India’s New Labour Codes 2025: Key Worker Benefits and Eligibility by Category

The labour laws in India have always been regularly updated to make a significant transformation. This has been a regular practice all through the last multiple decades. Businesses are expected to keep track of the changes being made to the sector to ensure compliance.

The recent labour codes implemented in Nov, 2025 have been quite impressive. There are four labour codes that have come into force and offered a cleaner and unified reference to the labour class.

The new labour codes have brought a combination of opportunity and responsibility for the business leaders and HR teams. It is important for the organisations to navigate through the new labour laws so that they reduce the execution burden and also comply with the regulatory landscape.

What Are the New Labour Codes 2025?

The four labour laws form the backbone of the overall employment framework in India. Each of these laws addresses the critical aspects of the relationship between an employee and employer.

Code on wages

The Code on Wages consolidates multiple wage-related laws into one unified framework. The wages and wage-related regulations now apply uniformly across all sectors and all categories of workers. Before the modification, the code of wages differed significantly across industry, state, and worker classification.

As per the code, wages now have a standard definition that includes basic pay, dearness allowance, and other allowances. However, the categories like gratuity, annual bonuses, and commissions are excluded from the wage definition for calculation purposes.

The Code on Wages also stipulates that workers should get their wages on time and in full. There should be unauthorised deductions. The minimum wage is now non-negotiable, and the central government will be deciding on the minimal wage for the workers.

Code on Social security

The Code of Social security seeks to provide safety net for the workers. It brings multiple social security schemes under one unified umbrella. These include, but are not limited to, provident fund, employees' state insurance, gratuity, maternity benefits, and pension schemes. All these have been brought under a single framework.

The best part of the changes is how the scope of social security has been extended. The coverage is now extended to include contract workers, fixed-term workers, gig workers, and platform workers. That would mean, if you classified some workers as temporary or external, now you have a new obligation towards these workers.

It is now mandatory to have a free annual health check-ups for workers in hazardous industries. It has also been redefined to define workers so that people earlier classified as contractors are now protected.

Industrial Relations Code

The code has reconstructed how organisations should handle workforce management, grievances, and disputes. It helps simplify hiring and firing policies. The code is designed for medium and large enterprises while introducing clearer thresholds for various employment decisions.

The code covers a wide range of topics that include dispute resolution mechanisms, recognition of trade unions, layoff procedures, and compensation for wrongful termination. The code also lays out the formal procedure to follow addressing industrial disputes and creating harmony between employers and workers.

Occupational Safety, Health and Working Conditions Code

The code consolidates all the laws related to safety into one framework. The code is applicable to workplaces beyond factories. These include the offices, warehouses, IT establishments, and construction sites.

The code sets standardised procedure for workplace safety, health, hygiene, and welfare. It also mandates safety committees, regular inspections, hazard identification, and preventive measures. It also ensures that workers have a voice in safety decisions affecting them.

Employee Benefits Under the New Labour Codes

The new labour law codes have been designed to wide ranging protections benefits for workers across all the sectors and employment categories.

Every worker should now receive an appointment letter. The appointment letter should specify terms of employment, job role, salary, benefits, working hours, and leave provisions. This document will protect workers and creates accountability for the employers.

Workers now get a unified social security framework. These would include provident fund contributions, health insurance, pension benefits, and gratuity. The eligibility for gratuity has been considerably reduced. Fixed term workers now become eligible for gratuity after one year of continuous employment. Earlier it had a five year requirement. The social security has now been expanded to include ontract and gig workers means that even non-permanent workers enjoy baseline protections, reducing vulnerability and economic insecurity.

Minimum wage has been mandatory across all sectors and categories. The central government will set a baseline wage. States must meet or exceed this floor wage, ensuring consistency and preventing wage undercutting. The minimum wages are applicable to a wide range of workers that include permanent employees, fixed-term workers, contract workers, and gig workers. There are no exemptions for specific sectors or employment types.

Workers in hazardous industries should now get free annual health check up. These are designed to detect occupational health issues early and ensure worker wellbeing. The cost for the checkup should be borne by the employer. That would make health screening accessible to every worker irrespective of the financial status.

The new wage definition has created a clarity for payroll purposes. The wages today include basic pay, dearness allowance, and other allowances. Other factors like gratuity, bonus, and commission are excluded.

The new code also introduces security for women’s rights. The discrimination based on gender is prohibited. The code enforces the equal pay for equal work across any sector. Women now have the right to work in night shifts in any industry. They are also provided adequate safety measures. The definition of "family" for female employees now includes parents-in-law, expanding maternity and dependant benefits coverage.

The workers injured during the commute to work and from the workplace is covered under social security schemes. This broadens protection beyond workplace injuries to include incidents during the work commute, recognising the risks workers face in urban and rural commuting scenarios.

The codes strengthen protections around wage payment. Also, wages are expected to be paid on time. Unauthorised deductions are prohibited, and any deductions must be explained and justified. Also the wages should be paid in full.

The codes have simplified and standardised the leave entitlements. Workers qualify for annual leave when they complete 180 days of work in a year. Fixed time workers and permanent employees get the same leave benefits. Previous disparity has been removed. There is also recognition of diverse employment patterns.

