New Labour Code For New India: The Biggest Labour Reforms in Independent India
These long-due and much-awaited Labour reforms represent the biggest labour reforms in Independent India. Passed by Parliament, these are futuristic legislations designed to ensure the well-being of our industrious workers and give a boost to economic growth. These reforms are shining examples of 'Minimum Government, Maximum Governance'.
Empowering Workers, Enabling Prosperity
The goal of these Codes is to empower workers, which is necessary for an empowered, prosperous, and Aatmanirbhar India. They will create a better working environment, accelerating the pace of economic growth, and ensuring 'Ease of Doing Business' by reducing compliance, red-tapism, and 'Inspector Raj'.
Key Preparatory Reforms Leading to Labour Codes
Before the passage of the Four Labour Codes, the Government made several significant preparatory reforms to improve worker welfare and streamline processes. These reforms laid the foundation for the comprehensive transformation that followed.
Universal Account Number (UAN)
Portability of provident funds across India
Providing workers the benefit of portability through a Universal Account Number (UAN) to securely withdraw provident funds from anywhere in the country, eliminating transfer hassles.
Shram Suvidha Portal
Digital ease in compliance filing
Providing ease in return filing to the industry through the Shram Suvidha Portal, transforming the inspector's role to that of an advisor and facilitator, removing the 'inspector raj' system.
PM Shram Yogi Man Dhan Yojana
Rs 3,000 per month pension after age 60
Started for old age workers in the unorganized sector, which provisions a pension benefit of Rs 3,000 per month after reaching the age of 60.
Gratuity Ceiling Increased
From Rs 10 Lakhs to Rs 20 Lakhs
The ceiling limit of gratuity was doubled from Rs 10 Lakhs to Rs 20 Lakhs, effective from 29th March 2018, significantly enhancing retirement benefits for workers.
Maternity Leave Extended
From 12 weeks to 26 weeks
Paid maternity leave was increased from 12 weeks to 26 weeks through the 2017 amendment to the Maternity Benefit Act, effective from 1st April 2017.
Wage Ceiling Enhanced
From Rs 18,000 to Rs 24,000
The wage ceiling under the Payment of Wages Act was increased from Rs 18,000 to Rs 24,000, effective from 28th August 2017, expanding coverage to more workers.
Digital Wage Payment Enabled
Payment via cheque or bank account
The Payment of Wages Act was amended on 16th February 2017 to enable the payment of wages to employees by cheque or crediting it to their bank account, modernizing wage disbursement.
From Satyamev Jayate to Shramev Jayate
The foundation for these comprehensive reforms was laid following the recommendations of the Second National Commission of Labour, which submitted its report in 2002. Although discussions were held for 18 years, no serious initiative was taken between 2004 and 2014, and Labour Reforms remained untouched even during the 1991 economic reforms.
Second National Commission of Labour
The commission submitted its report recommending that Central-level multiple Labour Laws should be codified into 4 or 5 Labour Codes. This laid the groundwork for comprehensive labour reform.
Launch of Shramev Jayate Scheme
Prime Minister Narendra Modi termed workers as "Nation Builders," stating that the power of Shramev Jayate for the country's growth was equal to that of Satyamev Jayate.
Extensive Tripartite Consultations
The Ministry of Labour and Employment organized 9 tripartite discussions involving Central Trade Unions, Employers' Associations, and representatives of State Governments to gather opinions and suggestions. The brainstorming on Labour Codes was fast-tracked after GST implementation.
Parliamentary Standing Committee Examination
All four Labour Code Bills were examined by the Parliamentary Standing Committee, which subsequently provided its recommendations to the Government.
Parliamentary Passage of Labour Codes
In a revolutionary move, the Central Government passed all four Labour Codes in Parliament, repealing non-useful laws and codifying 29 existing Labour Laws into just 4 comprehensive Codes.
Vision: Shramev Jayate
"Workers are Nation Builders. The power of Shramev Jayate for the country's growth is equal to that of Satyamev Jayate."
— Prime Minister Narendra Modi, 16th October 2014Consultative Process
- 9 Tripartite Discussions conducted between 2015-2019 with stakeholders
- Central Trade Unions consulted for worker perspectives
- Employers' Associations engaged for industry input
- State Government Representatives provided regional insights
- Parliamentary Standing Committee reviewed and recommended changes
Understanding India's New Labour Codes
India has consolidated 29 central labour laws into four comprehensive Labour Codes, fundamentally transforming employment regulations across wages, industrial relations, social security, and occupational safety. Organizations must understand these codes to ensure compliance and avoid penalties.
Code on Wages
Consolidates and simplifies four existing wage-related laws including the Payment of Wages Act, Minimum Wages Act, Payment of Bonus Act, and Equal Remuneration Act. Establishes universal minimum wage floor and standardizes wage definitions across all employment types.
Industrial Relations Code
Merges the Trade Unions Act, Industrial Employment (Standing Orders) Act, and Industrial Disputes Act. Introduces new provisions for trade union recognition, strike regulations, fixed-term employment, and streamlined dispute resolution mechanisms.
Code on Social Security
Amalgamates nine social security laws including EPF, ESI, Maternity Benefit, and Gratuity Acts. Extends social security coverage to gig workers, platform workers, and unorganized sector employees while establishing a unified social security framework.
