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, rationalising 29 existing Central labour laws.
Key changes across the Four Labour Codes:
- Expanded Minimum Wages: A "floor wage" will be set by the Central Government to ensure no minimum wage is set below this baseline, with State Governments able to set higher rates. The new codes also expand protections like universal coverage, gender equality in wages, etc.
- Uniform Definition of Wages (50% Rule) & Take-home salary: A standardized definition of "wages" mandates that basic pay must constitute at least 50% of the total remuneration. This may reduce immediate take-home pay for some employees, but it will lead to higher contributions to social security benefits like Provident Fund (PF) and gratuity, thereby enhancing long-term retirement security.
- Gig Workers Brought under Social Security for the First Time: For the first time, gig and platform workers are included in the ambit of social security, with aggregators required to contribute a percentage of their annual turnover to a dedicated fund for benefits like life and disability cover, and health benefits. Aggregators must contribute 1–2% of the annual turnover, capped at 5% of the amount paid/payable to gig and platform workers.
- Universal coverage: Payment of wages provisions apply to all employees (not just those earning up to ₹24,000/month) and disallow unauthorized deductions.
- Gratuity for fixed-term employees without the 5-year condition: The eligibility period for gratuity for fixed-term employees has been reduced from five years of continuous service to just one year, promoting greater financial security. Notably, gratuity is a lump-sum financial payout employers make to workers as a gesture of appreciation for extended service.
- Mandatory Appointment Letters: Employers are now required to issue formal appointment letters to all new workers, including those in the unorganized sector, which provides documentary proof of employment, wages, and social security entitlements, enhancing transparency and job security. This applies even in informal or gig‑work settings where such formalities often didn’t exist.
- Fixing working hours: Workers can work 8-12 hours in a day, capped at 48 hours in a week.
- Annual Leave with wages: The workers employed in an establishment are entitled for paid leave in a calendar year on working of 180 days or more in such calendar year, earlier workers had to work for 240 days for becoming eligible for paid leave.
- Expanded ESIC (Employees’ State Insurance) Coverage: ESIC now applies pan-India, eliminating the criteria of “notified areas.” Establishments with fewer than 10 employees may voluntarily opt in with mutual consent of employers and employees. Coverage would be mandated for hazardous occupation and extended to plantation workers.
- Limitation on Inquiry Period—Capped at the Last 5 Years: A crucial compliance reform: PF/ESI authorities cannot conduct unbounded inquiries. The Code fixes a five-year look-back period, protecting establishments from arbitrary or prolonged investigations.
- Women Can Work Night Shifts: Gender‑based wage discrimination is explicitly prohibited. Women workers are now permitted to work in night shifts across all establishments (before 6 AM and beyond 7 PM), subject to their consent and mandatory safety and security measures provided by the employer.
- Work From Home Provision: Remote work will be permitted in service sectors by mutual consent, improving flexibility.
- Single Registration, Single License, and Single Return System for Factories, Contract Labour, and Other Establishments: A unified licensing framework replaces multiple fragmented licences, drastically reducing paperwork and enabling seamless multi-activity operations under a single registration & returning.
- Compulsory Annual Medical Check-Up: Employers must provide all workers above the age of 40 years with a free annual health check-up, improving early detection, safety, and occupational well-being.
- Contract Labour Reform: Applicability threshold has been raised from 20 to 50 contract workers. All India license valid for 5 years against work-order based license to be provided to the contractor. For contract labour, beedi and cigar manufacturing and factory: a common license is envisaged and provision of deemed license after expiry of prescribe period is introduced. Moreover, the license shall be auto generated. Provision of contract labour board has been done away with and provision for appointment of designated authority to advise matters on core and non-core activities is introduced.
- Timely Wage Payment: Employers are mandatorily required to pay wages within a specific time frame (e.g., within 7 days of the next month for monthly wages, within 2 working days of termination/resignation), ensuring financial stability for workers.
- Commuting Accidents Covered: Accidents during travel between home and workplace are now deemed employment-related, qualifying for compensation.
- Faster and Structured dispute resolution mechanisms: The Code introduces a more efficient, time-bound, and layered dispute resolution system, reducing prolonged litigation and industrial uncertainty.
- Easier Hire-And-Fire Rules: Companies with up to 299 employees can now lay off staff without government approval (threshold raised from 100 to 300) and smaller firms get greater flexibility with fewer compliance requirements on employment conditions.
- Higher threshold for applicability of Standing Orders: The threshold for mandatory Standing Orders has been raised (300 or more workmen), reducing compliance burden for smaller establishments while maintaining clarity for larger ones.
- Result of Rationalizing Labour Laws: Laws 29 to Codes 4, Rules 1436 to 351, Returns 31 to Single (Electronics), Forms 181 to 31, Registers 84 to 8 and much more.
Thank you for reading. We hope the information was helpful to you!
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Social Security Code from 21.11.2025.pdf
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