Hanging fire since 2019-20, the four labour codes will go a long distance towards universalising minimum wages and social security for all workers and accelerate formal job creation, experts said. The codes, they said, will also significantly ease the compliance burden and the retrenchment process, aligning with the seasonality and vicissitudes of their businesses.
Teamlease Vice Chairman Manish Sabhrawal said, the new labour codes are an overdue gift to India’s young, women, factories, MSMEs and backward states. The past labour law regime viewed job preservation as a form of job creation and lasted so long due to the vested interests of trade unions. “But the self-interest of the vocal minority labour aristocracy cannot be considered national interest in a country where 65% of our population is less than 35 years old. It is a major reform that will accelerate formal, non-farm, high-productivity job creation.”
Chandrajit Banerjee, Director General, agrees, “Its a historic milestone for India’s labour landscape. By consolidating 29 diverse laws, these Codes ensure better wages, stronger social security, enhanced workplace safety and a more predictable regulatory environment for both workers and industry. This long-awaited reform brings India in line with global standards, eases compliance, empowers enterprises, and strengthens the foundations for higher productivity, greater competitiveness and accelerated job creation, he sais.
Some, however, say a lot would depend on how these codes are enforced. Others Former Principal Labour and Employment Advisor, Ministry of Labour, Govt of India, Partha Pratim Mitra said, a lot of provisions in the earlier regime of labour laws needed Parliament’s approval. “Now, the executive has the power to notify many provisions of the code in the name of flexibility. To what extent investment and decent jobs are created remains to be seen.”
“The enforcement of the labour codes is a consequential reset for India’s workforce economy. By bringing wages, social security and safety under a unified structure, the reforms bring long-needed predictability for enterprises while expanding protections for workers across formal, gig and platform sectors. The transition will require disciplined execution, but the direction is unmistakably toward a more organised and future-ready labour market,” said labour sector expert Sripal Jain.
Worker-Centric Reforms
The codes, among others, bring all workers, including gig and platform workers, under the social security net with benefits such as PF, ESIC and insurance, make it mandatory for all employers to issue appointment letters to their employees and timely wage payment, make minimum wage a statutory right for all workers, and free health annual check-up for workers above 40 years. Women have been permitted to work on the night shift in all types of work; fixed-term employment with benefits equal to those of permanent workers across all sectors has also been provided for. A worker will now be eligible for gratuity after just one year of work, rather than five years previously.
Easing compliance and fostering job creation placement
The employers also stand to benefit in more ways than one. Their compliance burden will be reduced manifold, as the Codes have provided for single registration, single licence, and a single return for a company with pan-India operations. The Codes providing for full-benefit, fixed-term employment of any duration across all industries would be helpful for manufacturing units, including MSMEs, to adjust their payrolls to the seasonality and vicissitudes of their businesses.
“India’s new labour codes mark a progressive step toward strengthening the backbone of our economy – the workforce. These reforms will not only ensure fair wages and improved safety but also enhance social security and overall well-being. As an industry, we welcome this move, which aligns with CREDAI Pune’s commitment to fostering a safe, equitable and sustainable working environment,” said Manish Jain, President, CREDAI Pune
The Centre has left the most contentious provisions, mulled earlier, to the discretion of the states: allowing factories, mines and plantations employing up to 300 people — against 100 now — to retrench/lay off workers and/or shut shop without government approval. States will have a window to change the employee strength threshold for retrenchment purposes via the notification route. The Industrial Relations Code creates provisions for the recognition of unions.
Labour economist K R Shyamsundar said, “The central government has implemented the codes without any amendment whatsoever, which can create problems for both employers and workers. I consider this more an experimental measure because several substantive and procedural issues have been left to rule-making, and, ironically, the rule-making process has assumed greater importance than the law-making process. These will be put to the test in the corridors of the judiciary.”
“The implementation of India’s four new Labour Codes will simplify compliance for employers, reduce regulatory burdens, and foster a more flexible hiring environment. Enhanced occupational safety standards and provisions for women on night shifts further promote inclusivity. These reforms will accelerate the formalisation of India’s workforce, boost the ease of doing business, and drive formal employment growth in an informal-dominated economy. With social security coverage already rising from 19% in 2015 to over 64% today, this worker-centric overhaul empowers millions while enabling industries to scale efficiently. A historic win for balanced, progressive labour governance,” said Suchita Dutta, Executive Director, Indian Staffing Federation (ISF).
A Uber spokesperson said that the company welcomes the government’s move to implement the new labour codes, including the Code on Social Security. Uber looks forward to working closely with the government to ensure the speedy and effective implementation of these reforms.