New Labour Code 2025 : Are You Ready To Be Transformed
New Labour Code 2025: India’s workplace landscape is undergoing a major transformation with the New Labour Code 2025. These sweeping changes will affect millions of employees, employers, HR professionals, business owners, and legal advisors across the country.
Effective 2025, the revised Indian labour law will supersede existing, outdated employment regulations with four consolidated codes. These codes will address a broad spectrum of issues, including wage determination and workplace safety measures.
Consequently, there is considerable interest in understanding ” what are the new 4 labour codes?” and obtaining resources, such as a New Labour Code 2025 PDF, to facilitate comprehension of these alterations.
We will explain the four new labour codes in simple terms. We will examine how employee benefits have changed, including the new 2025 labour code regarding gratuity. We will also demonstrate the impact of these updates on both workers and businesses. Finally, you will find practical tips for addressing the main implementation challenges these new rules present.
What is the New Labour Law?/ What are the New 4 Labour Codes?
The New Labour Code 2025 marks the most significant transformation in India’s employment landscape since independence. The government has consolidated 44 existing labour laws into four comprehensive codes. This creates a unified framework that addresses modern workforce needs. It also simplifies compliance for businesses.
The Four New Labour Codes are:
- The Code on Wages, 2019 – Consolidates four wage-related laws, including the Minimum Wages Act and Payment of Wages Act
- The Industrial Relations Code, 2020 – Merges three laws governing trade unions, industrial disputes, and standing orders
- The Code on Social Security, 2020 – Combines nine social security laws covering provident fund, gratuity, and employee insurance
- The Occupational Safety, Health and Working Conditions Code, 2020 – Integrates 13 laws related to workplace safety and working conditions
These codes cover approximately 50 Crores workers across organised and unorganised sectors, making them the backbone of India’s employment ecosystem. The framework provides universal coverage for social security benefits.
It standardises definitions across industries. It also enhances protection for gig workers and platform employees who were previously excluded from formal labour protections.
The consolidated approach eliminates overlapping provisions and reduces compliance burden while maintaining worker protections. Each code features technology-enabled implementation mechanisms, including digital platforms for registration, compliance reporting, and grievance redressal.
Key Differences from Previous Labour Laws
The New Labour Code 2025 introduces revolutionary changes compared to the previous fragmented system of 44 separate laws. The most significant difference is its universal approach.
Previously, laws had varying coverage criteria and definitions. The new codes, however, provide standardised definitions. They also offer unified coverage across all sectors.
Major Transformations Include:
| Aspect | Previous Laws | New Labour Code 2025 |
|---|---|---|
| Coverage | Limited to specific sectors | Universal coverage including gig workers |
| Compliance | Multiple registrations required | Single registration per code |
| Social Security | Restricted eligibility | Extended to unorganized sector |
| Dispute Resolution | Multiple forums | Streamlined grievance mechanisms |
The new framework introduces flexible employment arrangements that were absent in previous legislation. Fixed-term employment now receives equal treatment with permanent workers, including pro-rata benefits and social security coverage. The codes also recognize new-age work arrangements like remote work, flexible hours, and platform-based employment.
Gratuity calculations under the New Labour Code 2025 for gratuity have been standardised, with enhanced portability across jobs. Workers can now carry forward their social security benefits when switching employers, addressing a major limitation of the previous system.
The definition of wages has been expanded to encompass all monetary benefits. This expansion facilitates enhanced provident fund contributions. It also improves retirement security.
Furthermore, the regulations pertaining to strikes and lockouts have been revised. They aim to strike a balance between the rights of employees and the operational requirements of businesses. The revisions mandate a 14-day notice period and obligatory conciliation procedures.
Implementation Timeline and Current Status
Current Implementation Status:
- Central Government: All four codes and their rules have been notified
- State Governments: The Majority of states have completed the rule-making process
- Effective Date: The codes became operational w.e.f 21.11.2025
The staggered implementation allows businesses time to adapt their HR systems, payroll processes, and compliance mechanisms. States like Karnataka, Uttar Pradesh, and Gujarat were among the early adopters, providing valuable insights for other states.
The transition period includes extensive awareness campaigns, training programs for labour inspectors, and digital platform development for seamless compliance. Businesses are required to migrate their existing registrations to the new system while ensuring continuity of worker benefits and protections.
What is the New Labour Law in India in 2025?
