India ushers in labour reforms to modernise workforce, critics warn of risks

New Delhi: In a landmark move, the government on Friday implemented the four Labour Codes, pending since 2020, introducing worker-friendly measures like a timely minimum wage for all and universal social security, including gig and platform workers, while allowing longer work hours, broader fixed-term employment, and employer-friendly retrenchment rules.

While the four Labour Codes -- the Code of Wages (2019, Industrial Relations Code (2020), Code on Social Security (2020) and Occupational Safety, Health and Working Conditions Code (2020), which were passed by Parliament five years back -- were notified on Friday to replace 29 fragmented laws with a unified and modern framework, and rules that will bring them into force with immediate effect will be issued shortly.

Key reforms include mandatory appointment letters to workers to ensure formalisation and job security; universal social security coverage, including to gig, platform, contract, and migrant workers, with PF, ESIC, and insurance benefits; statutory minimum wages and timely payment across all sectors; expanded rights and safety for women, including night-shift work and mandatory grievance committees; and free annual health check-ups for workers aged 40 and above.

The Codes, however, had earlier come under criticism from trade unions over unclear provisions on retrenchment and possible discretionary behaviour during the implementation by the central or state governments.

They raised the ceiling for mandatory government approval for carrying out closures, layoffs or retrenchment. Against the existing provision of establishments employing 100 or more workmen needing government nod, the new code raises the cap to 300 workmen.

It also increases working hours in factories from 9 to 12 hours and in shops and establishments from 9 to 10 hours.

The next step is framing the rules. As labour is a concurrent subject, the Centre and states have to frame laws and rules. The majority of states have already carried out labour laws-related changes over the last few years, except for West Bengal.

The social-security coverage had expanded from 19 per cent in 2015 to over 64 per cent in 2025. The enforcement of the Labour Codes marks the next transformative step -- broadening worker protection, easing business operations and promoting a pro-worker labour ecosystem.

These Codes, Prime Minister Narendra Modi said, "will serve as a strong foundation for universal social security, minimum and timely payment of wages, safe workplaces and remunerative opportunities for our people, especially Nari Shakti and Yuva Shakti..."

"It will build a future-ready ecosystem that protects the rights of workers and strengthens India's economic growth. These reforms will boost job creation, drive productivity and accelerate our journey towards a Viksit Bharat."

Modi further said that "it is one of the most comprehensive and progressive labour-oriented reforms since Independence. It greatly empowers our workers. It also significantly simplifies compliance and promotes 'Ease of Doing Business'".

According to Labour Minister Mansukh Mandaviya, the labour Codes will formalise employment, strengthen worker protection, and make the labour ecosystem simpler, safer and globally aligned.

The four codes have 29 labour laws codified in them: four laws in the Wage Code, nine in the Social Security Code, 13 in the Occupational Safety, Health and Working Conditions Code, and three in the Industrial Relations Code.

They contain wide-ranging social security provisions, such as a floor wage and a requirement for employers to contribute to social security. It proposes to fix a National Floor Level Minimum Wage, and redefine the break-up of wages to increase the share of the basic pay component - a provision to enable higher provisioning for social security for establishments, especially in the service sector.

Similarly, aggregators employing gig workers have to contribute 1-2 per cent of annual turnover for social security, with the total contribution not exceeding 5 per cent of the amount payable by the aggregator.

Critics say linking social benefits to the size of the establishment would leave out millions of informal workers who work in small units or perform home-based work.

Systemic reforms in the Codes include a national floor wage, gender-neutral work policies, the Inspector-cum-Facilitator model for supportive compliance, faster dispute resolution through two-member tribunals, and a National Occupational Safety, Health (OSH) Board to harmonise safety standards.

Mandaviya said the codes will guarantee minimum wages for all workers, appointment letters for the youth, equal pay and respect for women, social security for 40 crore workers, gratuity for fixed-term employees after one year of employment, free annual health check-ups for workers above 40 years of age, double wages for overtime, 100 per cent health security for workers in hazardous sectors and social justice for workers as per international standards.

"These reforms are not just ordinary changes, but a major step taken by Prime Minister Shri Narendra Modi for the welfare of the workforce. These new labour reforms are an important step towards a self-reliant India and will give new momentum to the goal of a developed India by 2047," he said on X.

The ESIC coverage and benefits are extended Pan-India -- voluntary for establishments with fewer than 10 employees, and mandatory for establishments with even one employee engaged in hazardous processes.

Now, Fixed-Term Employees (FTE) will receive all benefits equal to those of permanent workers, including leave, medical, and social security.

The Codes have defined 'Gig work', 'Platform work', and 'Aggregators' for the first time.

Aadhaar-linked Universal Account Number will make welfare benefits easy to access, fully portable, and available across states, regardless of migration.

Plantation workers will be brought under the OSHWC Code and the Social Security Code.

Digital and audiovisual workers, including journalists in electronic media, dubbing artists, and stunt performers, will now be entitled to full benefits.