From gig workers to factories: What India's new labour codes really mean

India's overhaul merges 29 labour laws into four codes, reshaping minimum wages, gig-worker social security, industrial relations, and workplace safety through unified rules and digital compliance

For years, India’s labour reforms existed mostly on paper, debated in ministries, contested by unions, and watched closely by employers who knew change was coming but not when. That moment has now arrived. With all four labour codes coming into force simultaneously, India has entered a new regulatory era that will affect wage calculation, social security access, industrial relations, and workplace safety. 

Parliament approved the four codes in 2020, replacing 29 central labour laws. Five years later, effective November 21, the Code on Wages, Code on Social Security, Industrial Relations Code and the Occupational Safety, Health and Working Conditions (OSH) Code are operational.

 

What does the Code on Wages change? 

The Code on Wages merges four earlier laws and expands coverage to all employees, irrespective of sector, job type or salary level. Earlier, minimum wage norms applied mainly to scheduled employment and employees earning below ₹24,000 per month.

 

Key provisions include:

 

• National Floor Wage mandatory across states

 

• Wages defined as basic pay + dearness allowance + retaining allowance (used for social security); deductions capped at 50%

 

• Overtime fixed at at least twice the normal wage

 

• Working hours between 8–12 hours per day, capped at 48 hours per week

 

• Wage payment timelines: daily (end of shift), weekly (before weekly holiday), fortnightly (within two days), monthly (within seven days), and within two days of resignation/termination

 

• Mandatory wage slips, physical or electronic 

 

How does the Code on Social Security expand protections? 

This code merges nine statutes and formally recognises gig and platform workers for the first time.

 

• National registration system and social security fund for unorganised and gig workers

 

• Schemes may be funded by Centre, states or CSR contributions

 

• Aggregators must contribute 1–2 per cent of annual turnover, capped at 5 per cent of gig-worker payouts

 

• Fixed-term employees treated on par with permanent workers; gratuity eligibility reduced to one year

 

• EPFO coverage extended to establishments with 20+ workers

 

• ESIC becomes pan-India; mandatory if even one worker handles hazardous work

 

• Family definition for female workers now includes parents-in-law

 

• Compliance through inspector-cum-facilitators and web-based inspections

 

What changes under the Industrial Relations Code? 

The Industrial Relations Code merges three earlier laws and broadens the definition of “worker” to include manual, technical, clerical and supervisory roles, as well as sales promotion employees and working journalists earning under ₹18,000.

 

Key shifts include:

 

• Fixed-term employment formally introduced

 

• Layoff/retrenchment/closure threshold raised from 100 to 300 workers

 

• Strikes require a 60-day notice period

 

• Mass casual leave exceeding 50 per cent counts as a strike

 

• Mandatory negotiating union or council for units

 

What are the biggest additions under the OSH Code? 

The OSH Code merges 13 laws and aims to modernise workplace safety and compliance.

 

• Higher thresholds for factories and contract labour

 

• Contract labour permitted in core activities under conditions

 

• Women allowed to work beyond 7 pm with safeguards

 

• Expanded definition of inter-state migrants

 

• Mandatory appointment letters

 

• Annual health checks

 

• Safety committees in specified establishments

 

What does the Nomura analysis highlight? 

Nomura notes that the codes emphasise worker welfare while reducing compliance burdens.

 

Non-controversial reforms include:

 

• Uniform minimum wages

 

• Mandatory appointment letters

 

• Social security for gig workers

 

• Free annual health check-ups for workers over 40

 

• Gender-neutral pay norms

 

• Streamlined inspections

 

Compliance simplification is substantial:

 

• Rules cut from 1,400+ to ~350

 

• Forms reduced from ~180 to 73

 

• Single pan-India licence and registration

 

More contentious elements include the higher 300-worker threshold for retrenchment and tighter strike rules.

 

Nomura observes that the reforms align with efforts to boost domestic manufacturing, simplify compliance (including GST and income tax), and decriminalise business offences—an acceleration after the imposition of Trump-era 50% tariffs. 

 

Why do the labour codes matter for India’s workforce? 

India’s labour market remains deeply fragmented. According to the Periodic Labour Force Survey:

 

• Labour force participation rate: ~45 per cent

 

• Nearly 60 per cent of the workforce is self-employed

 

• Only 21.7 per cent are regular wage or salaried workers

 

• 39 per cent are own-account workers or employers

 

• 19.8 per cent are casual labour

 

• 19.4 per cent are helpers in household enterprises

 

Sectorally, nearly half the workforce is in agriculture (up from 43.3 per cent pre-pandemic to 46 per cent in 2023–24). Industry’s share has shrunk, while construction has grown.

 

Nomura notes that India urgently needs a shift towards formal, high-productivity jobs. Historically, strict labour regulation kept firms small. The new 300-worker threshold may encourage firms to scale up and hire more. 

 

What challenges lie ahead? 

While compliance may become simpler, the cost of hiring could rise. Businesses will need hand-holding to align with the new framework, and political resistance from trade unions remains strong.

 

Nomura expects additional reforms in the coming months as the government continues pushing for manufacturing expansion and simplified business processes.