For years, India’s labor laws were the most complex ones, with 29 overlapping regulations that usually left businesses struggling with compliance chaos and employees facing inconsistent protections. But on 21 November 2025, that had changed notably, as there was an introduction of four unified labor codes.
These reforms promise to make wage structures simple, stretch social security, and make workplace rules modern. So what are the highlights, key changes, and acts and compliances under labour law of the new framework, and how can you as a business prepare for it? Well, let us just find out.
A brief overview of the Four Codes
As said, the New Labour Codes 2025 bring 29 separate laws into four unified frameworks where each code talks about an important area of employment.
Code on Wages
- This code impacts every employee, with any dependency on their role.
- Minimum wages now apply universally and remove the old “scheduled employment” lists.
- A national floor wage makes sure that states cannot set wages below a central benchmark.
- A new definition of “wages” standardizes calculations across laws, with allowances capped at 50% of total pay.
- The impact on the businesses is that salary structures with low basic pay and high allowances will be recalibrated. Also, PF, gratuity, and other benefits will likely increase as the wage base expands.
Code on Social Security
- Built to widen coverage, this code brings gig workers, platform workers, and contract staff under the social security umbrella.
- Consolidates PF, ESI, gratuity, maternity benefits, and other schemes.
- The impact on businesses is that they have to add categories of workers that were not there earlier that means updating vendor contracts and manpower policies.
Industrial Relations Code
- This code brings a restructuring of rules around trade unions, disputes, retrenchment, and closures.
- Raises the need for approvals required in layoffs, thus giving flexibility to medium and large companies.
- Makes standing orders and dispute resolution processes standard.
- The impact on businesses will be that HR and IR policies will need to be updated to reflect the new requirements and structure the processes as per the updates.
Occupational Safety, Health & Working Conditions (OSHWC) Code
- Think of this as a modern “Factories Act,” but much broader.
- It consolidates safety and welfare laws.
- Introduces annual medical checkups for employees above 40.
- Sets clearer rules for migrant workers, contract labor, and working hours.
- The impact on businesses will be that not only corporations or factories will have to comply with rules but also warehouses, logistics hubs, and other unique office settings have to meet with the changes.
For sure these four codes will give a new perspective to the foundation of employment in India as it aims to simplify compliance, make worker protections stronger, and demand proactive adaptation from businesses.
Some Important changes that Businesses Must Prepare For
The New Labour Codes 2025 are not small adjustments rather they require businesses to rethink how they manage employees, contracts, and compliance.
New and Modern Salary Structures
Here the first step will be recalibration of salary structures, as the new definition of “wages” mandates that basic pay and dearness allowance form at least 50% of total compensation. It will directly impact provident fund, gratuity, and other benefits, mostly leading to higher costs in many cases.
Much better social security
Another important shift is the expansion of social security obligations, as employers must now account for gig workers, platform workers, and contract staff within their compliance frameworks. This means there has to be a revisit of vendor agreements, outsourcing contracts, and manpower policies to make sure that all categories of workers receive the benefits they are entitled to.
Update of HR policies
With the Industrial Relations Code there will be more structured processes in terms of trade unions, disputes, and layoffs. While thresholds for approvals rises, the medium and large companies will have more flexibility, and businesses will update HR policies to reflect new rules on discipline, termination, and dispute resolution.
More health and safety investments
Then under the OSHWC Code, the annual medical check-ups for employees above 40, clearer rules for migrant workers, and stricter documentation standards will demand companies invest in health and safety infrastructure. For industries like manufacturing, logistics, and construction, it will be a game changer without any second thought.
Five Benefits of New Labor Codes to Employers and Employees
To summarize it out here are the long-term benefits of the New Labour Codes 2025 for both employers and employees.
- Clarity and simplification, as it replaces 29 fragmented laws with four unified codes so that businesses now follow a single, streamlined system without confusion and errors
- Inclusivity for All Workers as for the first time, gig workers, platform workers, and contract staff are formally recognized under India’s labor laws, so millions of workers gain access to provident funds, gratuity, maternity benefits, and health schemes.
- Flexibility for Employers as the Industrial Relations Code brings higher thresholds for layoffs and closures, it gives medium and large companies more flexibility to adapt to changing business conditions.
- Stronger Workplace Safety and Welfare, as the OSHWC Code modernizes safety standards across industries with annual medical check-ups.
- Long term resilience, as it positions India towards a new and modern labor ecosystem.
The Practical Roadmap that every Business must plan
You might be a business using HR software like CloveHR, which automatically complies with the latest lawsand makes necessary changes to the system, but if you are still manual, here is a proper roadmap to make necessary changes.
Map Your Workforce
Start by studying every category of worker, like employees, contract staff, gig and platform workers, apprentices, consultants, and multi state employees. This detailed mapping is the foundation for compliance under the new codes.
Review Salary Structures
Revisit pay components to meet with the new definition of “wages,” where you make sure that basic pay plus dearness allowance equals at least 50% of total compensation. For this you can run simulations to understand the impact on PF, gratuity, and take home pay.
Check Social Security Coverage
Study obligations for all categories of workers, like those previously excluded, to find new responsibilities toward outsourced manpower, vendor contracts, and platform partnerships.
Update Policies and Contracts
Revise appointment letters, salary templates, vendor agreements, standing orders, and HR policies with the best of consistency, as definitions are now standard across all four codes.
Make Safety and Working Conditions Solid
Invest in workplace safety measures in case you are operating in manufacturing, logistics, construction, or large offices with shift work where you prepare for annual medical checkups, stricter documentation, and compliance audits.
Build a Monitoring System
Labor law compliance is no longer a one time exercise, so start preparing for tracking government advisories, court interpretations, and state specific rules to keep your systems future proof for new updates.
Wrapping Up
The new Labour Codes 2025 is one of the most notable reforms in the employment system of India. This transformation may feel complex, but the collective framework gives businesses a chance to simplify compliance, fortify worker protections, and modernize workplace practices.
For saving the time and efforts, you may make use of HRMS software like CloveHR to auto comply everything with the latest labour codes for present as well as in future.
Download the full New Labour Codes 2025 PDF here.
FAQs
1. What are these four new Labour Codes that the government launched and businesses must comply with?
They basically combine 29 old labor laws into one simpler system and the new codes are the Code on Wages, the Code on Social Security, the Industrial Relations Code, and the Occupational Safety, Health & Working Conditions Code.
2. How do the new codes affect salary structures?
The Wage Code standardizes the definition of “wages,” mandating that basic pay plus dearness allowance must constitute at least 50% of total compensation. This rule directly impacts and often increases employer contributions to provident fund and gratuity.
3. Are gig and platform workers covered under the new framework?
Yes, the Social Security Code brings gig workers, platform workers, and contract staff under the ambit of social security schemes like PF, ESI, and gratuity for the first time. This notably makes worker protection wider and also expands employer responsibilities.
4. What compliance risks should businesses watch out for with new labour laws?
A few risks here will be meeting mandated salary restructuring, looking at social security obligations for non traditional workers, and non compliance with new workplace safety requirements where the penalties for violations will be strict.
5. How can SMEs prepare for the changes bought by New Labour Codes 2025?
SMEs should actively conduct workforce mapping, review and update salary structures and employment contracts, and adopt key HR and compliance policies. Here businesses must know that early preparation is important to manage costs and ensure smooth adaptation.
