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India’s new Labour Codes mark the biggest overhaul of labour laws since Independence. For decades, 29 different labour Acts created confusion for employers and limited benefit access for workers. To fix this, the government has consolidated them into four simplified codes: the Code on Wages, the Industrial Relations Code, the Code on Social Security, and the Occupational Safety, Health and Working Conditions (OSH) Code.
Together, these codes aim to standardise definitions, reduce compliance complexity, and extend protections to a wider workforce, including gig and platform workers for the first time. A major change is the new definition of wages, which limits allowances to 50 percent of total pay. This increases basic salary, leading to higher PF and gratuity contributions. While this strengthens long-term savings, it may reduce monthly take-home pay for many private-sector employees.
The Industrial Relations Code raises the threshold for government approval on layoffs from 100 to 300 workers, giving companies more flexibility but raising concerns about job security. Workers benefit from faster wage payments, stricter safety norms, easier portability of benefits across states, and gratuity eligibility for fixed-term employees after one year.
Overall, the labour codes attempt to balance business flexibility with worker protection. Their real impact will depend on how effectively states implement them and how clearly rules are enforced.
