India has implemented a broad labour law reform by subsuming 29 existing laws into four consolidated labour codes, bringing significant changes that impact both traditional employees and gig-economy workers.
Overview of the New Codes
The four codes — Code on Wages (2019), Industrial Relations Code (2020), Code on Social Security (2020), and Occupational Safety, Health and Working Conditions Code (2020) — have formally come into effect, marking a systemic restructuring of employment standards in the country.
Universal Minimum Wage and Wage Structure
A national minimum floor wage will now apply to all workers across organised and unorganised sectors. Additionally, the definition of “wages” has been standardised such that the basic salary must constitute at least half of total pay. While this may lead to lower immediate take-home salaries in some cases, it increases long-term social-security and retirement benefits through higher employer contributions.
Inclusion of Gig and Platform Workers
Digital-platform workers, freelancers, delivery partners and gig-based workers are now formally recognised. Aggregator platforms will be required to contribute towards their social-security coverage, granting benefits previously unavailable to this workforce segment.
Gratuity and Leave Benefits Become More Accessible
Fixed-term employees will now be eligible for gratuity after just one year of service, compared to the earlier five-year requirement. Additionally, workers will now qualify for annual paid leave after 180 days of service, reducing the earlier threshold of 240 days.
Health and Safety Provisions
Companies must now provide free annual health check-ups for employees aged 40 and above. Commuting-related accidents are also recognised as employment-related incidents, ensuring compensation eligibility in such cases.
Night Shift and Workplace Equality for Women
Women employees can now legally work night shifts across sectors, subject to their consent and with mandatory safety arrangements by employers. The codes also enforce strict prohibition of gender-based wage discrimination.
Work-From-Home and Flexible Work Arrangements
Work-from-home is now formally recognised for certain sectors, particularly in services and technology, enabling employees and employers to mutually agree on remote-working arrangements.
Timely Wage Payments and Appointment Documentation
Employers must pay monthly wages within seven days of the following month, and issue final settlements within two working days of exit. Appointment letters will be mandatory for all new employees, including those in unorganised or gig roles, ensuring clarity of service terms.
Implications for the Workforce and Employers
These reforms aim to provide greater financial security, social-welfare coverage and transparency for employees. Employers will need to revise employment contracts, wage structures, insurance coverage, HR policies and safety-compliance frameworks to align with the updated requirements.