India’s four new labour codes are set to modernize and consolidate more than 25 existing labour laws.
The framework aims to simplify compliance for businesses while strengthening worker protection, wage clarity and social security coverage – including for gig and platform workers.
Below is a structured summary for employers, HR teams and compliance professionals.
1. Universal Minimum Wages
- Minimum wages will apply to all employees, including those in the unorganized sector.
- A statutory floor wage will be set by the Central Government based on living standards.
- State-level minimum wages must be at or above the floor wage.
2. Uniform Definition of “Wages”
To prevent excessive restructuring of salaries through allowances:
- “Wages” = basic pay + dearness allowance + retaining allowance.
- These must form at least 50% of total compensation.
This definition will directly impact PF, gratuity, bonus and severance calculations.
3. Payment of Wages
- Universal coverage extended to all employees earning up to ₹24,000 per month.
- Strict timelines for wage payments.
- Overtime must be compensated at twice the normal rate.
4. Gender Equality in Pay and Hiring
- No gender-based discrimination in recruitment, wages or service conditions for similar work.
5. Social Security for Gig and Platform Workers
- Aggregators/platform companies will contribute 1–2% of turnover towards social-security schemes.
- Benefits may include insurance, old-age protection and health coverage.
6. Gratuity for Fixed-Term Employees
- Fixed-term employees will be eligible for pro-rata gratuity, even without completing five years.
7. Higher Thresholds for Lay-off, Retrenchment and Closure
- Approval requirement increases from 100 workers to 300 workers.
- States may increase these thresholds further.
8. Work-From-Home Provisions
- Permitted for service-sector establishments with mutually agreed terms.
9. Dispute Resolution
- Two-member Industrial Tribunal introduced for faster settlement of disputes.
10. Notice Period for Strikes
- Mandatory 14-day notice before strikes.
- Strikes prohibited during the notice period and during ongoing negotiation processes.
11. Inspector-cum-Facilitator System
- Randomised, algorithm-driven inspections to reduce discretion and compliance risk.
- Focus on facilitation rather than punitive action.
12. Decriminalisation & Compounding
- Most offences now attract monetary penalties rather than imprisonment.
- Certain offences can be compounded to reduce litigation.
13. Digitisation of Compliance
- Electronic licences, registers and returns permitted.
- Single online registration and centralised filings to reduce administrative burden.
14. Mandatory Appointment Letters
- All employees – including unorganised-sector workers – must receive formal appointment letters.
15. Night Shifts for Women
- Allowed across sectors with consent and prescribed safety measures.
16. Contract Labour
- Applicable to establishments engaging 50 or more contract workers (up from 20 earlier).
17. Factories Act: Higher Thresholds
- For factories using power: threshold increased from 10 workers to 20 workers.
- Without power: threshold raised from 20 to 40 workers.
18. Working Hours
- The weekly limit remains 48 hours.
Daily limits may vary, subject to overtime at twice the usual wages.