India’s New Labour Codes: What Employees and Companies Must Know
India’s workforce is buzzing with discussions about a major reform—the new labour codes. After years of confusion and overlapping regulations, these rules promise a clearer framework for both workers and employers.
Until recently, India operated under 29 separate central labour laws. The sheer number made compliance difficult and often contradictory. In 2020, the government began consolidating these laws, introducing four unified labour codes. These codes have now come into force, bringing significant changes to wages, working hours, social security, and employment rights. Below are the key highlights.
1. Restructured Take-Home Salary
The new rules mandate that basic salary must constitute at least 50% of the total compensation package.
If an employee earns ₹10 lakh annually, the basic pay must be no less than ₹5 lakh.
This adjustment may reduce monthly “in-hand” income, since allowances will shrink in proportion. However, it increases contributions to social security schemes such as provident funds, ultimately strengthening long-term financial stability.
2. Universal Minimum Wage
A guaranteed minimum wage will apply to all workers across India, irrespective of whether they are in the organized or unorganized sector.
A committee in 2019 recommended ₹375 per day (about USD 5.3 at the time). Although this may be recalculated, the principle remains: no individual working in India should earn below the statutory minimum wage.
3. Mandatory Timely Payments
The codes lay down strict timelines for wage disbursal:
- Daily wage earners: Paid immediately after the workday concludes
- Weekly workers: Remunerated before their weekly holiday
- Monthly employees: Payment must be completed within seven days of the following month
This aims to prevent delayed salaries and financial uncertainty for workers.
4. Defined Working Hours
Work durations are now clearly regulated.
Employees may work between 8 and 12 hours per day, but the weekly limit cannot exceed 48 hours.
Any work beyond this threshold qualifies as overtime, which must be compensated at twice the normal wage. This clarification counters recent corporate voices promoting excessively long workdays, reinforcing employee welfare and legal protection.
5. Social Security for Gig and Platform Workers
Delivery personnel, ride-hailing drivers, and similar gig workers gain coverage under social security benefits. These may include:
- Life insurance
- Disability protections
- Health benefits
Companies such as Uber or Swiggy will contribute 1–2% of their turnover toward a social security fund dedicated to platform workers.
6. Measures for Gender Equality
The labour codes reaffirm equal pay for equal work.
They also introduce greater flexibility for women: night shifts are now permissible, provided there is consent and adequate safety arrangements. Previously, sectors like factories and mining barred women from nighttime work.
7. Annual Health Checkups
Employees above 40 years of age are entitled to one free medical check-up each year, sponsored by their employer. This provision aims to prioritize preventive healthcare in the workplace.
8. Benefits for Fixed-Term Employees
A new employment category—fixed-term workers—has been formalized. Such employees are hired for defined durations, such as one or two years. Unlike permanent staff, they do not require a five-year tenure to qualify for gratuity. Fixed-term workers become eligible after just one year of service.
Why These Reforms Matter
Modernising labour laws is essential for India’s evolving economy. Workers gain stronger protections and reliable social security, while businesses benefit from simplified hiring regulations. Many companies previously struggled with the complexity of 29 separate laws, which hindered efficiency and compliance. Simplification reduces these barriers, making the environment more conducive to investment and growth.
The true challenge lies in striking a balance—ensuring labour welfare without stifling enterprise. The coming years will determine whether the new labour codes can deliver on this promise and create an equitable ecosystem where both employees and companies thrive.
They promised progress, but they also stirred apprehension. These reforms could shape industries, influence livelihoods, and leave a lasting imprint. As their impact unfolds, India will witness whether these changes empower its workforce or test its resilience.
Follow StoryAntra for more updates like this, including deep-dive explanations of government reforms, financial trends, and global developments that impact everyday lives.
0 Comments