India’s Biggest Labour Reform Since Independence
Labour Codes Come Into Force After Decades of Delay
New Delhi: In a move that has been years in the making, the Government of India has finally brought the four Labour Codes into effect from November 21 2025, setting in motion one of the country’s most sweeping overhauls of labour regulation since Independence. After decades of operating under 29 fragmented, sometimes overlapping and often outdated Central labour laws—many dating back to the 1930s–1950s—the new framework consolidates the system into four unified pillars: the Code on Wages (2019), the Industrial Relations Code (2020), the Code on Social Security (2020) and the Occupational Safety, Health and Working Conditions (OSHWC) Code (2020).
The government describes this as a transformational shift toward a “future-ready workforce” and a “resilient industrial ecosystem,” but beneath the celebratory tone lies a deeper, more complex story about India’s changing political economy, the evolving world of work, and the country’s attempt to align itself with global norms while advancing its ambition of Aatmanirbhar Bharat.
The rollout underscores two parallel realities: the codes are a social-protection milestone for workers across sectors, and simultaneously a major political commitment by the government to simplify compliance, reduce business frictions, and demonstrate reform momentum. The Prime Minister, in statements released by his office, framed the implementation as “one of the most comprehensive and progressive labour-oriented reforms since Independence,” emphasising universal social security, safer workplaces, gender inclusion, and simplified processes that “promote Ease of Doing Business” while “boosting job creation and productivity.”
But the depth of the transformation comes into focus only when one parses what the codes actually change. For the first time, every worker in India—formal or informal, gig or platform, migrant or contract—becomes part of a single integrated labour architecture. Minimum wages now apply universally, timely wage payments become mandatory, and appointment letters—once absent across vast swathes of India’s workforce—become a legal right. These seemingly administrative shifts carry far-reaching consequences: written proof of employment enhances transparency, enforceability, access to welfare schemes, and workers’ bargaining power.
The expansion of Employees’ State Insurance Corporation (ESIC) coverage marks another structural reorientation. What was once tied to notified areas and specific sectors is now extended pan-India, mandatory for establishments engaged in hazardous processes even with a single employee, and voluntary for units with fewer than 10 workers. The reform thereby pushes India closer to universal medical and accident protection for workers and their families—a goal highlighted by the Prime Minister as central to building a “secure and dignified workforce.”
The Social Security Code introduces a historically significant change: gig and platform workers—whose rise has redefined employment globally—receive statutory recognition for the first time. Aggregators must contribute 1–2% of turnover to their welfare (capped at 5% of payouts), and a universal Aadhaar-linked account number ensures benefits remain portable across states and occupations. This is a foundational step in adapting labour governance to the platform economy, ensuring that as India digitises workplaces and services, the workforce is not left outside the social-protection net.
The Codes also reshape the gender landscape of work in India. Legal barriers restricting women from night shifts or specific occupations—including underground mining and heavy machinery—are removed, contingent on safety measures and consent. This is coupled with equal-pay guarantees, mandatory representation in grievance committees, and a broadened definition of “family” that allows women to include parents-in-law as dependents. In a labour market where women’s participation remains low, these provisions carry demographic and economic significance.
The OSHWC Code pushes safety to the centre of workplace regulation. Free annual health check-ups for all workers above 40 years, mandatory safety committees in large establishments, and national standards for hazardous industries signal a shift toward preventive healthcare and risk mitigation. In sectors such as plantations, dock work, beedi production, mining, and textiles—where conditions historically varied sharply—the Codes introduce uniform protections, medical facilities, education access for workers’ children, regulated working hours, and double wages for overtime.
Across India’s MSMEs, which collectively employ millions, the promise of simplified compliance is equally consequential: single registration, single licence, and single return replace the maze of regulatory filings that previously acted as deterrents to formalisation. The Inspector-cum-Facilitator model reframes enforcement as collaboration rather than punishment, aligning with the government’s message of a friendlier, more efficient business environment.
The political dimension is unmistakable. The Prime Minister has characterised the Codes as essential to India’s economic rise and its march toward a Viksit Bharat. The reforms help consolidate the government’s narrative that economic growth, job creation, and worker welfare are mutually reinforcing. They also allow the administration to assert reformist credibility at a time when global supply chains are shifting and India seeks to position itself as a reliable manufacturing base. The Codes—by reducing uncertainty for investors and promising predictable industrial relations—serve both economic and strategic purposes.
Yet the implementation arrives after extensive consultations and years of preparatory work, reflecting the complexity of harmonising Centre-state dynamics in a domain that straddles both. The government has signalled that consultations will continue as rules, schemes and standards are framed, and that existing rules under older Acts will remain in force during the transition. This careful sequencing suggests awareness of the operational challenges ahead: industries will need time to realign wage structures; states will need to adapt administrative systems; and workers will need clarity on their new entitlements.
There is also a structural shift in India’s social-security landscape worth noting. The government highlights that coverage has expanded from 19% of the workforce in 2015 to over 64% in 2025, a leap that reflects the growth of digital identity, portability and direct-benefit transfer ecosystems. By embedding the Codes within this broader trajectory, the reforms aim not only to modernise labour laws but also to lock in long-term resilience through portability across states, sectors and employment types.
India’s labour-law overhaul is therefore not just a legal restructuring—it is a political-economic recalibration. It seeks to balance flexibility with protection, encourage investment without diluting rights, and bring the country closer to global norms while addressing local complexities. The Codes promise a more coherent, transparent and rights-based labour architecture. But as implementation unfolds, the depth of their impact will depend on administrative readiness, industry compliance and workers’ ability to exercise their new rights.
What is clear, however, is that with the Codes now in force, India has crossed a threshold. A long-anticipated reform has finally moved from legislation to reality, carrying with it the weight of decades of expectation and the promise of a more equitable, modern and competitive labour ecosystem.
– global bihari bureau
