India’s labour landscape is witnessing one of the biggest reforms in decades:
India is entering a new era of labour reforms with the introduction of four Labour Codes. These new laws aim to simplify compliance, modernize workplace rules, and create a balanced environment for both employees and employers. While the intent is clear, the impact will be felt differently across industries, companies, and the workforce.
As India grows into a global business hub, these new rules are designed to create balance:
Better rights and security for workers
Simplified processes and reduced compliance burden for companies
The Government of India consolidated 29 labour laws into 4 major codes:
Code on Wages, 2019
Industrial Relations Code, 2020
Occupational Safety, Health & Working Conditions Code (OSH), 2020
Social Security Code, 2020
These codes aim to:
Standardize definitions (employee, worker, wage, overtime)
Simplify registrations & returns
Improve transparency between employee-employer
Ensure social security coverage for more workers
Boost ease of doing business in India
They apply to almost all employers-corporates, manufacturing units, IT/ITES companies, MSMEs, gig workers, and even start-ups.
The older labour laws (many written before independence) had issues like:
Too many separate Acts leading to confusion
Different rules in each state
Burdensome inspections & paperwork
Outdated definitions of wages & employees
Poor coverage for unorganized workers
Slow dispute resolution
The modern workforce-freelancers, platform workers, gig economy workers-did not fit well into old frameworks. The 2025 new labour laws aim to make things faster, simpler, and fairer.
Here are the most important changes explained simply:
The new labour code introduces a standard definition of "Wages", affecting salary structure nationwide.
Key Rule:
Basic salary must be at least 50% of total CTC.
Impact on Employees:
Higher monthly PF contributions
Bigger retirement corpus (PF & gratuity)
Slightly reduced take-home salary for some employees
Impact on Corporates:
Companies will have to restructure CTC
Increased annual PF burden
Payroll systems must be updated
For the first time in India, workers in platforms like:
Swiggy
Zomato
Ola
Uber
Urban Company
…are covered under social security benefits.
They may receive:
Accident protection
Health benefits
Pension support
Life insurance
The law now allows:
4-day work week (if daily hours = 12 hours)
Weekly 48 hours limit remains same
Companies get flexibility; employees get better work-life balance.
Contract workers now receive:
Cleaner guidelines on wages
Mandatory safety measures
Better working conditions
Clarity on permanent vs short-term contracts
Earlier:
27–30 separate returns
Different licenses for different states or units
Now:
One license can work in multiple states
One return can be filed electronically
One registration system for all codes
This reduces paperwork by 70–80%.
Earlier:
Minimum service required = 5 years
Now:
Fixed-term employees can get gratuity even for 1-year contracts.
A big benefit, especially for IT, media, and start-ups.
For companies with under 300 employees, no government permission is needed for:
Layoffs
Retrenchment
Closure
Earlier the threshold was 100 employees.
This will make business operations smoother and reduce delays.
Every organization must provide a legal appointment letter to every employee—skilled, unskilled, temporary, fixed-term, or contractual.
The OSH Code mandates:
Clean drinking water
Washrooms
Crèche facilities (for larger organizations)
Free annual health check-ups
Safer working environments
The new labour laws bring several advantages:
Workers receive:
PF
Gratuity
Maternity benefits
Medical coverage
Insurance
Even gig workers and unorganized sector workers get better protection.
Appointment letters, unified wage structure, clear working hours—everything becomes more predictable and secure.
The 4-day week option offers more flexibility, especially for tech, media, and start-ups.
New tribunals speed up labour dispute processes.
Corporates experience benefits—but also new responsibilities.
Benefits for Corporates:
Less paperwork
Single license for multiple states
Clearer definitions = fewer legal disputes
Easier compliance tracking
Flexibility in working hours
Faster hiring, firing, and expansion decisions
Challenges for Corporates:
Increased PF & gratuity contributions
CTC restructuring required
Need to update HR, payroll, and compliance software
Higher responsibility for worker safety & welfare
Feature Old Laws New Laws (2025)
Wage Definition Different in each law Universal definition
PF Impact Lower for many Higher PF (basic ≥ 50% of CTC)
Compliance Multiple returns, registers Single unified return
Working Hours Standard 8-hour day Flexibility + 4-day week
Gig Workers Not covered Fully recognized
Gratuity Only after 5 years 1 year for fixed-term workers
Hiring/Firing Permissions Needed for > 100 workers Needed for > 300 workers
Appointment Letters Not mandatory for all Mandatory for all
For MSMEs and start-ups, the changes are mixed.
Positive Impacts:
Simplified compliance
Single registration
Easier interstate business
Flexible hiring
Online filings reduce cost
Challenges:
Slight increase in wage bills
Higher employer contributions (PF, ESIC)
Need to update HR policies
But overall, the system becomes more transparent, stable, and business-friendly.
Legal Info India provides complete compliance and registration support for:
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Our legal experts help with:
Company setup
Labour law compliance
GST, MSME, and FSSAI registrations
Trademark filing & renewal
Business documentation
Ongoing legal support
This ensures your organization remains 100% compliant with the new laws.
The new labour laws of 2025 are designed to modernize India’s working ecosystem. They create a middle path—protecting workers without limiting corporate growth.
For employees, they bring:
Better protection
Clear rights
More social security
For businesses, they offer:
Simpler compliance
Flexibility
Faster decision-making
Overall, the shift will help India become stronger, more transparent, and business-friendly—paving the way for long-term economic growth.
Implementation is being done in phases, depending on state readiness.
Your take-home may reduce slightly if basic pay is increased to 50% of CTC, but your PF and gratuity benefits improve.
No. It’s optional, based on company policy.
Yes, they now receive social security benefits under the Social Security Code.
Yes, but compliance is far simpler than before.
Single licensing & single return system reduces up to 80% compliance burden.
They are now merged into 4 modern labour codes.
Yes, penalties are stricter but procedural requirements are simpler.
Yes, contract employees can get gratuity even with 1-year service.
By updating HR policies, restructuring CTC, and using compliance services like Legal Info India.
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