In a landmark overhaul of India’s archaic labour laws, the nation is set to implement four new labour codes, a move poised to fundamentally reshape the relationship between employers and employees. Consolidating 29 complex central laws, these new codes aim to simplify compliance for businesses while extending a robust safety net to millions, particularly in the unorganised sector.
This monumental reform introduces several transformative provisions. For the first time, India’s vast informal economy, which employs a staggering 40 crore (400 million) workers, will be brought under the ambit of social security. Here’s a full list of the key changes you need to know.
What is the New Minimum Wage Guarantee?
Perhaps the most significant change is the introduction of a statutory “floor wage” under the Code on Wages, 2019. The central government will set this national floor wage, and while states can set their own minimum wages, they cannot be lower than this benchmark. This guarantees a basic standard of living for every worker across the country, irrespective of their sector, ending the disparity of hundreds of different wage rates.
Gratuity After 1 Year: A Big Win for Employees
Under the old rules, an employee was eligible for gratuity only after completing five continuous years of service. The new labour codes have drastically reduced this threshold. Now, employees, including fixed-term and contractual workers, will be eligible for gratuity after completing just one year of service with an employer. This is a massive win for the modern workforce, especially for professionals in sectors like IT and startups who frequently change jobs.
Social Security for 40 Crore Workers: Gig & Platform Workers Now Covered
The Code on Social Security, 2020, is the cornerstone of this reform. For the first time, it officially recognises “gig workers” (like those on platforms such as Zomato, Swiggy, and Uber) and “platform workers.” These workers, along with migrant labourers and other unorganised sector employees, will now be eligible for social security benefits like:
* Life and disability insurance
* Maternity benefits
* Provident Fund (PF) schemes
These benefits will be provided through dedicated government funds, marking a critical step towards formalising a massive segment of the Indian economy.
How the New Codes Help Businesses: Simplified Compliance
To improve the “Ease of Doing Business,” the new codes significantly streamline regulations. Businesses will now benefit from a “one registration, one license, and one return” system, reducing paperwork and bureaucratic hurdles. The Industrial Relations Code has also updated rules for strikes and lockouts, making it mandatory for all industrial establishments to provide a 14-day notice, aiming to encourage reconciliation before disruption.
Better Safety & Health Rules (OSH Code)
The Occupational Safety, Health and Working Conditions (OSH) Code expands safety regulations to cover more sectors, including establishments with as few as 10 workers. It places a greater emphasis on the employer’s duty to provide a safe working environment. It also includes specific provisions for the health and working conditions of women, allowing them to work night shifts with their consent and adequate safety measures in place.
The Road Ahead: Implementation and Impact
While the central government has finalised the codes, their implementation hinges on states notifying the rules. This transition represents a seismic shift, aiming to create a flexible, modern, and secure labour market. For over 40 crore workers, it promises a future with a guaranteed wage and a social security net that was previously out of reach. For industries, it offers simplified compliance. The true impact will unfold as these codes are rolled out nationwide, but the blueprint for a new era in Indian labour is now firmly in place.
