India's Labour Code 2025: The Complete Guide for HR Leaders

India’s labour code 2025 represents one of the biggest regulatory shifts in the country’s employment landscape, replacing decades-old fragmented laws with a unified, modern framework. 

The new labour laws in India bring clarity, expand worker protections, and simplify compliance, making it essential for HR leaders to understand what’s changing and how it impacts their organizations. Here are some key changes introduced by the new labour code in India 

• Standardized and uniform wage definition that reshapes salary structures. 
• Broader social security coverage extending to gig, platform, fixed term, and unorganized workers. 
• Updated working-hour limits, leave rules, and safety standards for all establishments. 
• Simplified industrial relations processes with clearer dispute-resolution mechanisms. 
• Digitized compliance requirements and unified record-keeping obligations. 
• Enhanced workplace welfare, health checks, and safety mandates under the four labour codes in India. 

This blog breaks down: 

• The four labour codes in India,  
• Explains the major reforms under each, 
• Provides HR teams with a practical roadmap to prepare for the rollout of the India new labour laws.  

What is labour code in India? 

The labour code in India refers to the government’s consolidated framework of employment and industrial regulations designed to replace the country’s decades-old, highly fragmented labor laws.  

Instead of navigating 29 separate central legislations, many dating back to pre-independence, India introduced the four labour codes in India to modernize compliance, improve worker protections, and create a uniform regulatory structure across the country. 

According to the Ministry of Labour and Employment, this consolidation was introduced to: 

• Simplify and standardize definitions such as wages, workers, and employers; 
• Ensure “minimum government, maximum governance” in compliance; 
• Expand social security to every worker category, including gig and platform workers; and 
• Promote ease of doing business by streamlining registrations, filings, and inspections. 

These four legislations, collectively known as the labour code 2025 for their planned nationwide implementation, bring India’s labor landscape in line with global standards. The government notes that unified definitions alone help eliminate up to 60% of interpretational disputes previously arising from inconsistent terminology across old laws. This shift not only reduces litigation but also gives HR leaders clearer, data-backed frameworks for workforce classification and compensation planning. 

India’s unorganized workforce makes up nearly 90% of total labor, and the new labour code in India ensures that social security benefits such as PF, ESI, and gratuity increasingly extend to categories that were historically excluded, including contract, gig, and platform workers.  

This dramatically widens the social protection net and aligns workforce benefits with India’s long-term economic development goals. 

The four codes at a glance — What’s changed fundamentally 

India’s transition to the labour code 2025 is anchored in four comprehensive laws that modernize the country’s employment landscape.  

These four labour codes in India consolidate 29 separate central labour acts into a unified structure, simplifying compliance while improving worker protections and creating consistency across states.  

This consolidation represents one of the biggest structural shifts under the new labour laws in India, ensuring clarity for both employers and employees. 

Below is an overview of each code, what it replaces, and its core purpose. 

1. Code on wages, 2019 

The Code on Wages, 2019 merges four major wage-related laws: 

• Minimum Wages Act, 1948 
• Payment of Wages Act, 1936 
• Payment of Bonus Act, 1965 
• Equal Remuneration Act, 1976 

This code introduces a uniform definition of “wages”, a central change under the new labour code in India. It mandates: 

• Minimum wages for all workers, including unorganized and gig workers, 
• Equal pay for equal work across genders, and 
• Standardized timelines for wage payments. 

One of the most significant shifts is the requirement that allowances cannot exceed 50% of total compensation, preventing salary structures from being broken into excessive allowances to reduce statutory benefit contributions. 

2. Industrial relations code, 2020 

The Industrial Relations Code, 2020 consolidates three key laws: 

• Industrial Disputes Act, 1947 
• Trade Unions Act, 1926 
• Industrial Employment (Standing Orders) Act, 1946 

This code strengthens dispute-resolution mechanisms, streamlines trade union registration, and modernizes employer-employee relations. It also revises thresholds for layoffs, retrenchments, and closures, allowing certain establishments to proceed without prior government approval, offering greater operational flexibility. 

