Historic reform consolidates 29 laws into a unified compliance framework
On November 21, 2025, the Government of India implemented four consolidated Labour Codes, replacing 29 existing laws with a unified framework for employment, wages, social security, and workplace safety. This represents one of the most significant post-independence labour law reforms in India.
This historic change affects every employer operating in India. Whether you’re a multinational company with Indian operations or a staffing firm placing workers in the region, understanding these new requirements is essential for staying compliant.
At People2.0, we’re committed to helping our partners navigate these changes with confidence. Here’s what you need to know about India’s new labour law landscape.
Understanding the Four Labour Codes
The Government of India has consolidated decades of fragmented legislation into four streamlined codes:
Code on Wages, 2019 establishes a uniform definition of wages, guarantees minimum wages for all workers, and mandates timely payment. It replaces four earlier wage-related laws.
Industrial Relations Code, 2020 streamlines dispute resolution, introduces fixed-term employment provisions, and revises thresholds for standing orders and strikes. It consolidates three existing laws.
Code on Social Security, 2020 extends social security benefits to gig workers, platform workers, and unorganised sector employees. It brings together nine previous statutes.
Occupational Safety, Health and Working Conditions Code, 2020 consolidates 13 laws into one framework for workplace safety, health standards, and working conditions.
Key Changes Affecting Employers
The New Definition of Wages
One of the most impactful changes involves how wages are calculated. Under the new framework, an employee’s basic pay must constitute at least 50% of their total remuneration. This affects calculations for provident fund, gratuity, overtime, leave encashment, and statutory bonus.
Employers with salary structures that feature low basic pay and high allowances will need to restructure compensation packages.
Mandatory Appointment Letters
All workers must now receive appointment letters that clearly state their designation, wages, and social security entitlements. This applies to every employee, regardless of the nature of employment.
Expanded Social Security Coverage
For the first time, gig workers and platform workers are formally recognised under Indian labour law. Social security coverage now extends to fixed-term workers, unorganised sector employees, and inter-state migrant workers.
Aggregators may be required to contribute 1-2% of annual turnover (capped at 5% of total payments to platform workers) toward social security funds.
Changes to Gratuity
Fixed-term employees now qualify for gratuity after just one year of continuous service, down from the previous requirement of five years. This change significantly impacts employers who rely on project-based or contract workers.
Workplace Safety Requirements
The Occupational Safety, Health and Working Conditions Code introduces mandatory provisions including free annual health check-ups for workers over 40, working hours capped at 8-12 hours per day and 48 hours per week, overtime with worker consent at double the normal wage rate, mandatory safety committees in establishments with 500 or more workers, and expanded night shift permissions for women with required safety measures.
Simplified Compliance
Despite the scope of changes, the new codes aim to reduce administrative burden. Employers will benefit from single registration, single license, and single return requirements for safety and working conditions. The shift from inspector-based enforcement to an “Inspector-cum-Facilitator” model emphasises guidance and compliance support rather than punitive action.
First-time or minor non-compliance may result in monetary penalties rather than imprisonment, reflecting a more facilitative approach to enforcement.
What This Means for Your Business
Immediate Actions Required
Employers should begin preparing now, even as some state-level rules are still being finalised. Priority areas include reviewing and updating employment contracts to include mandatory appointment letter requirements, restructuring salary packages to ensure basic wages meet the 50% threshold, updating HR policies to align with new definitions of “worker” and “employee”, extending social security enrolment to all eligible workers including fixed-term staff, and upgrading workplace safety standards and health provisions.
Transition Period Considerations
During the transition, existing rules and regulations under the previous laws will continue to apply until superseded. However, employers should not delay compliance efforts. Implementation of the codes is occurring gradually, as some of the states have started notifying the rules under the codes.
Documentation Updates
Muster rolls, wage registers, overtime records, and similar documents should be updated to align with the revised formats prescribed under the Labour Codes.
Looking Ahead
The implementation of India’s four Labour Codes marks a turning point for employment compliance in the region. Social security coverage in India has already expanded dramatically, rising from about 19% of the workforce in 2015 to more than 64% in 2025. These new codes are expected to deepen that expansion.
For employers, the message is clear: proactive compliance planning is essential. The transition is underway, and businesses that invest time now in understanding and adapting to the Codes will be better positioned for success in India’s evolving labour market.
How People2.0 Can Help
Navigating India’s new labour law landscape requires local expertise and hands-on support. Through our Indian entity Husys, People2.0 offers the compliance capabilities businesses need to meet these new requirements.
Whether you’re setting up operations in India for the first time or managing an existing workforce, our team can help you review employment contracts and policies, structure compliant payroll and benefits programs, implement social security enrolment for all worker categories, and ensure ongoing compliance as state-level rules are finalised.
Contact us to discuss how our employer of record services in India can support your workforce compliance goals.
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