Historic Rationalization: Four Codes Unify 29 Labour Laws to Boost Welfare, Flexibility, and Ease of Business
SDG 8: Decent Work and Economic Growth | SDG 10: Reduced Inequalities
Institutions: Ministry of Labour & Employment
In a landmark decision, the Government of India has made the four Labour Codes effective from November 21, 2025, successfully rationalizing and amalgamating 29 existing Central labour laws. This historic reform modernizes a legislative framework largely dating back to the pre-Independence era (1930s–1950s) to align India’s labour ecosystem with contemporary economic realities and global standards. The four codes are: the Code on Wages, 2019; the Industrial Relations Code, 2020; the Code on Social Security, 2020; and the Occupational Safety, Health and Working Conditions Code, 2020.
The reforms achieve a dual objective: enhancing worker welfare and promoting ease of doing business. For workers, the key benefits include:
Universal Minimum Wages: A statutory right to minimum wages is established for all employees across the organized and unorganized sectors, backed by a statutory Floor Wage set by the Central Government.
Social Security Expansion: The Code on Social Security, 2020 extends benefits—including PF, ESIC, and insurance—to all workers, critically including gig, platform, and unorganized workers for the first time. Aggregators must contribute 1-2% of their annual turnover (capped at 5% of payments to workers) to a dedicated Social Security Fund.
Inclusivity & Safety: Gender discrimination is legally prohibited, and women are permitted to work night shifts and in all occupations (including underground mining and heavy machinery) with consent and mandatory safety measures. Workers over 40 years old are entitled to mandatory free annual health check-ups.
Formalization: Mandatory appointment letters for all workers promote job security. Fixed-Term Employees (FTEs) gain full parity with permanent workers, including gratuity eligibility after just one year.
For employers and industry, the Codes drastically reduce the compliance burden:
Simplification: The framework introduces a simplified system of Single Registration, Single License, and Single Return across multiple requirements.
Higher Thresholds: The prior government approval limit for lay-offs, retrenchment, or closure has been raised from 100 to 300 workers, promoting formalization and operational flexibility. The threshold for Standing Orders is also raised to 300 employees.
Modern Enforcement: The shift to an Inspector-cum-Facilitator system emphasizes guidance and compliance support over punitive action. Furthermore, the decriminalization of minor offenses replaces imprisonment with monetary fines.
The operationalization of these Codes is key to realizing the vision of Aatmanirbhar Bharat by strengthening both the workforce and industries. The Codes significantly enhance social protection coverage and portability for the burgeoning gig economy, while simultaneously simplifying complex compliance processes to boost India’s global competitiveness and employment generation.
What is the Inspector-cum-Facilitator System?→ The Inspector-cum-Facilitator system is a reform introduced in the new Labour Codes that replaces the traditional, often punitive, role of the “Inspector”. This new role emphasizes providing guidance, advisory services, and support to employers to ensure compliance, rather than focusing solely on prosecution. The system often incorporates randomized, web-based inspections to enhance transparency and reduce harassment.
Follow the full news here: Government Makes the Four Labour Codes effective to Simplify and Streamline Labour Laws
India’s Labour Reforms: Simplification, Security, and Sustainable Growth