Occupational Safety, Health & Working Conditions Code
Subsumes 13 existing laws including the Factories Act, Mines Act, and Contract Labour Act. Establishes uniform safety standards, working hour regulations, welfare provisions, and employment conditions across all industries and establishments.
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Get Compliance SupportUniversal Wage and Social Security Rights
The new Codes universalise minimum wages and timely payment of wages, creating a comprehensive legal framework for social security for everyone.
For the first time since Independence, all the workers have got the Right to Minimum Wages.
The Social Security Code amalgamates 9 Labour Laws to secure the right of workers to insurance, pension, gratuity, and maternity benefit.
Safety, Health, and Working Conditions
The OSH Code subsumes 13 existing Labour Laws to provide a better and safe environment along with occupational health and safety at the workplace.
This Code ensures the security of interests of workers engaged in factories, mines, plantations, motor transport, bidi and cigar workers, contract, and migrant workers.
Core Protections and Benefits
Mandatory Appointment Letters
Providing appointment letters to all workers has been made mandatory for employers.
Health Check-ups
Employers must provide mandatory, free annual health check-ups for the workers.
Leave Entitlement
Now a worker is entitled to one-day leave for every 20 days of work if they have worked 180 days.
Empowerment of Women Workers
- Women have the right to work in all types of establishments.
- Women have been given the right to work at night with their consent, provided the employer ensures adequate safety and facilities.
- The 2017 amendment to the Maternity Benefit Act increased paid maternity leave from 12 weeks to 26 weeks.
- Mandatory crèche facility in all establishments having 50 or more workers.
Welfare of Inter-State Migrant Workers
- Legal Identity: Workers can now register themselves as Inter-State Migrant Workers on a national portal. This provision grants the worker a legal identity, enabling them to receive benefits from all social security schemes.
- Travel Allowance: Employers must provide an annual travelling allowance for a to-and-fro journey to the native place.
- Ration Facility: Under the "One Nation - One Ration Card", the worker gets ration facility in the State they are working in, while the remaining family members can avail of the ration facility where they reside.
- Grievance Resolution: There is a mandatory helpline facility in every State for the resolution of Inter-State Migrant Workers' grievances.
Towards End to Disputes
The Industrial Relations (IR) Code amalgamates 3 Labour Laws and seeks to safeguard the interests of Trade Unions and workers, ensuring disputes do not arise in the future.
Faster Justice
Labour Tribunals will institutionalize a vibrant mechanism for speedy disposal of cases, recognizing that delay in justice equals injustice. Worker disputes are to be resolved within a year in the Tribunal.
Tribunal Structure
Industrial Tribunals will now have 2 members to facilitate faster disposal of cases, ensuring efficient resolution of labour disputes.
Re-skilling Benefit
At the time of retrenchment, a worker will be provided 15 days' wages for re-skilling. These wages are credited directly into the worker's bank account to enable them to learn new skills.
Unemployment Allowance
In case of job loss, workers covered under the ESI Scheme get financial aid from the Government under the Atal Bimit Vyakti Kalyan Yojna, which is a type of unemployment allowance.
Trade Union Recognition
A Trade Union with 51 per cent votes shall be recognized as the sole negotiating union. If no single union gets 51 per cent of votes, a negotiating council of trade unions shall be constituted.
Right to Strike
The law provides flexibility to State Governments to modify the Codes, and importantly, the right to strike has not been curtailed at all.
Governance, Technology, and Compliance
These reforms are designed to simplify processes and end the old system of regulatory harassment.
The new system will lead to a stable regime for businesses to invest and create a win-win situation for both the employee and the employer. The provision of a notice period offers an opportunity for amicable settlement of any grievance between employees and employers.
Simplification of Compliance
The 44 central labour laws have been assimilated into four Codes, leading to Single Registration, Single License, Single Statement, and Minimum Forms. This means there will now be just one registration, one assessment, and one return filing.
Transparency and Accountability
The usage of IT-enabled systems for inspection has been made mandatory. Electronic registration and licensing are emphasized, bringing complete transparency to the system.
End of Inspector Raj
The system of 'inspector raj' has been removed. The inspector's role is now that of an advisor and facilitator. This is enforced via a random web-based inspection system.
If family sentiments arise between workers and employers, the journey of development cannot be stopped. We need to move away from the mindset that industry and labour are always in conflict, instead fostering a mechanism where both benefit equally.
Ensure Your Business is Fully Compliant with India's New Labour Codes
As India's Labour Codes transform how businesses manage their workforce, staying compliant is no longer optional—it's essential. MYND helps enterprises navigate these comprehensive reforms with expert guidance, technology-powered solutions, and end-to-end compliance management.
Complete Compliance
All 4 Labour Codes covered: Wage, Social Security, OSH, and IR
Proactive Monitoring
Real-time alerts for statutory deadlines and regulatory changes
Expert Support
22+ years of experience serving 1,000+ enterprises across India
Ministry of Labour & Employment, Government of India
All information on this page is sourced from official documentation published by the Ministry of Labour & Employment, Government of India. For detailed legal text and official notifications, please refer to the complete Labour Code documentation.
