Introduction
The Government of India has taken a major step towards labour reform by consolidating 29 Central Labour Laws into 4 Labour Codes. These reforms aim to simplify compliance, enhance worker welfare, and create a more transparent, business-friendly environment.
As these new laws come closer to implementation, every business—large or small—needs to understand their scope, key changes, and compliance requirements.
What Are the 4 Labour Codes?
| Labour Code | Previous Acts Merged | Primary Objective |
|---|---|---|
| Code on Wages, 2019 | Payment of Wages Act, 1936; Minimum Wages Act, 1948; Payment of Bonus Act, 1965; Equal Remuneration Act, 1976 | Ensures uniformity in wage and bonus regulations across all industries. |
| Code on Industrial Relations, 2020 | Trade Unions Act, 1926; Industrial Employment (Standing Orders) Act, 1946; Industrial Disputes Act, 1947 | Promotes smooth employer–employee relations and faster dispute resolution. |
| Code on Social Security, 2020 | 9 major social security laws including EPF Act, ESI Act, Maternity Benefit Act, etc. | Extends social security benefits to all workers, including gig and platform workers. |
| Code on Occupational Safety, Health and Working Conditions (OSH), 2020 | 13 Acts including Factories Act, Mines Act, Contract Labour Act, etc. | Consolidates health, safety, and welfare standards across workplaces. |
Key Highlights of the New Labour Codes
| Aspect | Old System | New Labour Codes (Reforms) |
|---|---|---|
| Definition of ‘Wages’ | Varied across different Acts | Uniform definition—50% of total remuneration considered as wages. |
| Working Hours | Differed by State/Act | Standardized 8-hour workday, with provisions for 4-day work week. |
| Overtime & Leave | Fragmented laws | Unified overtime policy, uniform leave structure across industries. |
| Fixed Term Employment | Limited recognition | Legal recognition, ensuring equal benefits for fixed-term employees. |
| Social Security | Restricted to organized sector | Extended to unorganized, gig, and platform workers. |
| Dispute Resolution | Multiple authorities | Simplified conciliation and dispute mechanisms. |
Impact of the 4 Labour Codes on Employers
The new labour reforms are designed to simplify compliance and reduce overlapping regulations, but they also bring new responsibilities.
1. Simplified Registration and Returns
Businesses can now file a single online return and maintain a unified registration under multiple laws, reducing administrative work.
2. Cost Implications
With the new definition of wages (50% rule), basic salary and allowances will directly impact PF, ESI, and gratuity contributions, potentially increasing overall labour costs.
3. Flexibility for Employers
The Industrial Relations Code allows companies with up to 300 employees to lay off workers or close units without government approval (earlier limit: 100 employees), improving ease of business.
4. Enhanced Worker Benefits
The Social Security Code expands coverage to gig workers, self-employed, and contract workers, ensuring wider inclusion in social welfare schemes.
Compliance Requirements for Companies
| Compliance Area | Action Required by Employer |
|---|---|
| Wage Structuring | Reassess salary breakup to comply with the 50% “wage” rule. |
| Working Hours & Overtime | Review shift patterns and maintain accurate attendance records. |
| Social Security Enrolment | Register all eligible employees under EPF/ESI and social schemes. |
| Health & Safety | Implement OSH Code guidelines and maintain safety registers. |
| Employment Contracts | Update offer letters and standing orders per Industrial Relations Code. |
Challenges in Implementation
- Delay in State-level rules and notifications
- Need for HR and payroll restructuring
- Awareness and training for HR professionals
- Balancing employee welfare with cost implications
How Sankhla Corporate Services Pvt. Ltd. Can Help
At Sankhla Corporate Services Pvt. Ltd., we specialize in helping corporates ensure seamless transition and compliance with the new labour laws.
Our Labour Law Compliance and Audit Services cover:
- Labour Code Readiness Assessment
- Compliance Audit & Gap Analysis
- Payroll Structuring, New Wage Code
- Statutory Register & Record Maintenance
- ESIC, EPF & LWF Compliance Support
Benefits of the New Labour Codes
- Simplified compliance process
- Transparent wage structure
- Uniform definitions and applicability
- Wider social security coverage
- Ease of doing business
- Time saving
Partner with us to stay compliant, minimize risks, and align with the new labour framework confidently.
Explore our Labour Law Compliance Services
The New Labour Codes mark a historic step in India’s employment regulation system—modernizing, simplifying, and digitizing labour governance. Businesses that prepare early will not only ensure compliance but also build a sustainable, employee-friendly ecosystem.
