Labour is a cornerstone of economic growth and sustainable development. Recognizing the need for a modern, streamlined framework to protect workers’ rights, the Government undertook a historic reform by consolidating 29 existing labour laws into four comprehensive Labour Codes:
- 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.
These Codes simplify compliance, reduce administrative complexity, and provide workers with more accessible avenues for social security, fair wages, safe working conditions, and overall welfare. By strengthening legal safeguards and promoting dignity at work, this reform not only enhances the wellbeing of India’s workforce but also reinforces the country’s commitment to a resilient, equitable, and future-ready labour ecosystem that aligns with global best practices.
The empowerment of labour forms the foundation of a prosperous, self-reliant (Aatmanirbhar) India. Reflecting this vision, employment in India has grown significantly, rising from 47.5 crore in 2017–18 to 64.33 crore in 2023–24, a net addition of 16.83 crore jobs in just six years. Over the same period, the unemployment rate fell sharply from 6.0% to 3.2%, while 1.56 crore women joined the formal workforce, highlighting the Government’s focus on inclusive and sustained labour empowerment.
This robust labour market has contributed to broader socio-economic transformation, including a declining share of the population below the international poverty line. Simultaneously, India’s social protection system has expanded rapidly, emerging as one of the largest in the world and reinforcing the nation’s commitment to secure, equitable, and inclusive growth.
What is the Rationale Behind the Codification of Existing 29 Labour Laws?
Labour law reforms are central to building a modern, resilient, and inclusive economy. To address long-standing challenges and create a future-ready framework, the Government consolidated 29 existing labour laws into four comprehensive Labour Codes. This historic move aims to simplify compliance, streamline enforcement, promote employment, and guarantee safety, health, social security, and fair wages for every worker, reinforcing India’s commitment to a fair and efficient labour ecosystem.
The reform is driven by three key imperatives:
- Simplifying compliance: Eliminating the complexity of multiple overlapping laws to make adherence easier for employers and workers alike.
- Streamlining enforcement: Reducing fragmentation across authorities to ensure clarity, efficiency, and effective implementation.
- Modernizing outdated legislation: Bringing pre-Independence laws in line with today’s economic realities, technological advancements, and the aspirations of a skilled and dynamic workforce.
This codification not only strengthens workers’ rights but also fosters a labour environment that is competitive, equitable, and aligned with India’s vision of an Aatmanirbhar economy.
Key Implication for Employers
| Area | Implication | Action Required |
| Workforce Classification | Updated definitions of ‘employee’ and ‘worker’ | Review job descriptions and workforce categories to align with new definitions |
| Hiring & Employment Contracts | Restrictions on contract labour and fixed-term arrangements | Reassess recruitment models and revise contracts accordingly |
| Compensation & Benefits | Uniform definition of wages affecting payroll | Analyze payroll and compensation structures to ensure compliance |
| Financial Planning | Enhanced employee benefits | Assess financial impact on organizational budgets |
| HR & Employee Policies | Changes in working hours, leave, and retrenchment rules | Update HR policies and employee relations processes |
| Governance & Compliance | Stronger internal controls required | Implement internal audit mechanisms, periodic reviews, and monitoring systems |
The Transformative Power of Labour Codes
India’s new Labour Codes are designed to make labour laws simpler, fairer, and aligned with today’s evolving work environment. By safeguarding workers’ rights, enhancing safety and social security, easing compliance for businesses, and promoting job creation, these Codes are reshaping the country’s labour landscape. The key transformations introduced by the Labour Codes include:
- Modernization of Labour Laws: Aligning regulations with current economic realities, technological advancements, and evolving work patterns.
- Comprehensive Worker Protection: Ensuring safety, health, social security, and wage security for all categories of workers under a unified framework.
- Enhanced Employment Opportunities: Simplifying procedures and fostering a business-friendly environment that encourages investment and economic growth.
- Simplified Compliance: Introducing uniform definitions, single registration, single return, and streamlined online systems for seamless adherence.
- Technology-Driven Administration: Leveraging digital tools for registration, licensing, and inspections to improve efficiency and transparency.
- Strengthened Accountability: Implementing risk-based, online inspection mechanisms and objective enforcement processes to enhance transparency.
- Regulatory Simplification and Harmonization: Consolidating multiple labour laws into four comprehensive Codes, reducing administrative burden and ensuring consistency across the labour ecosystem.
The Labour Codes thus represent a historic reform, fostering a labour market that is efficient, transparent, inclusive, and future-ready.
Finance Sector Unions’ Response
The National Confederation of Bank Employees (NCBE), representing workers across India’s banking sector and encompassing all UNI Global Union affiliates, issued a strong statement on 21 November, expressing sharp opposition to the new Labour Codes.
Describing the rollout as “a deeply distressing moment for the working class,” the NCBE marked 21 November as a ‘Black Day’ for Indian workers. The confederation criticised the Codes for undermining job security by legitimising fixed-term contracts, weakening protections for women under the guise of “gender equality,” and skewing the balance unmistakably in favour of corporate interests.
“NCBE strongly condemns these retrograde steps,” said L. Chandrasekhar, General Secretary of NCBE. “We stand firmly with the national trade union movement in opposing these anti-worker legislations. This is a moment for united resistance to safeguard the dignity and rights of the working class.”
The NCBE also emphasised that the Codes were implemented unilaterally, despite five years of trade union opposition that had previously compelled the government to delay their enforcement. The statement further cautioned that the proposed Shram Shakti Niti-2025 could introduce even more far-reaching changes, potentially intensifying challenges for workers across sectors.
Way Forward: Adapting to India’s New Labour Codes
1. Comprehensive Assessment
- Review HR, Finance, Payroll, and Legal functions
- Identify gaps in policies, processes, and compliance
2. Impact Analysis
- Conduct financial and operational modelling
- Assess implications of wages, benefits, and workforce structure
3. Policy & Process Alignment
- Update employment contracts, job classifications, HR policies
- Align leave, working hours, and welfare programs with the Codes
4. Technology Enablement
- Implement digital registration, reporting, licensing, and inspections
- Enhance efficiency, transparency, and risk management
5. Capacity Building
- Train management, HR teams, and employees
- Ensure awareness and smooth implementation of the Codes
6. Governance & Monitoring
- Establish internal controls, audits, and risk based monitoring
- Maintain accountability and compliance
7. Stakeholder Engagement
- Engage with trade unions, industry bodies, and authorities
- Promote transparency, dialogue, and industrial harmony
Outcome:
A structured, proactive, and technology driven approach ensures compliance, protects worker rights, and builds a fair, efficient, and future-ready workforce.