It introduces the concept of negotiation unions, encourages voluntary arbitration, and defines updated procedures for standing orders, all of which aim to reduce industrial conflict and bring predictability for HR leaders navigating the labour codes in India. 

3. Code on social security, 2020 

The Code on Social Security, 2020 replaces nine central laws covering employee benefits such as provident fund, state insurance, gratuity, and maternity benefits. A major feature of the new labour laws in India is the extension of social security to: 

• Gig workers, 
• Platform workers, 
• Fixed-term employees, and 
• Contract and unorganized workers. 

The code introduces a national framework for universal social protection, enabling benefit portability and expanding coverage to categories that were previously excluded. Gratuity eligibility for fixed-term employees is also accelerated, signaling a more inclusive benefits structure. 

4. Occupational Safety, Health and Working Conditions (OSHWC) Code, 2020 

The OSHWC Code, 2020 consolidates 13 workplace safety and welfare laws, including regulations governing factories, contract labor, mines, and construction establishments. Its major objectives include: 

• Standardizing workplace safety norms, 
• Regulating contract labor more comprehensively, 
• Enhancing welfare facilities such as creches and canteens, 
• Introducing mandatory health check-ups for specific categories, and 
• Defining working-hour rules and rest intervals. 

The code also enables women to work in all sectors and shifts—including night shifts—provided employers ensure adequate safety measures. This is a significant modernization step under the India new labour laws. 

At a glance: 

With the structure of the four labour codes in India clearly defined, the next section examines how these reforms translate into practical, high-impact changes for employers and HR leaders. 

Key reforms under labour code 2025 and what they mean for HR leaders 

Here are the most critical reforms and what they mean for organizations. 

1. Standardized wage definition and compensation restructuring 

One of the biggest shifts under the new labour code in India is the uniform definition of “wages.” Allowances are now capped at 50% of total compensation, meaning basic wages must constitute at least half of the total salary. This affects: 

• Provident fund contributions 
• Gratuity payouts 
• Overtime calculations 
• Leave encashment 
• Retrenchment compensation 

Data released along with the code indicates that this change can increase employer social security liability by 10–30%, depending on workforce salary structures. Organizations that heavily relied on allowances (such as HRA, special allowance, or variable pay) may see a rise in long-term liabilities. 

2. Expanded social security coverage for all worker types 

A major reform under the India new labour laws is the expansion of social security benefits to gig workers, platform workers, fixed-term employees, and contract labor. Government data highlights: 

• More than 400 million unorganized workers are expected to benefit from expanded social protection. 
• Fixed-term employees now qualify for gratuity proportionally, rather than completing five years. 
• A unified registration system simplifies enrolment into PF, ESI, and other welfare schemes. 

This makes the labour codes in India significantly more inclusive than earlier frameworks. 

3. Updated working hours, leave mandates, and safety standards 

Under the new safety and working-condition requirements: 

• The daily working-hour limit remains 8 hours, but weekly hours can now go up to 48 hours, allowing employers to adopt flexible 4-day or 5-day workweeks. 
• Overtime must be compensated when employees exceed prescribed limits, and weekly rest periods must be standardized. 
• Mandatory health check-ups are introduced for specific worker groups, especially those in hazardous roles or above a specific age bracket. 
• Women are permitted to work night shifts with adequate safety provisions. 

These reforms reflect a modernization of workplace standards under the new labour laws in India. 

4. Inclusion and recognition of gig, platform, and unorganized workers 

For the first time, gig and platform workers, estimated at over 7.7 million and rising, are formally acknowledged in India's statutory framework. The labour code 2025 includes provisions for: 

• Social security funds for gig and platform workers 
• Aggregator contributions based on turnover 
• Centralized digital databases for worker registration 
• Benefit portability across platforms and states 

This recognition reflects the reality of India’s evolving labor market. 

