New labour laws boost security, benefits and protections for workers.
From better gratuity and insurance to stronger safety rules, the new labour laws offer workers more protection and peace of mind.
India’s labour landscape underwent its biggest transformation since Independence on November 21, 2025, when the government finally implemented the long-awaited four labour codes. For decades, workers and employers operated within a fragmented system of 29 separate laws—many written for an economy that no longer resembled the fast-moving, technology-driven, globally connected workforce India has become. The new codes on wages, industrial relations, social security, and occupational safety and health bring all of it under one coherent, modern framework. It is a reset that has been years in the making, and its impact will touch nearly every working Indian.
The timing is significant. India’s workforce has been expanding at a historic pace. Between 2017–18 and 2023–24, the country added more than 16 crore jobs. Unemployment fell sharply, from 6% to just 3.2%. Even more noteworthy is the rise in women’s workforce participation: over 1.5 crore women entered the formal labour market in this period, signalling a major shift in the social and economic fabric. And yet, until now, this new economy—shaped by startups, gig platforms, global manufacturing, remote work, and massive urbanisation—was still governed by laws designed for an industrial era defined by mills, factories, and permanent, lifelong employment.
For workers, these new codes promise clearer wage structures, stronger social protections, and broader access to benefits that were previously out of reach for many. For employers, the labyrinth of multiple filings, licences, inspections, and compliance checklists is replaced by a streamlined and unified system. The hope is that businesses spend less time navigating regulations and more time growing, hiring, and investing.
This article examines what all of this really means—how salaries will be structured, what happens to job security, who gets benefits, and how working conditions might change in the years ahead.
GRATUITY AFTER ONE YEAR, AND A NEW DEFINITION OF WAGES
One of the most consequential changes is the introduction of a uniform definition of “wages.” Until now, companies often broke salaries into complicated components—basic pay, allowances, bonuses, reimbursements—to manage costs and structure benefits. With the codes, wages have a single, standard meaning across all labour laws. This simplicity comes with real implications: gratuity calculations, provident fund contributions, and several other benefits will now be based on a more transparent structure. For many employees, this could mean higher long-term benefits, even if it slightly alters take-home pay in the short run.
The biggest shift, however, is around gratuity. Traditionally, gratuity was a benefit reserved for employees who completed at least five years of continuous service. This made sense in an older economy where people often spent long stretches of their careers with a single employer. But that is no longer how the workforce behaves. Fixed-term contracts, project-based roles, and gig-like arrangements are increasingly common across technology, media, retail, logistics, and even manufacturing.
Recognising this shift, the new codes make fixed-term employees eligible for gratuity after just one year of service. This marks a huge change for millions of workers whose jobs are tied to shorter cycles. It offers them a layer of financial security that simply did not exist before.
Labour expert Sethuraman noted that “the codes bring greater uniformity to wage structures and key employment-related provisions. The compliance framework is aimed at being simpler, consistent, and easier for stakeholders to navigate.” His point underscores what many businesses have long hoped for: fewer grey areas, fewer disputes, and a more predictable regulatory environment.
He also pointed out that the government is expected to roll out the implementation in phases. Most states already have draft rules prepared and are now moving toward finalising them. This staggered rollout may help avoid disruption while giving employers time to adapt to the new system.
As India steps into a new chapter of work—one driven by flexibility, speed, and scale—the labour codes aim to build a foundation that is fairer for workers and easier for businesses. Whether they fully achieve this balance will depend not just on the laws themselves, but on how state governments, employers, and workers embrace the transition in the months ahead.