Code on Wages, 2019 – Minimum Wage and Payment Regulations
The New Labour Code 2025 introduces significant changes to wage regulations. It does so through the Code on Wages, which consolidates four existing wage-related laws. This comprehensive framework establishes a universal minimum wage system. It applies to all employees across organised and unorganised sectors. This is true regardless of their skill level or employment type.
Under this code, state governments must set minimum wages. These wages cannot fall below the national floor wage determined by the central government. The wage structure now includes basic wages. These must constitute at least 50% of total compensation. The remaining portion is allocated to allowances and benefits. This ensures workers receive adequate base pay while maintaining transparency in salary structures.
Key provisions include:
- Timely payment mandates requiring wages to be paid before the 7th of each month for monthly-paid employees
- Equal pay for equal work principles that eliminates gender-based wage discrimination
- Overtime compensation at double the normal rate for work exceeding standard hours
- Simplified wage period definitions with daily, weekly, fortnightly, and monthly payment cycles
The code also introduces digital payment mechanisms, making electronic transfers the preferred method for wage disbursement. Employers must maintain detailed wage records and provide pay slips containing comprehensive breakdowns of earnings and deductions. Non-compliance attracts penalties ranging from ₹50,000 to ₹2 lakh, along with potential imprisonment.
Industrial Relations Code – Union Formation and Dispute Resolution
The Industrial Relations Code transforms workplace democracy and conflict resolution in the Indian industry. It replaces three existing laws, introducing modern approaches to labour-management relations, making union formation easier and streamlining dispute resolution.
The revised code streamlines union registration. It necessitates membership from either 10% of the workforce or a minimum of 100 workers, whichever is lower. This facilitates the formation of collective bargaining units.
The code also establishes a transparent process for recognising negotiating unions. The union that demonstrates the highest membership is granted negotiating rights.
Standing orders become mandatory for establishments employing 300 or more workers, compared to the previous threshold of 100 workers.
Strike and lockout regulations have been refined with specific notice periods:
- 14 days advance notice for strikes in public utility services
- 60 days notice for closures, retrenchments, and layoffs in establishments with 300+ workers
- Cooling-off periods during which no industrial action can be taken
The code establishes industrial tribunals at the state and national levels for faster dispute resolution. These tribunals must dispose of cases within one year, preventing prolonged legal battles that harm both workers and businesses. Alternative dispute resolution mechanisms like conciliation and arbitration are encouraged to resolve conflicts amicably.
📥 Free Download — Income Tax Calculator FY 2025-26Re-skilling and re-deployment provisions protect workers during technological transitions, requiring employers to provide training opportunities before implementing layoffs. Fixed-term employment contracts are legally recognised, offering flexibility to both employers and workers while maintaining social security benefits.
Social Security Code – Benefits and Welfare Schemes
The Social Security Code is the most significant welfare reform in India’s labour laws. It expands social security coverage to include all workers. This includes those in the gig economy and the unorganised sectors. This unified code consolidates nine existing social security laws into a single, comprehensive framework.
Universal coverage now includes:
- Employees’ Provident Fund (EPF) for all establishments employing 20 or more workers
- Employees’ State Insurance (ESI) with medical benefits and cash benefits during sickness
- Gratuity payments for all establishments employing 10 or more workers
- Maternity benefits extended to 26 weeks with enhanced coverage
The New Labour Code 2025 for gratuity significantly improves worker benefits by reducing the eligibility threshold and streamlining payment processes. Gratuity calculations remain at 15 days’ wages for each completed year of service. The coverage expansion means millions more workers now qualify for these benefits.
Platform workers and gig economy participants gain access to social security schemes through government-administered funds. Employers contribute between 1-2% of annual turnover to finance these benefits, ensuring sustainable funding for the expanded coverage.
Key improvements include:
- Simplified registration processes for establishments
- Unified contribution collection through a single platform
- Enhanced portability of benefits across jobs and states
- Technology-driven service delivery reduces bureaucratic delays
The code establishes social security funds. These funds are managed by boards comprising government, employer, and worker representatives. This composition ensures transparent governance and efficient benefit delivery.
Occupational Safety, Health and Working Conditions Code
This comprehensive code prioritizes worker safety and establishes stringent health standards across all industries. It consolidates 13 existing laws to create a unified safety framework. The framework addresses modern workplace hazards. It clearly defines responsibilities for employers and workers.
