Table of Contents
Labour Codes: Execution and Monitoring Will Be Key
The long-awaited Labour Codes—on Wages, Social Security, Industrial Relations and Occupational Safety—came into force in November triggering a large-scale restructuring exercise in salaries and wages and getting a larger workforce, especially contractual workers, within the fold of formal employment. These reforms span over contracts, compliance, and social security, besides legally defining certain kinds of workers like ‘gig workers’, ‘platform workers’ and ‘aggregators.’
The Government of India has announced the implementation of the four 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 with effect from 21st November 2025. Thus the Government has consolidated 29 labour laws into four comprehensive Labour Codes.
Changes due to these labour codes are expected to provide financial stability to workers at the same time strengthen enterprises with an empowered workforce.
Gratuity Reforms and Fixed-Term Employment
A key feature of the codes is extension of gratuity. For instance, fixed-term employees (hired for a specific period) will be eligible for gratuity if they complete 1 year of service with a particular employer. Currently, gratuity eligibility is only after completing 5 years.
While benefitting employees this also reassures the employers. This will save hiring costs for the companies, provide stability and bring in clarity with regard to gratuity payments across sectors.
- Key Highlights Of The New Gratuity Rule
Fixed-term employees (FTEs) will receive gratuity after 1 year of continuous service, instead of 5 years. - The definition of ‘wages’ expanded to include additional components, thus increasing gratuity payouts.
- Employers to pay gratuity within 30 days, failing which a 10% annual interest to be imposed.
FTEs, under the new system, will be entitled to full parity in wages and benefits as regular employees like leave facilities, medical benefits and social security measures.
Several Indian labour laws have been archaic, framed in the pre-Independence and early post-Independence era (1930s–1950s). Since then, most major economies have updated their labour regulations but India continued with fragmented and complex laws.
Recognition and Protection of Gig & Platform Workers
Gig & Platform Workers: ‘Gig work’, ‘Platform work’, and ‘Aggregators’ have been legally defined under the new codes making welfare benefits cover these workers. The Code of Social Security includes unorganized, gig, and platform workers to cover life, health, maternity, and provident fund benefits.
Strengthening Gender Equality and Women’s Participation
Women can work in all types of establishments and during night hours (before 6AM, beyond 7PM) with consent and safety measures, fostering equality and inclusion.
The Codes have also provisioned for proportional representation of women in grievance committees to ensure gender-sensitive redressal as also the provision to add parents-in-law in Family Definition of Female employees.
Formalisation, Social Security and ESIC Expansion
There is also considerable formalisation and better living conditions spelt out under the new codes. The ESIC (Employees’ State Insurance) Coverage, for instance, now applies pan-India. Establishments with fewer than 10 employees can voluntarily opt for coverage with mutual consent of employers and employees.
However, proof of the pudding is in the eating. How well do states, municipal bodies, and districts implement these codes, set the mechanism for monitoring their execution and how efficiently the grievance redressal mechanism works, will test the efficacy of these codes.
Periodic impact assessment studies by public policy institutions, think tanks, consulting firms, experts in labour laws, etc will help the government strengthen the execution and take necessary action where required.