5. Modernized framework for fixed-term employment 

The labour code 2025 expands the scope of fixed-term employment to all sectors, providing statutory parity with permanent workers in: 

• Wages 
• Hours of work 
• Allowances 
• Social security benefits 

Additionally, fixed-term employees become eligible for gratuity proportionate to the period served, even if less than five years. 

6. Digitized compliance, record-keeping, and employer obligations 

The labour codes mandate digital compliance processes, simplifying historically complex labor filings. Employers must maintain electronic registers for: 

• Attendance and working hours 
• Wage and payment records 
• Social security contributions 
• Safety and health audits 
• Employee classifications 

Union registration, dispute filings, and inspection processes also shift toward digital interfaces, reducing paperwork and improving transparency. 

With the key reforms clearly outlined, the next step is to translate these legal requirements into a structured compliance roadmap that HR teams can follow to prepare for the labour code 2025 rollout. 

Step-by-step compliance roadmap for HR teams in 2025 

The roadmap below aims to help HR and compliance teams convert legislative requirements into practical action under the new labour laws in India. 

1. Conduct a comprehensive workforce classification audit 

Because the labour codes unify definitions of “employee,” “worker,” “contract labour,” “gig & platform worker,” and “fixed-term staff,” organisations must revisit their current workforce structure and re-classify accordingly. This step includes: 

• Mapping all personnel categories — permanent, fixed-term, contract, gig, vendor-engaged, unorganized, part-time, etc. 
• Updating HR databases/HRIS with the new classifications. 
• Preparing a full list of contractors, outsourced staff, gig-economy workers and informal workers associated with the firm — to check whether they fall under the new codes. 

This exercise ensures that no worker eligible under the social security or wage provisions remains outside formal compliance coverage. 

2. Redesign salary and compensation structures according to the new wage definition 

Under the Code on Wages (2019) — now part of the labour code 2025 framework — the definition of “wages” is standardized. This requires organisations to: 

• Ensure that basic wage (or equivalent) meets statutory definitions before allowances. 
• Review existing CTC/salary templates and recalculate basic, allowances, bonus, overtime, gratuity basis accordingly. 
• Simulate impact on statutory benefits (provident fund, gratuity, social security contributions) under revised definitions. 
• Communicate changes transparently with employees, especially where take-home pay or allowance structure changes. 

Reworking salary structures early helps avoid legal non-compliance and aligns financial planning for FY 2025–26. 

3. Update employment documentation and contracts across all workforce types 

Given the unified regulatory framework under the labour codes in India, it is mandatory for employers to maintain written employment or engagement contracts for every worker — whether full-time, fixed-term, contract, or gig-based. HR teams should: 

• Issue formal appointment/engagement letters to all workers. 
• Draft standardised contract templates for fixed-term, contract, or gig workers, clearly stating wages, working hours, benefits, social security coverage, termination clauses, etc. 
• Ensure compliance with standing order norms for establishments over threshold sizes under the Industrial Relations Code. 
• Maintain records of employment history, roles, wages, job type (permanent/contract/gig), and worker category, to aid future audits or statutory compliance checks. 

This step improves transparency, reduces ambiguity, and protects the organisation from legal risk under the new labour code in India. 

4. Extend social security and welfare benefits to all eligible workers 

One of the core objectives of the Code on Social Security (2020) is to broaden social protection to include formal, informal, gig, contract, fixed-term and platform workers under one regulatory umbrella. To comply, HR/management should: 

• Register all eligible workers — especially contract, gig, or unorganised — under relevant social security schemes. 
• Maintain records of social security contributions, gratuity eligibility, health and welfare benefits as applicable. 
• Review vendor/contractor agreements to ensure obligations around social security and statutory compliance. 
• For fixed-term employees, apply gratuity and other benefit eligibility as mandated. 

This ensures the firm meets both the letter and spirit of the labour codes, while expanding worker welfare in line with India’s new labour laws. 

