India’s Labour Law Reforms: Examining the New Labour Codes

Introduction

The origin of labour legislation in India is the protection of the workers by ensuring minimum wages, safe working environments and industrial dispute resolution procedures. Yet, as time progressed, the system of labour laws in India got complicated as a number of laws were enacted to solve the problems that were specific to the industry and social issues. Consequently, employers, workers and regulators tended to go through the disjointed legal system with a lot of difficulty.

The Government of India has realized these problems and has embarked in a significant reform of labour laws in the country by combining 29 central labour laws into four inclusive labour codes. These reforms were put in place with the aim of simplifying the labour regulation and enhancing compliance and the environment becoming more business friendly and yet remain protecting the rights of the workers. The new labour law codes are 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.

Although these labour codes can be regarded as one of the most important changes in the labour law system in India of recent decades, they have also created much controversy among policymakers, labour unions, scholars, and stakeholders of the industry. The supporters believe that the unification of labour laws would make the compliance processes easier, and would lead to economic growth as the labour market in India would be more flexible and efficient. Those who criticise it, however, complain that some of the provisions will undermine the workers and decrease the bargaining capacity of labour.

In this blog, I aim to discuss how the labour law structure in India is changing drastically with the emergence of new labour codes. Then discuss the key characteristics of the new labour codes and how they aim at simplifying and consolidating the previous legal framework as they also seek to strike a balance between the interests of the employers and the workers. Meanwhile, these changes also pose some very significant questions regarding the practical implications of the reforms on workers, especially in relation to job security, social security safeguards and the working conditions. It is in that regard that this blog is also about whether the new labour codes do address the concerns or not sufficiently or there are also still critical gaps.

The labour law system in India has over the years been quite fragmented with almost 29 central labour laws that cover various areas of employment including wages, industrial disputes, social security and safety in the work place. Although these laws were intended to safeguard the employees initially, more regulations were invented and complicated the system to follow and abide by particularly to businesses that operated in various fields.

In my own opinion, it was not always the motivation of these laws that was the issue, but rather a complicated set system under which they functioned. There were lots of various registrations, inspections, and compliance requirements of different statutes which created administrative and legal ambiguity on the part of the employers. In this regard, the government has provided the new labour codes as a wider initiative of simplifying the labour regulation and enhancing the ease of doing business. The premise was that by having many laws narrowed down into fewer codes, the system of laws could be much more understandable and effective.

The unification of 29 different labour laws into four codes was one of the significant reforms. This was aimed at streamlining a legal system that had grown very complicated. I think this consolidation is a reasonable structural reform, but the fact that it is simpler does not always ensure more enforcement.

Uniform Definition of Wages

The codes provide one definition of wages which had previously been different in various labour laws. This is also meant to bring sanity in computing benefits like the provident fund, gratuity and bonuses. Although this might minimize legal challenges, some employers might rearrange the elements of salaries in accordance with the new definition.

Fixed-Term Employment

The new framework officially acknowledges the use of fixed-term employment, whereby companies can employ workers to work on agreed employment periods but still grant them the same statutory benefits as permanent employees within the period of their employment. This has the potential to provide the flexibility to a demand fluctuating industry, although the question arises of whether the long-term job security would slowly diminish.

The Retrenchment Threshold

The number of employees required to be approved by the authorities before layoffs has been raised to 100 or even 300 employees. Advocates believe that this would make firms increase their expansion without fear of regulations. But as viewed by an employee, this change could also deter job security in some areas.

Increase in Social Security

The codes also seek to widen social security covers to gig and platform workers since work in the digital economy is changing. This is a step in the right direction in theory, but it will mostly rely on the implementation of these schemes in practice.

Conclusion

The new labour codes have a mixed picture as seen through the eyes of a worker. On the positive side, a simplified system of labour laws that would be the result of the merging of several labour laws may simplify labour regulation and its implementation. The attempt to offer workers on gigs and platforms social security coverage is also a sign that the labour market in India is rapidly evolving. Nonetheless, some of the stipulations such as the relaxation of retrenchment rules and the increased flexibility among the employers concern the job security, and the bargaining power of employees. It also may also happen that within some areas, the ease of layoffs will contribute to periods of unemployment, provided no sufficient protective measures are applied. There are various reforms in my opinion, useful as they may be in modernizing the labour regulation, their effectiveness in reality would be determined by how well they can balance the economic flexibility and as well as providing protection for the workers.

Author: Vaditya Vinuthna, in case of any queries please contact/write back to us via email to chhavi@khuranaandkhurana.com or at  Khurana & Khurana, Advocates and IP Attorney.

Endnotes

1. Ministry of Labour and Employment, Government of India, Code on Wages, 2019 (Act No. 29 of 2019) https://www.indiacode.nic.in accessed 24 June 2026.

2. Ministry of Labour and Employment, Government of India, Industrial Relations Code, 2020 (Act No. 35 of 2020) https://labour.gov.in/en/labour-codes accessed 24 June 2026.

3. Ministry of Labour and Employment, Government of India, Code on Social Security, 2020 (Act No. 36 of 2020) https://labour.gov.in/en/labour-codes accessed 24 June 2026.

4. Ministry of Labour and Employment, Government of India, Occupational Safety, Health and Working Conditions Code, 2020 (Act No. 37 of 2020) https://labour.gov.in/en/labour-codes accessed 24 June 2026.

5. Government of India, Press Information Bureau, ‘India’s Labour Reforms: Simplification, Security and Growth’ (21 November 2025) https://pib.gov.in accessed 24 June 2026.

6. Government of India, Press Information Bureau, ‘Government Makes the Four Labour Codes Effective’ (21 November 2025) https://pib.gov.in accessed 24 June 2026.

7. DLA Piper, ‘New Labour Codes Usher in a New Era of Compliance in India’ (9 February 2026) https://knowledge.dlapiper.com accessed 24 June 2026.

8. Economic Times, ‘Implementation of Labour Codes: What Changes and What Lies Ahead’ (15 November 2025) https://economictimes.indiatimes.com accessed 24 June 2026.