NEW LABOUR CODES IN INDIA 2025: IMPACT ON SALARY, LEAVE, AND WORKING HOURS

India is entering a transformative era in labour governance with the Government announcing the new labour code implementation date as 21 November 2025. This marks the full operationalisation of four major labour reforms. The Code on Wages, 2019, The Industrial Relations Code 2020, The Social Security Code 2020, and The Occupational Safety, Health, and Working Conditions Code, 2020. Together, these consolidate and rationalise 29 existing labour laws in India, many of which originated in the pre-Independence period. This comprehensive labour code implementation addresses longstanding challenges and brings the country’s regulatory framework in line with global standards.

For decades, labour law changes in India 2025 were seen as essential to keep pace with an evolving economy. Many older regulations were created for an industrial landscape that no longer exists, resulting in fragmented rules, excessive compliance burdens, and limited protection for a significant portion of the workforce. The four Labour Codes modernise this landscape, bringing clarity, expanding social security, and ensuring that workers and industries can grow in a balanced and productive manner.

TMWala can support organisations during this transition by simplifying documentation, recordkeeping, and workforce compliance aligned with the new regulatory structure.

A SIMPLIFIED AND INCLUSIVE LABOUR FRAMEWORK

The new Labour Codes replace multiple overlapping laws with a streamlined system. Employers will now benefit from a single registration, a single licence, and a single return, which dramatically reduces compliance requirements. At the same time, workers gain stronger rights, wider protections, and enhanced transparency across sectors.

A key change is the universalisation of minimum wages. Earlier, minimum wages applied only to scheduled industries, leaving many workers uncovered. Under the Code on Wages, every worker is legally entitled to a minimum wage, strengthened further by the introduction of a National Floor Wage. This ensures that no worker receives wages below a basic living standard.

The salary structure under the new wage code also promotes financial stability through mandatory, timely payment of wages and stricter provisions to prevent unauthorised deductions. Employers are required to issue appointment letters to all workers, strengthening formalisation and offering clear proof of employment, job roles, and entitlements.

Read this for more information: Press Release: Press Information Bureau

STRONGER SOCIAL SECURITY AND HEALTH PROTECTION

One of the most significant reforms is the massive expansion of social security coverage. Under the Social Security Code 2020, all workers, including gig workers, platform workers, fixed-term employees, MSME workers, migrants, and contract workers, are brought into the broader social protection net.

Establishments across India will now have access to Employees’ State Insurance Corporation (ESIC) benefits, including those with fewer than 10 employees (voluntarily) and all establishments with even one hazardous process worker. This extends medical protection, insurance, and disability benefits to millions who were previously excluded.

Free annual health check-ups for all workers above the age of 40 promote preventive healthcare, while mandatory safety committees and national OSH standards ensure safer working conditions. These changes significantly improve workplace welfare and reduce long-term health risks.

MODERN WORKING HOURS AND LEAVE REGULATIONS

The working hours rules under the new labour code provide clarity while balancing productivity with worker welfare. Working hours are now standardised at 8 to 12 hours per day, with a cap of 48 hours per week. Overtime must be voluntary and compensated at double the normal wage rate.

The leave policy under the new labour code also becomes more structured. Workers can accumulate and carry forward leave, receive payment during leave, and avail annual leave after 180 days of continuous work, which is particularly important for contract and fixed-term employees. These provisions ensure a healthy work-life balance and prevent exploitation.

TMWala can assist businesses in tracking working hours, leave balances, overtime payments, and compliance documentation accurately under the new framework.

NEW GRATUITY PROVISIONS FOR GREATER SECURITY

One of the most impactful reforms lies in the new gratuity rule in India. Fixed-term employees (FTEs) are now eligible for gratuity after completing only one year of continuous service, as opposed to the earlier requirement of five years. This will significantly benefit workers in sectors with frequent short-term contracts, promoting job security and enabling long-term financial planning.

Fixed-term employees also receive all benefits at par with permanent employees, including social security, medical coverage, and leave benefits, encouraging direct hiring and reducing excessive contractualisation.

EMPOWERING WOMEN AND YOUTH IN THE WORKFORCE

The Labour Codes prioritise gender equality and youth advancement. Women are now permitted to work in all categories of employment, including night shifts, underground mining, and hazardous industries, subject to safety measures and their consent. Mandatory representation of women in grievance committees ensures inclusive and effective dispute resolution.

The Codes explicitly prohibit gender-based discrimination in wages, hiring, promotions, and working conditions, supporting the broader national goal of increasing women’s labor force participation.

Youth workers also gain stronger protections through guaranteed minimum wages, mandatory appointment letters, clear work histories, and payment of wages during leave. Such measures help create a predictable, fair, and secure employment environment for young entrants into the workforce.

SECTOR-SPECIFIC BENEFITS ACROSS THE ECONOMY

The labour reforms bring dedicated improvements to key sectors:

• MSMEs benefit from simplified compliance, timely wage payments, social security coverage, and better work facilities such as canteens and rest areas.
• Beedi, cigar, and plantation workers gain regulated working hours, enhanced safety, protective equipment, ESI benefits, and educational facilities for their families.
• IT, ITES, and digital media workers receive mandatory, timely salaries, clear contracts, and fast dispute resolution processes.
• Dock, mine, and hazardous industry workers receive compulsory health check-ups, standardised safety norms, and better medical facilities at worksites.
• Gig and platform workers receive statutory recognition, aggregator contributions to their welfare funds, and Aadhaar-linked universal account numbers for portability across states.

These reforms collectively ensure that every worker, permanent, temporary, contractual, gig, or migrant receives equitable protections and opportunities.

CONCLUSION

India has already made remarkable advancements in expanding social security over the last decade, increasing coverage from 19 percent of the workforce in 2015 to over 64 percent in 2025. The four Labour Codes now strengthen this momentum, embedding protection, portability, and predictability throughout the system.

With the new labour code implementation date bringing these significant reforms into effect, India is set to enter a new phase of inclusive and sustainable economic growth. By balancing workers’ welfare with ease of doing business, the Codes support both people and productivity, ultimately contributing to a stronger, resilient, and self-reliant nation.

The modernised framework reinforces India’s commitment to a pro-worker, pro-women, pro-youth and pro-employment labour environment, positioning the country as a global leader in social protection and labour governance.

FAQs

1. When will the new Labour Codes be implemented?
   21 November 2025.
2. How many laws are merged under the new codes?
   29 labour laws.
3. What are the major labour law changes in India 2025?
   New wage rules, social security expansion, updated working hours, and leave norms.
4. What changes in the salary structure under the new wage code?
   Timely wages, national floor wage, and clear appointment letters.
5. What are the working hours rules under the new labour code?
   8–12 hours per day, 48 hours per week.
6. What is the leave policy under the new labour code?
   Annual leave after 180 days and paid leave provisions.
7. What is the new gratuity rule in India?
   Gratuity after one year for fixed-term employees.
8. Who is covered under the Social Security Code 2020?
   All workers, including gig and platform workers.
9. Are women allowed to work night shifts under the new codes?
   Yes, with safety measures and consent.
10. How can TMWala help companies?
    By simplifying compliance and managing attendance, leave, and wage records.