India's Labour Codes

How India consolidated dozens of labour laws into four codes, what they change for workers and employers, and the debate around them.

India historically had a complex web of labour laws: dozens of central laws and many more state laws covering wages, working conditions, disputes and social security. Employers and economists often argued that this complexity discouraged formal hiring. Unions argued many laws protected workers. In 2019 and 2020, Parliament passed four labour codes to consolidate 29 central laws.

The four codes

Code on Wages, 2019: covers minimum wages, payment of wages and bonuses, extending minimum wage coverage to all workers.
Industrial Relations Code, 2020: covers trade unions, strikes and conditions for layoffs and closures.
Code on Social Security, 2020: covers provident fund, insurance and maternity benefits, and for the first time recognises gig and platform workers.
Occupational Safety, Health and Working Conditions Code, 2020: covers safety, working hours and conditions.

Key changes

Layoffs: firms with up to 300 workers can lay off or close without government permission, up from 100 under the older law.
Fixed-term employment allowed across sectors, with equal benefits to permanent workers.
Stricter conditions for strikes, including notice requirements.
Universal minimum wages and a national floor wage.
Social security for gig workers.

Implementation

The codes were passed by Parliament but took years to come into force, because rules must be framed by both central and state governments. The central government notified the codes to take effect in November 2025.

The debate

Supporters say simpler, more flexible laws will encourage firms to grow, hire formally and create jobs.
Critics, including most central trade unions, argue the codes weaken job security and the right to strike, and they held protests against them.

The 100-worker threshold

Under older rules, factories with 100 or more workers needed government permission to lay off workers. Economists observed that many Indian firms stayed just below this size, possibly to avoid the rule. Raising the threshold to 300 aims to let firms grow without that hurdle, though unions worry about easier layoffs.

Thinking labour reform is only about firing workers

The codes also extend minimum wages to all workers, recognise gig workers and simplify compliance. They involve trade-offs between flexibility for employers and protections for workers.

Key takeaways

India's four labour codes consolidate 29 central labour laws.
They cover wages, industrial relations, social security and working conditions.
Changes include a higher layoff threshold, fixed-term work and gig worker recognition.
Supporters expect more formal jobs; unions fear weaker protections.