Understanding India’s New 4 Labour Codes – A Simple and Complete Guide

Here’s everything explained in plain language:

1. Code on Wages, 2019 (Already in force everywhere)

This is the simplest of the four codes.

What it does:

• Every worker in India now has the right to a minimum wage, no matter which industry or state.
• Men and women must get equal pay for the same work.
• Salary must reach your bank account on time (no delays).
• Bonus rules are clearer and fairer.
• At least 50% of your total salary must be basic pay + dearness allowance (so take-home doesn’t become too low because of too many allowances).

Good for: Regular workers, contract staff, domestic helpers – basically everyone.

2. Industrial Relations Code, 2020 (The “Hiring & Firing” Code)

This code decides how companies can hire, fire, or close factories.

Big changes that matter:

• Companies can now officially hire people on fixed-term contracts (e.g., 1–3 years) and they get the same benefits (PF, gratuity, bonus) as permanent staff.
• Earlier, factories with 100+ workers needed government permission to lay off people or close down. Now this rule applies only to 300+ workers.
• Closing a factory or retrenching workers has become easier and faster for smaller and medium companies.
• If there is a dispute (like wrongful termination), it will be solved faster through tribunals.
• A new fund will help laid-off workers learn new skills.

Good for: Companies want flexibility; workers on contract get more rights.

3. Occupational Safety, Health and Working Conditions Code, 2020 (OSH Code)

This is the “safety and welfare” law.

Important points:

• Only one licence needed even if you have factories, contractors, and offices in the same state.
• Every employee gets one free health check-up every year.
• Women can now legally work night shifts if safety and transport are provided and they agree.
• Maximum working hours in a day (including overtime) = 12 hours.
• Migrant workers get journey allowance and their benefits travel with them across states.
• Factories with 250+ workers must appoint a safety officer.

Good for: Factory workers, migrant labourers, women employees, contract workers.

4. Code on Social Security, 2020 (The “Future-Ready” Code)

This is the most exciting one because it covers gig and platform workers for the first time.

What’s new:

• Delivery boys, cab drivers, freelancers on Urban Company, etc., are now officially “workers” and will get social security.
• Companies like Swiggy, Zomato, Ola, Uber will contribute 1–2% of their turnover towards a welfare fund for these workers.
• Fixed-term employees become eligible for gratuity after just 3 years (earlier it was 5 years).
• PF, ESI, maternity benefit, and gratuity rules are now the same for contract and permanent staff.
• Soon every worker will have a universal social security account linked to Aadhaar.

Good for: Gig workers, platform economy, unorganised sector, women, contract staff.