India's four Labour Codes and the jobs question

What the codes are

The four Labour Codes replace a body of 29 central labour statutes — several of them dating to the 1930s and 1940s — with a consolidated framework. The Ministry of Labour and Employment describes the exercise on the National Portal of India as the “biggest labour reforms in independent India” (india.gov.in). The four codes are the Code on Wages, 2019; the Industrial Relations Code, 2020; the Code on Social Security, 2020; and the Occupational Safety, Health and Working Conditions (OSH) Code, 2020. The Code on Wages received presidential assent on 8 August 2019 (Wikipedia summary of the enacted Act); the three remaining codes were passed by Parliament in September 2020, with the Social Security Code cleared by the Lok Sabha on 22 September 2020 and the Rajya Sabha on 23 September 2020 (PRS Legislative Research).

Enactment and enforcement were separated by five years. The government brought the major provisions of all four codes into force with effect from 21 November 2025, a step law firms tracking the change described as the most significant restructuring of Indian labour law since independence (KPMG; Herbert Smith Freehills Kramer).

What each code changes

The Code on Wages introduces a national floor wage set by the central government on the basis of minimum living standards, below which no state’s minimum wage may fall, and a uniform statutory definition of “wages.” That definition — basic pay plus dearness and retaining allowances — caps excluded components (such as house-rent allowance and bonus) at 50% of total remuneration, so that anything above the cap is counted back as wages (Ministry of Labour and Employment). Because provident-fund and gratuity contributions are pegged to “wages,” the redefinition raises the wage base for many payrolls.

The Industrial Relations Code consolidates the law on trade unions, standing orders and dispute resolution. It puts fixed-term employment on a statutory footing, entitling such workers to the same benefits as permanent staff on a pro-rata basis, and provides for two-member industrial tribunals (PRS Legislative Research). It also raises to 300 workers the establishment-size threshold above which an employer needs prior government permission to lay off, retrench or close, and extends strike-notice and conciliation conditions across all industries (Business Today).

The Code on Social Security extends coverage beyond the organised sector for the first time: gig and platform workers are recognised as a distinct category, and aggregators may be required to contribute between 1% and 2% of annual turnover (capped at 5% of amounts paid to workers) toward welfare schemes administered through a National Social Security Board (PRS Legislative Research). Fixed-term workers are made eligible for gratuity and provident fund.

The OSH Code consolidates thirteen safety statutes, standardises working hours and double overtime wages, permits women to work night shifts with consent and safeguards, and requires free annual health checks for workers above 40 (Ministry of Labour and Employment).

The rules are still being written

The codes are in force, but the operational detail sits in subordinate rules that were not finalised at commencement. The Ministry of Labour and Employment published draft Central Rules through a gazette notification dated 30 December 2025, inviting objections and suggestions — a 30-day window for the Industrial Relations Code rules and 45 days for the other three (KPMG). Because labour is a Concurrent-List subject, states also frame and notify their own rules; some have published drafts and a few have notified final state rules, which means the practical shape of the regime varies by state as of mid-2026.

Why unions oppose it

Ten central trade unions condemned the rollout as a “deceptive fraud” and demanded immediate withdrawal, and held nationwide protests including on 26 November 2025 (Business Today). Their objections are specific. They argue that raising the retrenchment and standing-orders threshold to 300 workers removes job security for most of the workforce; that extending strike-notice requirements and conciliation bars across all sectors narrows the right to strike; and that the “spread-over” provision could be used by states to stretch the working day beyond the retained eight-hour limit under the guise of longer breaks (Progressive International). A procedural objection runs alongside the substantive ones: unions contend that enacting the codes without adequate parliamentary debate and notifying them without convening the tripartite Indian Labour Conference departed from established consultation practice (Progressive International).

The jobs question

The codes regulate the terms of work; they do not, by themselves, create it — and that gap is the substance of the argument. India’s headline unemployment rate has stayed low on official surveys: the Periodic Labour Force Survey’s monthly bulletin put the all-India unemployment rate (current weekly status, age 15+) at 5.2% in September 2025 (PLFS Monthly Bulletin, September 2025, PIB), while the PLFS Annual Report 2025 records a usual-status labour-force participation rate of 59.3% for those aged 15 and above, with self-employment — at 56.2% — still the single largest category of work (PLFS Annual Report 2025, PIB). The contested issue is not the headline rate but the composition: whether enough of the workforce holds regular, formal, salaried jobs, and how much of measured employment is low-paid self-employment or unpaid family work.

The scale of the informal workforce is visible in the ministry’s own database: over 31 crore unorganised workers had registered on the e-Shram portal by late November 2025 (Devdiscourse), with women consistently forming a majority of registrations (IBEF). The government’s principal jobs instrument is the Employment Linked Incentive (ELI) Scheme, approved by the Cabinet on 1 July 2025 with an outlay of ₹99,446 crore and a stated target of incentivising more than 3.5 crore jobs over two years — Part A paying first-time EPFO-registered workers up to one month’s wage (capped at ₹15,000), and Part B paying employers for additional hiring (PIB). Because ELI operates through EPFO enrolment, it is also a formalisation lever: its benefits flow only to jobs inside the provident-fund net. Supporters of the codes argue that lighter, unified compliance and portable social security make formal hiring more attractive; critics argue that diluting job security and collective bargaining does nothing to raise the number of good jobs and shifts risk onto workers. Both positions are claims about the same unresolved question, and the enacted codes do not settle it.

Who owns this topic (and why we’re here)

Search results on the Labour Codes are dominated by two kinds of page. The first is law-firm and consultancy compliance alerts — KPMG, EY, PwC, Herbert Smith Freehills Kramer, DLA Piper — which are precise on payroll mechanics and effective dates but are written for employers and stop at what companies must do. The second is exam-prep and current-affairs explainers aimed at UPSC and other competitive exams, which list the four codes and their headline features but rarely track the live contest over rules, enforcement and the jobs debate. Wire summaries carry the protest news for a day and move on.

What is missing is a single, maintained, seat-of-power view that holds the institutional dossier, the enacted law, the still-draft rules, the union objections and the employment data in one place — attributing each side rather than adjudicating, and updating as the state rules and enforcement land. That is the gap this desk fills: not advice on compliance, and not a syllabus bullet list, but a standing account of where the reform actually stands and what remains contested.

Maintained topic brief. Analysis by IndiaStand — it characterises the state of play and the range of positions actually held, attributes each claim, and makes no forecast and no recommendation.