New Labour Codes for Businesses and Occupations including Wood-based and Other Industries T D Khurana and R C Dhiman

Government of India has recently notified implementation of four labour codes from 21st November, 2025. These codes have been restructured by amalgamating 29 old labour related laws and simplified them for ease of doing business and providing relief to industry and other establishments using labour for paid works.

The four new codes are:
1. Code of Wage Act, 2019 (CW)
2. The Industrial Relations Code, 2020 (IRC)
3. The Code on Social Security, 2020 (CSS)
4. The Occupational Safety, Health and Working Conditions Code, 2020 (OSH).

CW is based on 4 old laws (related to wages, minimum wages, bonus, and equal remunerations), IRC is based on 3 (related to trade unions, industrial employment, and industrial disputes), CSS is based on 9 (related to employees’ compensation, employees’ state insurance, EPF, employment exchanges, maternity benefits, gratuity, cine-workers welfare fund, building construction’s workers, and unorganized workers’ social security), and OSH is based on 13 (related to factories, contract labour, mines, dock workers, building & other construction workers, plantation labour, inter-state migrant workmen, working journalist and other news-paper employees, working journalist wages, cine workers and cinema theatre workers, motor transport workers, sales employees, and beedi and cigar workers).

The main changes incorporated in these codes include removal of ambiguity in definitions like wages, worker, employee etc and apply their same definitions in all the four codes.

It also brought a little relief from the inspector-raj by changing the role of Inspector to Inspector-cum-Facilitator with his transformed role of facilitating labour related issues, providing appropriate opportunity to settle causal and inadvertent nature non-compliances before enforcing them as per legal provisions.

These codes also introduced a “Single Unified Annual Electronic Return”) to reduce the administrative load of multiple returns.

Main features of contract labour

Many establishments employ labour through contractors. Contractor has now been designated as employer for the contract labour supply in OSH and CW. This has significantly broadened and created a more inclusive, tech-driven compliance framework where the contractor needs to operate within a framework of joint liabilities along with the primary employer of establishment.

The contractor now needs to own the full responsibility on labour compliances if the principal employer of the establishment, for any reason, fails to resolve them as per the provisions of these codes. Regulatory authorities can now pursue recovery proceedings or attach bank accounts of both parties simultaneously during a default and therefore contractors are required to maintain flawless and transparent digital-trails to avoid severe financial and other penalties on non-compliances

Main features of individual labour codes

1. The Code on Wages, 2019

This code modernizes compensation establishing a statutory status by universally guaranteeing a minimum wage to all employees, eliminating the old system that restricted legal minimums only to scheduled employments. It introduces a legally binding “national floor wage” set by the central government, which acts as a baseline below which no state government can fix its minimum wages.

It strictly prohibits gender-based discrimination in wages for the same or similar work, mandates timely salary payments within stipulated timeline, and caps total monthly wage deductions at 50% to prevent predatory practices.

The provisions of WC are universally applicable to all sectors which employ one or more paid workers and includes domestic works; land production systems i.e., agriculture, horticulture, forestry and others; businesses and occupations including all wood-based and other industrial establishments etc.

2. The Industrial Relations Code, 2020

This code aimed at introducing flexibility for industries while protecting workers, increases the employee threshold for factories, mines, and plantations requiring prior government permission for layoffs, retrenchments, or closures from 100 to 300 workers.

To formalize temporary labour, it anchors the concept of “Fixed-Term Employment” (FTE), which allows businesses and occupations to hire employees on contracts while legally binding them to provide those workers with the same statutory benefits, wages, and leaves at par with permanent staff.

Additionally, it sets a statutory 14-day notice period for strikes across all industrial establishments and streamlines trade union recognition by establishing a single “negotiating council” to represent workers during disputes.

3. The Code on Social Security, 2020

This code focuses on universalizing healthcare and welfare, introducing monumental updates that explicitly expand social safety nets to include gig workers, platform employees, and unorganized sectors for the very first time. It mandates that online aggregators contribute a fixed percentage (1% to 2%) of their annual turnover into a centralized social security fund to finance these protections.

Furthermore, it rolls out a highly portable, Adhaar-linked Universal Account Number to seamlessly track benefits across state borders, relaxes the continuous service eligibility criteria for gratuity from 5 years down to just 1 year for fixed-term contract employees, and broadens the reach of the Employees’ Provident Fund (EPF) and Employees’ State Insurance Corporation (ESIC).

4. The Occupational Safety, Health and Working Conditions Code, 2020

This code replaces an overlapping web of sectoral laws by establishing national safety and health standards across factories, docks, mines, and construction sites. It institutes mandatory written appointment letters for all employees to crack down on undocumented labour, caps normal working hours at a maximum of 48 hours per week, and guarantees consent-based overtime pay at double the regular wage rate.

Notably, it legally protects a woman’s right to work night shifts across all sectors, provided employers secure their consent and implement stringent safety measures like transport and CCTV monitoring. It also ensures free annual medical health check-ups for employees over the age of 40.

Overall effect of labor codes

These codes modernize the employment landscape of the country by striking a balance between worker security and business agility, consolidating 29 fragmented laws into a single, digitized framework.

Key benefits for workers:

For workers, the codes universalize minimum wages, mandate formal appointment letters, lower the gratuity barrier for fixed-term contracts, and extend a social security net to gig and contract laborers for the first time.

Key Benefits for Businesses:

Simultaneously, businesses benefit from simplified payrolls via a single standardized definition of “wages,” vastly reduced compliance burdens through unified digital filings, greater operational flexibility to scale workforces, and the replacement of arbitrary inspections with a transparent, web-based advisory model.

Two factors that differentiate these codes are related to the threshold number of workers for different activities and fines and penalties levied on offences committed against the provisions of these codes. These are summarized in the following in Table1 and Table 2 respectively.

Table-1. Threshold limits of workers for compliance under different codes

Table-2. Fines and penalties for violation of the provisions of the Labour Codes

Compounding of offenses is punishable with a fine up to 50% of the statutory maximum fine. For offenses punishable with imprisonment up to 1year combined with a fine, compounding is permitted at 75% of the maximum fine. Repeat offenses within 5 years cannot be compounded.

This paper presents abstracted information on codes keeping in view the space limitations. For details, the readers are referred to the full documents which could be assessed from the links provided in Table-3.  These codes are also available on a single link- India Code Digital Repository – Act Entry.

Table-3. Online links for assessing full documents of codes