New Labour Codes 2025: Full Explained Guide (Updated): For decades, India’s labour laws were scattered, confusing, and divided across 29 different regulations with separate definitions, compliances, and government authorities. As a result, companies struggled with compliance, and employees found it difficult to claim their legal rights and benefits.
To solve this issue, the Government of India combined these 29 old labour laws into four simplified and modern labour codes, known as the New Labour Codes 2025.
What Are the New Labour Codes?
The old system was like a messy drawer—too many registrations, too many inspectors, and too much confusion. To fix this, the government introduced:
➡ Code on Wages
➡ Industrial Relations Code
➡ Code on Social Security
➡ Occupational Safety, Health & Working Conditions (OSH) Code
These codes modernize and simplify labour regulations for full-time employees, contract workers, gig workers, platform workers, and workers in small and large establishments.
Why Were the Old Labour Laws Changed?
The earlier laws were outdated and inconsistent. They had:
✔ Different definitions
✔ Different compliance formats
✔ Complicated processes
✔ Many exceptions
This made:
➡ Compliance difficult for employers
➡ Benefits difficult for employees
➡ Execution confusing for government bodies
So, the government consolidated everything into one structured framework.
List of 4 New Labour Codes
| Labour Code | Laws Replaced | Key Areas Covered |
|---|---|---|
| Code on Wages (2019) | Minimum Wages Act, Equal Remuneration Act, Bonus Act, Payment of Wages Act | Minimum wage, equal pay, timely wage payment |
| Industrial Relations Code (2020) | Trade Unions Act, Industrial Employment Act, Industrial Disputes Act | Hiring, firing, strikes, dispute resolution |
| Social Security Code (2020) | EPF Act, ESIC Act, Maternity Benefit Act and others | PF, ESIC, maternity benefits, gig worker benefits |
| OSH Code (2020) | Factories Act, Mines Act & others | Workplace safety, working hours, health rules |
Purpose of the New Labour Codes
The goal is to:
👉 Make compliance simpler
👉 Provide legal protection to workers
👉 Standardize definitions
👉 Support formal employment
👉 Recognize gig and platform workers
Who Will Benefit?
These codes benefit:
➡ Private sector employees
➡ Factory workers
➡ Contract workers
➡ Delivery partners
➡ Gig workers (Swiggy, Zomato, Uber, Ola)
➡ IT sector employees
➡ Shops & establishment workers
Salary Impact Under New Labour Codes
Under the new rules:
👉 Allowances cannot exceed 50% of total salary
👉 So, Basic Salary must be at least 50%
This means:
➡ Basic Salary ↑
➡ PF & Gratuity ↑
➡ Take-Home Salary ↓
Example (₹2,00,000 CTC)
| Structure | Basic | Allowances | PF (12%) | Take-Home |
|---|---|---|---|---|
| Old Rules | ₹70,000 | ₹1,30,000 | ₹8,400 | Higher |
| New Rules | ₹1,00,000 | ₹1,00,000 | ₹12,000 | Lower |
Long-term: Better retirement benefits
Short-term: Less in-hand salary
Key Changes Under New Labour Codes
✔ Gratuity eligibility reduced: 5 years → 1 year for fixed-term workers
✔ Nationwide ESIC coverage
✔ Women allowed in night shifts (with safety provisions)
✔ Inter-state benefit portability
✔ IT sector salaries must be paid in the first week
FAQs
Q. Are these laws fully implemented?
Some states are implementing gradually; rollout is underway.
Q. Will gig workers receive benefits?
Yes — for the first time, gig workers are legally recognized.
Q. Will my in-hand salary reduce?
Yes, slightly — but your retirement benefits will increase.
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