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 Labour Codes on November 21, 2025 marking a significant shift in labour and employment laws framework in India. These Labour Codes aims to simplify, 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);
• 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 Key Reforms Introduced by the Labour Codes include:

• Consolidation and Rationalisation of Statutes: The 29 existing central labour laws are rationalised into four thematic codes, reducing overlap, improving clarity, and creating a harmonised compliance structure. This simplifies interpretation, record-keeping, and enforcement across establishments.
• Uniform Definitions to Promote Consistency: The Codes introduce standardised 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,
  • Unorganised worker, 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:
  • 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 recognise 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), strengthening workforce protection while allowing staffing flexibility.
• 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.
• Rationalised 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 licence for factories, contract labour, 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: he Codes enhance both employer responsibilities and enforcement capabilities through:
  • Increased penalties for non-compliance,
  • Compounding of 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
• 4.Ratifications for India, International Labor Organization, https://labour.gov.in/lcandilasdivision/india-ilo