New Labour Law implemented in India: Know 12 key changes

New Labour Law: The Union Government announced that the four consolidated Labour Codes—the Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020, and the Occupational Safety, Health and Working Conditions Code, 2020—have been made effective from November 21, 2025.

As the implementation of India’s four new consolidated Labour Codes brings significant changes for virtually every employee. The key changes are—Minimum Wage, Health Checkup, and WFH—are all covered.

Here are 12 of the most important changes every employee should know, based on the new Codes (Code on Wages, Industrial Relations Code, Code on Social Security, and OSHWC Code):

1. Universal Minimum Wages: A statutory right to minimum wages is extended to all workers (organized and unorganized sectors). A national floor wage will be set, and no state can fix a minimum wage below this amount.

2. Higher Basic Pay & Retirement Contributions: The definition of ‘Wages’ is standardized. Basic Salary, Dearness Allowance, and Retaining Allowance must constitute at least 50% of the total remuneration (CTC).

This means higher contributions towards Provident Fund (PF) and Gratuity (as they are calculated on a larger basic pay component), leading to better retirement security, though it may result in a lower monthly ‘take-home’ pay for some employees.

3. Faster Gratuity Eligibility for Fixed-Term Employees (FTEs): FTEs will now be eligible for gratuity after just one year of continuous service, instead of the previous five years.

4. Overtime Compensation: Overtime work must be compensated at least twice the normal rate of wages.

5. Timely Wage Payment: Wages must be paid within two working days of an employee’s resignation or termination.

6. Mandatory Annual Health Check-ups: Employers must provide a free annual health check-up for all employees above 40 years of age, particularly in hazardous industries and certain others.

7. Formal Recognition of Work-From-Home (WFH): The new codes formally recognize WFH arrangements in the service sector based on mutual agreement, providing legal clarity for remote and distributed work models.

8. Expanded Safety and Welfare: The Codes consolidate and strengthen rules for workplace safety, including provisions for clean working environments, potable water, and mandatory safety committees in large establishments.

9. Social Security for Gig and Platform Workers: For the first time, gig and platform workers (like those with ride-sharing or food delivery apps) are formally recognized and are eligible for social security benefits from a dedicated fund, partly funded by aggregators.

10. Appointment Letters Mandatory for All: Employers must issue a formal appointment letter to every employee, which is crucial for proving employment history and accessing formal benefits.

11. Gender Equality and Night Shifts for Women: Employers cannot discriminate based on gender in hiring or wages for similar work. Women are permitted to work night shifts in all sectors, including hazardous ones, provided they give consent and the employer ensures stringent safety, security, and transport arrangements.

12. Fixed-Term Employees Get Parity: Fixed-Term Employees are now entitled to the same wages, benefits (like leave and social security), and working conditions as permanent employees.

The new Codes aim to simplify India’s complex labour laws, extend social security to more workers, and modernize the framework for new forms of employment.

Also Read: B.T. Lalitha Nayak’s controversial remarks on Ramayana and Mahabharata spark outrage