India’s labour law has changed in a big way. 29 old labour laws are gone, and 4 new “Labour Codes” now decide salary, job security, PF, ESI, and working conditions for most workers in the country. Some changes look good on paper for workers, but many old protections have quietly become weaker, especially around job security and contract work.
1. What exactly has changed?
Earlier, there were 29 separate central labour laws – for example, Industrial Disputes Act, Factories Act, Contract Labour Act, Trade Unions Act, etc. From 21 November 2025, these have been merged into 4 big codes:
# Code on Wages, 2019
# Industrial Relations Code, 2020
# Code on Social Security, 2020
# Occupational Safety, Health and Working Conditions (OSHWC) Code, 2020
-- Think of it like this: earlier you had 29 small rulebooks; now there are 4 thick rulebooks that cover almost everything. It looks “simple”, but the content inside these new books has also changed.
2. How your salary structure will change
The new laws change how your salary is broken into “basic”, “allowances”, etc.
Rule: “Basic pay + dearness allowance” must be at least around 50% of your total CTC.
Result: Your in‑hand salary can go down, but PF and gratuity will go up over time.
Example 1 – Private office employee
Before: CTC = ₹40,000
Basic = ₹12,000, allowances = ₹20,000, in‑hand looked higher, PF on only ₹12,000.
After: Company must keep basic ≈ ₹20,000 (around 50%).
-- In‑hand may drop a bit because PF is taken on ₹20,000, but your PF balance and future gratuity grow faster.
What this means for you
-- Short term: You may feel “salary cut” in hand.
-- Long term: Better retirement savings, bigger PF and gratuity if you stay in jobs for several years.
There will also be a “national floor wage” below which no state can fix its minimum wage, so the very lowest wages should not be extremely low anywhere.
3. Visible “good news” for workers
Many points being shown as positive are real, but they are only one side of the story.
# Appointment letters for all
-- Every employee should get a formal appointment letter
-- Example: If you work in a small shop or office and the owner used to say “No paper, just come and work”, now the law expects him to give you a written letter. This helps you prove your job if there is a dispute.
# Health checkups and safety
-- Certain workers (especially older or in risky jobs) must get regular health checkups from the employer.
-- Example: A worker in a small factory with chemicals gets a yearly health test arranged by the company, instead of paying from his own pocket.
# Women and night shifts
-- Women can work in night shifts in more sectors, but with mandatory safety arrangements like transport and security.
-- Example: A woman working in an IT/BPO office can legally work late‑night shifts if the company provides safe travel and security as per rules.
# Recognition for gig workers
-- Gig and platform workers (app drivers, delivery partners) are now recognised in law.
-- Companies must pay a small percentage into a social security fund for them.
-- Example: A food‑delivery rider who meets with an accident could, in future, claim help from a formal scheme instead of depending only on company goodwill.
4. The part no one is telling you: what got weaker
While the above sounds good, many older protections have been diluted.
4.1 Easier layoffs for medium‑sized companies
Earlier, under the Industrial Disputes Act, factories with 100 or more workers had to take government permission for large‑scale retrenchment or closure.
-- Now, under the Industrial Relations Code, that limit is 300 workers in many cases.
-- So, units with 100–299 workers get much more freedom to fire or shut down.
Example 2 – Factory with 200 workers
Old regime: Owner wanted to close or lay off 80 workers → needed government permission, long process, possible political/union pressure.
New regime: Same factory with 200 workers may not need that permission → easier and faster layoffs.
For workers inside such factories, job security has clearly gone down.
4.2 Contract labour thresholds raised
The new OSHWC Code and related rules increase some thresholds for when contract‑labour rules kick in.
-- Example: In many cases, the law now applies only if there are 50 or more contract workers, instead of 20 earlier.
-- So, a company using 30–40 contract workers may fall completely outside some strong protections that existed earlier.
Example 3 – Warehouse with contract workers
-- Before: 25 contract loaders in a warehouse were covered by strict contract‑labour rules, licensing, and welfare norms.
-- After: If the threshold is 50, the same 25 people may lose those specific safeguards and be more at the mercy of contractor and company.
5. Fixed‑term jobs and strikes: more control for employers
Fixed‑term employment becomes normal
-- Companies can hire people on fixed‑term contracts legally in almost any sector.
-- Workers on fixed‑term contracts are supposed to get some benefits like gratuity (if they complete one year), but the job ends automatically when the contract ends.
Example 4 – Mall sales staff
-- A clothing brand in a mall hires sales staff only for Diwali‑New Year season on a 4‑month contract.
-- You may get better pay than a casual worker and some protections, but you know you will be jobless after 4 months unless renewed.
This can mean more short‑term, rotating jobs and fewer permanent posts.
Strikes become harder
-- The Industrial Relations Code adds stricter rules and longer notice periods before a legal strike.
-- Example: Workers cannot suddenly stop work in protest; they must give advance notice and follow procedures, or the strike can be declared illegal.
This gives stability to companies but reduces the immediate power of workers to protest.
6. Gig and unorganised workers: on paper vs in real life
The Social Security Code talks about gig workers, platform workers and unorganised workers.
-- There will be social security schemes funded by government and small contributions from companies and workers.
-- But most details – how much money, what exact benefits, how to claim – are left to future rules and schemes.
Example 5 – App driver
-- On paper: Listed as “platform worker”, covered by a central fund.
-- In practice: Until a specific scheme, budget, and portal exist, he may not see any real monthly or yearly benefit.
So, recognition is a good first step, but the real benefit depends on how quickly and how well these schemes are rolled out.
7. Why this matters to every common worker
In simple words:
# Your paper rights – minimum wage, PF, gratuity, appointment letter, health checkup – look stronger and clearer.
# Your job security in many medium‑sized private companies is weaker because employers can hire on fixed‑term contracts and lay off more easily up to 300 workers.
# Your future benefits (PF, gratuity) may improve, but present in‑hand salary for many will feel a bit tighter.
# Gig and informal workers finally appear in the law, but whether they truly benefit will depend on how seriously the government and companies implement the schemes.
India’s new labour codes are a mix of more formality and social security on paper and more flexibility and power for employers in practice. The real test will be how state rules, inspections, and court decisions shape these laws over the next few years.