Working hours and conditions receive detailed regulation:
- Maximum 8-12 hours daily and 48 hours weekly working time
- Double pay for overtime
The code mandates safety committees in establishments employing 50 or more workers, with equal representation from management and workers. These committees conduct regular safety audits, investigate accidents, and recommend preventive measures. Employers must provide personal protective equipment free of charge and ensure proper training on safety protocols.
Women’s workplace safety receives enhanced protection through:
- Prohibition of night shifts without adequate safety measures
- Mandatory creche facilities in establishments employing 50+ women
- Separate rest rooms and washing facilities
- Zero-tolerance policies for workplace harassment
Environmental health standards now cover noise pollution, air quality, lighting, and temperature controls. Regular health check-ups become mandatory for workers in hazardous industries, with employers bearing all medical examination costs.
The code introduces risk-based inspection systems where high-risk industries face more frequent inspections, while low-risk establishments enjoy reduced compliance burdens. Digital reporting of accidents and safety violations enables real-time monitoring and faster response to workplace hazards.
Penalties for safety violations range from ₹2 lakh to ₹10 lakh. Serious offenses can result in imprisonment terms of up to two years. This deterrent approach encourages proactive safety management rather than reactive compliance.
New Labour Code 2025 For Gratuity: Major Changes in Employee Rights and Benefits
Enhanced Gratuity Calculation Methods and Eligibility: The New Labour Code 2025 introduces substantial modifications to gratuity calculations. These changes are poised to benefit millions of workers throughout India directly. The revised framework enables employees to receive gratuity after completing one year of continuous service.
This represents a significant reduction from the previous five-year requirement. This alteration is anticipated to affect approximately 4 crore workers who were previously ineligible for gratuity benefits.
The calculation method has also evolved. The traditional formula of 15 days of last drawn wages for each year of service remains. The new code introduces a standardized approach across all establishments.
Small businesses with 10 or more employees now fall under mandatory gratuity coverage. This is a change compared to the earlier threshold of 20 employees.
Key improvements include:
- Automatic coverage for seasonal and contract workers who complete 240 days of work annually
- Higher maximum gratuity ceiling adjusted for inflation
- Simplified nomination process allowing electronic submissions
- Faster processing timeline with mandatory payment within 30 days
The new system also addresses payment delays through penalty provisions. Employers face financial consequences for late payments, with interest rates tied to prevailing bank rates. Digital payment mechanisms ensure transparency and reduce disputes between employers and employees.
Revised Working Hours and Overtime Compensation
Working hour regulations under the new labour law in India in 2025 establish clearer boundaries for employee welfare. The standard working week remains 48 hours, but the distribution becomes more flexible. Employers can now implement four-day work weeks with 12-hour daily shifts, provided they don’t exceed the weekly limit.
Overtime compensation sees substantial improvements:
| Overtime Type | Previous Rate | New Rate |
|---|---|---|
| Regular overtime | 1.5x basic wage | 2x basic wage |
| Holiday work | 1x basic wage | 2x basic wage |
| Night shift premium | No standard | Additional 25% |
The new framework recognises different industry needs while protecting worker rights. Manufacturing units can extend daily working hours to 12 hours with proper justification and employee consent. However, mandatory rest periods become non-negotiable – workers must receive 24 consecutive hours off weekly
Special provisions specifically address women’s working conditions. They include mandatory creche facilities for establishments with 50+ women employees. Additionally, there are enhanced security measures for night shifts. Transportation arrangements become compulsory for women working beyond 7 PM.
Expanded Social Security Coverage for Gig Workers
Gig economy workers finally gain comprehensive protection under the new 4 labour codes. Platform workers, freelancers, and independent contractors can now access social security benefits previously reserved for traditional employees. This expansion covers an estimated 1.5 Crores gig workers currently operating in India’s digital economy.
The social security net includes:
- Provident Fund contributions with government co-funding for low-income workers
- Medical insurance through state-sponsored schemes
- Accident and disability coverage for work-related injuries
- Pension benefits are calculated based on contribution periods
Registration becomes streamlined through a unified portal where gig workers can enrol regardless of their platform affiliations. Multiple income sources can be consolidated under one social security account, simplifying benefit calculations and claims processing.
Platform companies now share responsibility for worker welfare through mandatory contributions to social security funds. The contribution rate varies based on worker engagement levels. It also considers earning thresholds. This creates a sustainable funding model that doesn’t burden individual workers or platforms excessively.
New Labour Code 2025 PDF
Download the New Labour Code 2025 PDF File from link below:
↓ Download: New Labour Code 2025 (PDF)