5. Strengthen workplace safety, health protocols and welfare standards 

Under the Occupational Safety, Health and Working Conditions Code, 2020 (OSHWC), organisations must ensure safer working conditions, welfare facilities, and periodic health and safety compliance — irrespective of sector or employment type. Key action items: 

• Conduct a thorough audit of workplace safety, including infrastructure, hazardous processes, ergonomics, hygiene, and emergency preparedness. 
• Establish or upgrade welfare facilities: drinking water, sanitary facilities, rest areas, medical check-ups (where eligible), safety gear, and welfare measures for vulnerable workers (e.g., women, contract labour). 
• Implement working-hour policies, shift schedules, overtime, rest periods, night shift safeguards (especially for women), as per code guidelines. 
• Maintain safety records, incident logs, health check-up reports, and compliance documentation to produce if inspected or audited. 

Such steps not only meet compliance requirements but also build stronger workplace standards, aiding in retention and employer branding as per the ethos of the new labour laws in India. 

6. Establish digital record-keeping, unified compliance register and audit mechanisms 

One of the advantages of the labour codes in India is the emphasis on streamlined compliance and simplified regulation. For organisations, this translates into adopting digital record-keeping and centralised compliance management: 

• Upgrade or configure HRMS/HRIS systems to hold unified records — wage history, worker classification, social security contributions, safety audits, contracts, attendance, working hours, etc. 
• Maintain a central compliance register for all statutory obligations across codes — wages, social security, industrial relations, safety — to enable easy tracking and audit readiness. 
• Schedule periodic internal audits to catch compliance gaps early (e.g., missing contracts, wage structure non-compliance, safety lapses). 
• Create a dedicated compliance team or assign roles to ensure ongoing adherence to code requirements, especially during the transition period. 

This systematic approach reduces risk, ensures transparency, and supports smooth compliance under labour code 2025. 

How HR teams can operationalize workforce wellbeing under the new labour laws in India 

As organisations transition to the labour code 2025, the expectations from HR teams go beyond compliance. Employee wellbeing, financial security, and inclusive benefits now sit at the center of workforce policy, and companies need tools that simplify execution without adding administrative overhead. This is where future-ready platforms become essential. 

Built in India and built for Indian companies, Xoxoday has always taken a tech-first approach to solving operational challenges for HR, compensation, and business leaders. Designed to anticipate regulatory and workforce shifts well ahead of time, Xoxoday equips organisations with the infrastructure needed to support employees holistically, across physical, emotional, financial, and occupational wellbeing. 

Xoxoday’s employee perks and benefits solution supports this shift through a comprehensive benefits marketplace designed for mid-market and enterprise organizations. The platform enables HR teams to configure, deploy, and track wellness programs across four key dimensions, physical, emotional, financial, and occupational, helping companies transition smoothly into the new regime. 

What the platform enables for HR teams 

• Financial wellness: Early wage access and tax-saving multi-benefit cards covering meals, fuel, telecom, and books allowances. 
• Health & preventive care: Annual health check-ups, teleconsultations, OPD services, dental and vision care, and insurance support. 
• Physical wellness: Fitness memberships, step challenges, sports clubs, hobby groups, and nutrition consultations. 
• Mental wellbeing: Counselling services, mental health journals, stress management programs, and 24/7 support access. 
• Lifestyle benefits: Learning, childcare, senior care, fertility support, and professional development through flexible spending accounts. 
• Exclusive savings: Discounts across 6,000+ brands in 30+ categories, with savings ranging from 5% to 50%. 

Wrapping up 

India’s transition to the new labour code 2025 marks one of the most significant workforce reforms in decades. By replacing outdated and fragmented regulations with the four labour codes in India, the country now moves toward a simpler, more transparent, and future-ready labor framework.  

For HR leaders, these reforms represent not just a compliance requirement but an opportunity to modernize policies, strengthen workforce well-being, and enhance organizational efficiency under the new labour laws in India.