For the first time, gig and platform workers have access to dedicated support through a welfare fund. This fund supports income during lean periods, healthcare, and other contingencies specific to gig work. It represents formal acknowledgement of gig work as legitimate employment deserving of protection.

Employer Benefits Under the New Labour Codes

Of course, the new codes introduce new obligations for the employers. But, in addition, they also have plenty of benefits for them

• Compliance Simplification: – All the 29 laws have now been consolidated into four labour codes. This makes it easy and simple to comply with the regulations. Employers need not juggle between multiple guidelines that appear to contradict one another. A single framework reduces confusion and makes compliance planning more straightforward.
• Workforce clarity: – The new codes specify the definition of an employee with no confusion. It also clarifies the obligations an employer may have towards the employees. This clearly eliminates the grey are that can cause legal complications. Organisations can now classify workers with greater confidence, knowing the rules are explicit and nationally consistent.
• Reduced disputes: – Since the new rules are clear and unambiguous, there is a lesser scope for disputes. The workers will have a proper knowledge of their rights. Employers understand the rules and comply by them as there is no room for confusion. This mutual understanding can help reduce unwanted grievances. Thee would be no wrong terminations.
• Better Employer Branding: – Organisations can now comply by the new codes. This should help showcase commitment towards the better employment practices. This should work as a great means for improve the employer branding and attracts the quality talent. Workers prefer employers known for transparent policies and fair treatment.
• Scalability: – A standardised framework lets the organisations to scale up their operations easily. The framework remains across all workers and this makes it easy for scaling up your business. This should help you reduce the complexity of growing your business.
• Operational Challenges Ahead : –However, these codes can have a few challenges in terms of execution. The employers will have to invest in systems, training and process redesign. The process management can be a real headache. However, partnering with a reliable HRMS solution can help you achieve more positive results.

What Employers and HR Teams Need to Prepare For?

The transformation from the old system to new system can take a lot of efforts. Here are a few options that you should focus on –

• Policy updates : – Each of your HR policies need to be reviewed and updated in the light of new labour codes. The outdated policies may conflict with the new ones. The policy updates should be communicated to all employees.
• Payroll restructuring: – The new wage requirements will need you to redesign payroll components. You may realise that some of your wages are not in tune with the new wage rate. Some other businesses may need to adjust how bonuses, commissions, and allowances are classified. Proper management of the processes in this context can be a bit difficult. echnical roles may require different adjustments than operations roles.
• Employee Classification : – The code mandates appointment letters for all employees. The employers also need to update their clear wage structures, leave records, and safety documentation. Many of the organisations may need to upgrade their documentation systems. Using digital systems can help in this context and HRMS solutions can help you in this venture.
• Audit Preparedness: – New codes may trigger more audit compliance requirements. Organisations should prepare the proper documentation for payroll records, leave management, safety measures, and grievance redressal. An internal audit may be a good idea here.
• Common challenges : – Many organisations may suffer with accurate payroll calculations. Identifying all worker categories across vendor contracts requires meticulous effort. Training HR teams on the new codes takes time and resources. State-level rules, still being finalised, create uncertainty until final notifications are published. Documentation backlogs, where historical records are incomplete, create compliance risks.

Why Does the New Labour Codes 2025 Matter?

The new labour codes have simplified the labour scene in India. The fragmented landscape that employers worked in the past has changed consistently. The labour landscape changed by state, industry, and worker type.

The new codes replace the previous fragmented laws. Employers no longer manage dozens of separate labour acts, each with different definitions and procedures. Instead, four coherent codes provide clear, nationally consistent rules.

HRMS software supports organisations in implementing these codes effectively, automating payroll calculations, tracking compliance, and maintaining systematic records that demonstrate adherence to the new requirements.

How HRMS Helps Implement Labour Codes Effectively?

HRMS tools provide the best support for the employers in understanding and complying with the guidelines as per the new labor codes.

Some salient ways that these codes help you include

• Centralised data : – HRMS tools maintain the complete employee data in a centralised location. This includes their salary structure, benefits, leave records, attendance, and documentation.
• Automated Payroll : – The new wage definition and minimum wage requirements require precise payroll calculations. HRMS systems automate these calculations using standardized formulas, reducing the risk of manual errors that could lead to underpayment or overtime miscalculation.
• Compliance testing : – HRMS tools can help employers track compliance requirements. These include appointment letters issued, health check-ups scheduled, leave entitled and utilized, safety records maintained.
• Worker Classification: – HRMS systems help maintain clear worker categories, track employment type, and monitor eligibility for specific benefits.
• Reporting : – Systematic reporting via HRMS enables organisations to generate compliance reports, audit documentation, and statutory filings with accuracy and efficiency.

Conclusion

India’s new labour codes in 2025 mark a very significant development. The codes help businesses create a more transparent, equitable, and organised employment framework. For HR teams, the codes offer clarity about expectations and procedures. For employers, it offer the efficiency of a standardized framework. For workers, they offer stronger protections and more transparent rights.

Begin the preparation phase now so that you can meet the exact requirements that your business needs. That way, you can efficiently comply with the regulations as outlined by the new labour codes in 2025.