New Labour Codes 2025 India – Index
Summary
India’s New Labour Codes mark the biggest reset of workplace rules in decades, replacing 29 outdated laws with a cleaner, simpler framework. One of the most impactful changes is the new one year gratuity eligibility for fixed term employees, a shift that directly strengthens financial security for crores of workers. These reforms are designed to formalise jobs, expand social security, and build a future ready workforce.
What Happened: The New Labour Codes Move India Into a Modern Labour Era
For decades, India’s labour laws were a maze of overlapping rules created between the 1930s and the 1950s. On 21 November 2025, the Union government activated a long awaited transformation that merged 29 laws into four clear, worker centric labour codes.
A major headline from this overhaul is the change in gratuity eligibility. Until now, fixed term employees had to complete five years of continuous service to claim gratuity. Under the new rules, they will qualify after one year. This aligns them with permanent staff on matters of pay structure, benefits and social security coverage.
The codes apply not only to formal employees but also to gig workers, platform workers, migrant labourers and workers in MSMEs, making the labour net wider than at any point in India’s history.
New Labour Codes – Key Details
| Aspect | Earlier Framework | New Labour Codes 2025 |
|---|---|---|
| No. of Labour Laws | 29 separate Acts | 4 consolidated codes |
| Gratuity for Fixed Term Employees | Eligible after 5 years | Eligible after 1 year |
| Minimum Wages | Only for scheduled sectors | Universal minimum wage |
| Social Security | Limited coverage | PF, ESIC, insurance for all workers |
| Appointment Letter | Not mandatory | Mandatory for every worker |
| Women’s Employment | Limits on night shifts | Allowed in all jobs with safety measures |
| ESIC Coverage | Only notified areas | Available across India |
| Compliance | Multiple licences and returns | Single licence and single return |
Download Official Labour Codes PDF (Government Document)
Click here to download the New Labour Codes PDF
Key Info: The Four Labour Codes Explained
India’s new framework stands on four pillars, each designed to address gaps in the older system.
Code on Wages, 2019
Focus: Minimum wages, timely payment, wage clarity
Benefit: Ensures statutory minimum wages for every worker regardless of industry.
Industrial Relations Code, 2020
Focus: Hiring rules, firing norms, dispute settlement, unions
Benefit: Faster dispute resolution and smoother employment processes.
Code on Social Security, 2020
Focus: PF, ESIC, maternity, gig workers, unorganised workforce
Benefit: Universal social security coverage through Aadhaar linked portability.
Occupational Safety, Health and Working Conditions Code, 2020
Focus: Safety, health standards, working conditions
Benefit: Standardised safety norms, regulated shift hours and mandatory health check ups.
Why It Matters: The Bigger Shift Behind the New Labour Codes
India’s economy has changed faster than its labour laws. Older Acts were built for a workforce dominated by factories and predictable long term employment. Today, India has gig workers, app based jobs, platform services, migrant labour flows and a start up ecosystem creating flexible work models.
The older framework led to:
• Fragmented compliance across 29 Acts
• Unclear definitions for employees, contractors and gig workers
• Slow dispute resolution
• Limited social security coverage
• Barriers for women in certain jobs or timings
The new codes address these issues through clarity, universal coverage and simplified compliance. India’s labour framework now resembles global practices in developed economies.
Impact on You: What Different Workers Will Now Receive
The changes impact nearly every category of worker.
Fixed Term Employees
• Equal pay and benefits as permanent staff
• Gratuity eligibility after one year
• Medical cover and social security inclusion
Gig and Platform Workers
• Legal recognition for the first time
• Welfare funds partly supported by aggregators
• Portable benefits tied to Aadhaar
Women Workers
• Permission to work in night shifts with safety measures
• Equal pay and anti harassment protection
• Mandatory representation in committees
MSME Workforce
• Appointment letters
• Social security access
• Standard working hours
Contract Workers
• Equal benefits and gratuity after one year
• Free annual health check ups
Additional Key Improvements
| Area | Before 2025 | After New Labour Codes |
|---|---|---|
| Wage Timeliness | No strict timelines | Mandatory timely payment |
| Health Check Ups | No requirement | Free annual check up for workers 40+ |
| Women in Night Shifts | Restrictions | Allowed with protection and consent |
| Plantation Workers | Limited safety provision | Protective gear and ESIC coverage |
| Digital and Media Workers | No formal recognition | Appointment letters and double overtime |
Broader Economic Impact
India’s social security coverage has expanded from 19 percent in 2015 to 64 percent in 2025. The new codes build on this momentum by making benefits seamless, technology driven and portable across jobs. Industry bodies expect the simplified compliance system to reduce operating costs while improving workplace trust and productivity.
A more formalised workforce also means better wage records, easier credit access and more predictable incomes for households.
Samay Street FAQs
1. What exactly is changing with gratuity rules
Gratuity for fixed term employees now requires only one year of service instead of five. Permanent employees continue under the existing five year rule.
2. Are gig workers finally getting social security
Yes, gig and platform workers will be covered under the Code on Social Security with welfare funds supported partly by aggregator companies.
3. Will salaries get delayed under the new system
No. Timely wage payment is mandatory, and penalties apply for delays.
4. Can women work night shifts under the new rules
Yes, with proper safety arrangements and written consent.
5. Do the codes reduce paperwork for businesses
Significantly. Firms now need one registration, one licence and one annual return.
Samay’s Take
India’s labour system has always been a patchwork of scattered rules. The new codes do something simple yet powerful. They make work predictable, rights portable and benefits universal. Gratuity after one year sends a clear message. India is ready to support flexible work without compromising security.
As India wakes up to this new regulatory era, the coming months will be critical. While BJP-ruled states like Gujarat and Uttar Pradesh have moved quickly to notify rules, a fragmented rollout is possible across opposition-ruled states. Ultimately, the success of the “New Labour Codes 2025” will depend on how effectively businesses can transition to these new norms while balancing profitability with the enhanced welfare of India’s 500-million-strong workforce.
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Sources
- New Labour Codes Official PDF (Government Document)
- Union Government Announcements on Labour Reforms
Provided through official public statements and press information. - Historical Labour Law Framework
Based on analysis of the 29 Central Acts consolidated under the new codes.
