working Conditions Code, 2020 (“OSH Code”); and the Industrial Relations Code, 2020 (“IR Code”), subsuming 29 central labour laws on wages, industrial relations, social security and occupational safety, welfare and working conditions.

The labour codes and their key highlights are summarised below:

Enforced Provisions: All Provisions enforced.

Description: Provisions relating to grievance redressal; trade unions; negotiating union; standing orders registration; notice of change; arbitration and conciliation of industrial disputes; strikes and lockouts; layoff, retrenchment and closure; worker re-skilling fund; offences and penalties and compounding of offences, etc.

Acts repealed: Trade Unions Act, 1926; Industrial Employment (Standing Orders) Act, 1946 (20 of 1946); Industrial Disputes Act, 1947.

Key Highlights:-

• Revised definition of ‘industry’ covers all systematic employer–worker activities, excluding charitable, social or philanthropic organisations, sovereign functions, and domestic service.

• Revised definition of ‘worker’ to include sales promotion employees and supervisory employees earning up to INR 18,000 per month.

• Fixed term employees entitled to proportionate benefits as permanent employees and eligible for gratuity after 1 year of service.

• Every industrial establishment with 20 or more workers to have a grievance redressal committee of 10 members with equal representation from employer and workers and adequate representation of women workers.

• Every industrial establishment with more than 1 registered trade union(s) to recognise a sole negotiating union made up of registered trade union having 51% or more workers; if this threshold is not met, a negotiating council will be constituted with at least 20% of total workers.

• Threshold for industrial establishments increased from 100 to 300 for applicability of certified standing orders and permission for layoff, retrenchment and closure from appropriate government.

• Concerned parties to an industrial dispute to directly approach tribunal if matters not settled by conciliation within 90 days.

• Inclusion of mass casual leave by 50% workers on a given day to be deemed as strike.

• No strike or lockout to take place without giving 60 days’ notice and with a waiting period of 14 days of such notice.

• A re-skilling fund to be setup for retrenched workers requiring industrial establishments to deposit an amount equal to 15 days’ wages for every retrenched worker; to be transferred to the worker within 45 days of retrenchment.

Enforced Provisions: All Provisions enforced.

Description: Provisions relating to registration; duties of employer and employee; working hours, leaves and holidays; maintenance of registers, records and returns; provisions for employment of women, audio-visual workers; offences and penalties, compounding of offences, etc.

Acts repealed: Factories Act, 1948; Plantations Labour Act, 1951; Mines Act, 1952; Working Journalists and other Newspaper Employees (Conditions of Service) and Miscellaneous Provisions Act, 1955; Working Journalists (Fixation of Rates of Wages) Act, 1958; Motor Transport Workers Act, 1961; Beedi and Cigar Workers (Conditions of Employment) Act, 1966;  Contract Labour (Regulation and Abolition) Act, 1970; Sales Promotion Employees (Conditions of Service) Act, 1976; Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979; Cine-Workers and Cinema Theatre Workers (Regulation of Employment) Act, 1981; Dock Workers (Safety, Health and Welfare) Act, 1986; and Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996.

Key Highlights:-

• ‘Audio-visual’ worker now includes dubbing artists and stunt persons, ‘working journalists’ now include electronic and digital media journalists.

• Establishments employing 10 or more employees require single electronic registration.

• Threshold increased for obtaining registration for factories with power and without power.

• Mandatory appointment letters to be issued to all employees; employees without such letters to receive them within 3 months.

• Annual leave entitlement threshold lowered to 180 days.

• Subject to consent and safety requirements, women allowed to work before 6 A.M. and after 7 P.M.

• Overtime permitted only with worker consent and payable at twice the rate of normal wages.

• Contract labour can be engaged in core activities in cases where such activity is ordinarily outsourced or does not require full-time involvement or there is a temporary increase in workload.

Enforced Provisions: Sections 1-41.

Description: Provisions relating to prohibition of gender-based discrimination; payment of minimum wages; fixation of minimum wages; hours of work; wages for overtime work; statutory bonus.

Key Highlights:

• Minimum wages now apply to all employees, not just those in scheduled employments.

• Definition of ‘wages’ now includes basic pay, dearness allowance, and retaining allowance. Introduction of new proviso specifying that allowances and contributions exceeding 50% as of now shall be deemed as part of wages.

• Floor wage to be fixed by the Central Government, minimum wages to not be lower than floor wage.

• Wages must be paid within 2 working days of employee’s removal, retrenchment, or resignation, as a part of full and final settlement.

Enforced Provisions: Sections 43-46.

