India’s new labour codes explained: Gratuity, minimum wages, fixed working hours and more benefits

India’s labour laws were once fragmented into 29 different Acts. The government has now merged them into four labour codes to revolutionise workplaces and protect workers, including those in the unorganised sector, by ensuring timely wage payments, health and welfare benefits, compensation, occupational safety, and provisions for females, bringing stability and security to both employees and workers.

New Labour laws in effect from November 21, 2025 

The central government has introduced four new comprehensive labour codes replacing 29 laws that defined the working conditions of employees and workers. The New labour laws are in effect from November 21, 2025. The Ministry of Labour & Employment released a statement that thoroughly explains the new labour codes. All the previous laws have been categorised in the codes following: 

The Code on Wages

The Code on Social Security

Occupational Safety, Health and Working Conditions

Industrial Relations Code

Impact of the New Labour Codes

• The 29 laws were framed in the pre-independence and early post-independence era, which do not reflect modern working conditions. The new labour code will positively impact the lives of the working class, with social security for unorganised and gig workers, universal minimum wages, health benefits, safety for female workers and faster dispute solutions. Bringing credibility and transparency in the hiring, payment and layoff process will smooth employer-employee relations. 
• The Ministry of Labour & Employment said, “Codes lay the foundation for a protected, future-ready workforce and resilient industries, boosting employment and driving labour reforms for Aatmanirbhar Bharat, and it also aligns India’s labour ecosystem with global standards, ensuring social justice for all workers”. 

	Pre Labour Reforms	Post Labour Reforms
Formalisation of Employment	No mandatory appointment letters	Mandatory appointment letters to all workers. Written proof will ensure transparency, job security, and fixed employment.
Social Security Coverage	Limited Social Security Coverage	Under Code on Social Security, 2020 all workers including gig & platform workers to get social security coverage. All workers will get PF, ESIC, insurance, and other social security benefits.
Minimum Wages	Minimum wages applied only to scheduled industries/employments; large sections of workers remained uncovered	Under the Code on Wages, 2019, all workers to receive a statutory right minimum wage payment. Minimum wages and timely payment will ensure financial security
Preventive Healthcare	No legal requirement for employers to provide free annual health check-ups to workers	Employers must provide all workers above the age of 40 years with a free annual health check-up. Promote timely preventive healthcare culture
Timely Wages	No mandatory compliance for employers' payment of wages	Mandatory for employers to provide timely wages, ensuring financial stability, reducing work stress and boosting overall morale of the workers.
Women workforce participation	Women’s employment in night shifts and certain occupations was restricted	Women are permitted to work at night and in all types of work across all establishments, subject to their consent and required safety measures. Women will get equal opportunities to earn higher incomes – in high paying job roles.
ESIC coverage	ESIC coverage was limited to notified areas and specific industries; establishments with fewer than 10 employees were generally excluded, and hazardous-process units did not have uniform mandatory ESIC coverage across India	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. Social protection coverage will be expanded to all workers.
Compliance Burden	Multiple registrations, licenses and returns across various labour laws.	Single registration, PAN-India single license and single return. Simplified processes and reduction in Compliance Burden.

Notable benefits across different sectors 

1.  Fixed-Term Employees (FTE)

FTEs will receive all benefits at par with permanent employees, including leave, medical cover, social security, and equal wages, with gratuity after just one year of service. This promotes direct hiring, boosts income security, and reduces excessive contractualisation.

2. Gig & Platform Workers

‘Gig work’, ‘platform work’ and ‘aggregators’ are defined for the first time, with mandatory 1–2% contribution by aggregators (capped at 5% of payouts) towards worker welfare. An Aadhaar-linked Universal Account Number will ensure portable, easy access to benefits across states, even after migration.

3. Contract Workers

Fixed-term employees (FTE) are eligible for gratuity after one year of service. The employer will provide health benefits and social security. Legal protection and benefits equal to permanent employees. 

4. Women Workers

Gender discrimination and pay parity are legally prohibited. Women are eligible to work night shifts, including work like underground mining and heavy machinery. “Provision to add parents-in-law in Family Definition of Female employees, expanding dependent coverage and ensuring inclusivity,” released by the Ministry of Labour & Employment. 

5.  Youth Workers

Minimum wage is guaranteed for all youth workers, to receive appointment letters, payment of wages during leave has been made mandatory, exploitation is prohibited, and workers will receive wages as per the floor wage determined by the Central Government. 

6. Audio-Visual & Digital Media Worker

Digital and audio-visual workers, including journalists in electronic media, dubbing artists, and stunt persons will now receive full benefits. Mandatory appointment letter for all workers - clearly stating their designation, wages, and social security entitlements. Timely payment of wages ensured. Overtime Work beyond prescribed hours, to be consent based and pay at least double the normal wage rate.

7.  IT & ITES Workers

Release of Salary mandatory by the 7th of every month. Transparency and trust ensured. Equal pay for equal work made mandatory, women’s participation is strengthened. Facility for women to work night shifts in all establishments – women to get opportunity to earn higher wages. Timely resolution of harassment, discrimination, and wage related disputes. Guarantee of social security benefits through fixed-term employment and mandatory appointment letters.

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