Labor Regulations, Welfare and Social Security

Under the Constitution of India, labor is a subject on the Concurrent List, where both the Central and State Governments are competent to enact legislation.¹ As a result, India has a plethora of laws (29 labor-related statutes by the Central Government alone) addressing various aspects, such as industrial relations, the formation of trade unions, occupational safety and health, labor welfare, minimum wages, conditions of employment, disciplinary action, employment and training, accidental and social security benefits, etc.²

The Ministry of Labor and Employment implemented four new Labor Codes marking a significant shift in India’s labour and employment law framework. These Labor Codes simplifies, rationalize, and amalgamate 29 labor laws into four Labor Codes, in line with the recommendations of the Second National Commission on Labor:

• Code on Wages, 2019 (Wage Code)³;
• Code on Industrial Relations, 2020 (IR Code);
• Code on Social Security, 2020 (SS Code); and
• Code on Occupational Safety, Health, and Working Conditions, 2020 (OSH Code).

The 4 Codes were brought into force with effect from 21 November 2025, and the final Central Rules under each of the Codes - the Industrial Relations (Central) Rules, 2026, Code on Wages (Central) Rules, 2026, the Social Security (Central) Rules, 2026, and the Occupational Safety, Health and Working Conditions (Central) Rules, 2026 were recently notified on May 8, 2026, together with the Model Standing Orders, 2026 which contain separate schedules for the mining, manufacturing and services sectors.

These Central Rules govern establishments in the central sphere. Since labor is a subject under the Concurrent List of the Constitution of India, individual States are required to frame and notify their respective rules for implementation of the Codes. In Maharashtra, the State Rules under the Code on Wages, 2019, Industrial Relations Code, 2020, Occupational Safety, Health and Working Conditions Code, 2020 and the Code on Social Security, 2020 remain in draft form.

Accordingly, certain aspects of the Labor Codes in Maharashtra continue to be governed by the applicable transitional framework pending notification of the remaining State Rules.

The Key Reforms Introduced by the Labour Codes include:

• Consolidation and Rationalization of Statutes:The 29 existing central labor laws are rationalized into four thematic codes, reducing overlap, improving clarity, and creating a harmonized compliance structure. This simplifies interpretation, record-keeping, and enforcement across establishments.
  • Uniform Definitions to Promote Consistency: The Codes introduce standardized definitions—most notably “wages”, which will apply across all four Codes. This uniformity reduces ambiguity and limits the scope for conflicting interpretations. The redefined wage structure (with capped exclusions) is expected to have downstream implications for:
  • payroll structuring,
  • computation of social security contributions,
  • gratuity, leave encashment, and
  • retrenchment compensation.
• Emphasis on Social Security and Wider Coverage: The SS Code expands coverage to a broader workforce, including:
  • gig workers,
  • platform workers,
  • unorganized workers, and
  • fixed-term employees.

  This represents India’s most significant step toward universal social security, creating an enabling framework for contributory schemes and welfare measures applicable beyond traditional employment structures.

• Streamlined Compliance and Digital Governance: The Codes adopt a technology-driven compliance model, with provisions for:
  • algorithm-based selection for inspections.

  This significantly reduces administrative burdens while improving transparency and predictability for employers.

• Streamlined Compliance and Digital Governance: The Codes adopt a technology-driven compliance model, with provisions for:
  • Single registration for multiple Acts,
  • Unified returns and electronic record-keeping,
  • Web-based inspection systems, and
  • Algorithm-based selection for inspections.

  This significantly reduces administrative burdens while improving transparency and predictability for employers.

• Fixed-Term Employment Regularised: The Codes formally recognize fixed-term employment, enabling employers to engage talent for defined periods without triggering the obligations associated with permanent employment. Fixed-term employees must receive the same statutory benefits as permanent employees, including gratuity (on a pro-rata basis), payable upon completion of one (1) year of continuous service, strengthening workforce protection while allowing staffing flexibility. Non-renewal of a fixed-term contract upon expiry of its term does not, by itself, constitute retrenchment.
• Strengthened Industrial Relations Framework: The Industrial Relations Code introduces several key reforms:
  • Higher thresholds for prior government approval for layoffs, retrenchment, and closure (300 workers instead of 100).
  • Establishment of Industrial Tribunals with streamlined dispute-resolution mechanisms.
  • Mandatory notice of strike and corresponding restrictions to promote industrial peace and continuity.

  These reforms aim to balance employer flexibility with worker protection.

• Rationalized Health, Safety, and Working Conditions: The OSH Code consolidates provisions governing safety, working conditions, and welfare across a wide range of establishments. Key features include:
  • a single license for factories, contract labor, and other activities,
  • uniform standards for workplace safety,
  • expanded protections for women employees, including enabling night-shift work with safeguards, and
  • mandatory health checks and welfare measures in specified sectors.
• Expansion of Employer Obligations and Enforcement Powers: The Codes enhance both employer responsibilities and enforcement capabilities through:
  • increased penalties for non-compliance,
  • compounding certain offences to promote quicker resolution,
  • employer obligations to maintain electronic registers and exhibit updated notices, and
  • broader powers for inspectors-cum-facilitators to advise establishments on compliance.
• Protection of Workers’ Rights: The Codes introduce multiple employee-centric reforms, including:
  • timely and full payment of wages under a unified framework,
  • stronger mechanisms for redressal of grievances,
  • statutory recognition of re-skilling funds for retrenched workers, and
  • provisions enabling leave encashment and continuous service flexibility.

• 1.Constitutional Provision, Ministry of Labor & Employment, http://labour.gov.in/constitutional-provision
• 2.About the Ministry, Ministry of Labor & Employment, http://labour.gov.in/about-ministry
• 3.The Code on Wages, Ministry of Labor & Employment, https://labour.gov.in/labour-reforms