Description: Provisions relating to payment of dues, undisbursed dues in case of death of employee; reference of disputes; offenses and penalties, etc.

Key Highlights: First time offenses (except those punishable only with imprisonment, or with both imprisonment and fine) may be compounded on payment of 50% of the maximum fine. Repeated offenses committed within 5 years of a similar offence earlier offense, or offenses where the person was previously convicted, cannot be compounded.

Enforced Provisions: Section 67 (1), (2) (a)-(r), (u)-(zc), (3)-(5).

Description: Provision relating to the power of appropriate government to make rules.

Key Highlights: Government may frame rules on wage calculation; factors for arduous work; loan-recovery deductions; fixation of floor wage, etc.

Enforced Provisions: Section 69.

Description: Acts repealed: Payment of Wages Act, 1936; Minimum Wages Act, 1948 (with some few exceptions); Payment of Bonus Act, 1965; and Equal Remuneration Act, 1976.

Key Highlights: 4 Acts repealed under this Code.

Enforced Provisions: Sections 1-14.

Description: Provisions relating to applicability; registration and cancellation; constitution of social security organisations including boards and committees, etc.

Key Highlights:

• Inclusion of definition of aggregator (digital intermediary/marketplace for a buyer/service user, to connect with seller/service provider), gig worker (person in paid work arrangement outside of traditional employer-employee relationship), platform worker (person in paid work arrangement for organizations or individuals using online platform).

• Chapters on employees’ provident fund and employees state insurance can be voluntarily extended and also withdrawn through an agreement between employer and majority of employees.

Enforced Provisions: Section 15 (1), (2).

Description: Provisions relating to framing of schemes including employees’ provident fund, pension, and deposit linked insurance.

Key Highlights: Central Government to specify the requirements for formation and modification of social security scheme including pension and life insurance.

Enforced Provisions: Section 16 (1)(c).

Description: Provisions relating to establishment of deposit-linked insurance fund.

Key Highlights: Central Government to establish insurance fund wherein employers would be required to contribute for every employee an amount not more than 1% or such percentage, as may be notified.

Enforced Provisions: Sections 17-141.

Description: Provisions relating to contributions in provident fund and insurance schemes; payment of gratuity; compulsory insurance; maternity benefit; employees’ compensation for accidents and injuries; schemes for unorganised workers, gig workers and platform workers; offences and penalties, compounding of offences, etc.

Key Highlights:

• Requirement for aggregators to contribute 1–2% of annual turnover toward Central Government social security schemes, as may be notified.

• Accidents occurring during travel between home and workplace treated as arising out of employment.

• First-time offences punishable with fine may be compounded at 50% of the maximum fine, and offences punishable with fine and imprisonment up to 1 year may be compounded at 75% of the maximum fine.

Enforced Provisions: Section 143.

Description: Provision relating to the power of the appropriate government to exempt establishment(s).

Key Highlights: Appropriate government may, by notification, exempt any establishment(s) (including factory or other establishments) from any/all provisions of this Code.

Enforced Provisions: Section 164 (1) items 1-2, 4-9, (2)(a), (c) and (3).

Description: Acts repealed: Employees’ Compensation Act, 1923; Employees’ State Insurance Act, 1948; Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959; Maternity Benefit Act, 1961; Payment of Gratuity Act, 1972; Cine-Workers Welfare Fund Act, 1981; Building and Other Construction Workers’ Welfare Cess Act, 1996; and Unorganised Workers, Social Security Act, 2008.

Key Highlights: Only the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, will remain in force for 1 year to the extent it is not inconsistent with this Code.

Additionally, the following Wages Code provisions are now in force: (i) Sections 42(4)-(9) on State Advisory Board; and (ii) Section 68 on the Central Government’s power to remove difficulties. Sections 144-163 of the SS Code are also in effect, covering deferment or reduction of contributions, liability on transfer of establishments, etc.

Although the Central Government has enforced substantive portions of the codes, this remains a transition during which employers must comply with both existing regulations and the new codes until the transition is complete.

While the codes aim to streamline various governance objectives through uniform thresholds, such as, compounding of offences, streamlined definitions, and digital compliance systems, thereby aligning with India’s ease of doing business agenda, the long-term impact of these codes will ultimately depend on how they are implemented, tested and iterated.

About the authors: Sheena Ogra is a Partner, and Ria Chanda Tandon, Harshita Vaashite and Satyaroop Kar are Associates at Ahlawat & Associates.

Disclaimer: The opinions expressed in this article are those of the author(s). The opinions presented do not necessarily reflect the views of Bar & Bench.

If you would like your Deals, Columns, Press Releases to be published on Bar & Bench, please fill in the form available here.