Cross-Border Catch Up: Unpacking India’s Labor Law Shake-Up

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Patty Shapiro: Hi, and welcome to the Cross-Border Catch-Up, the podcast for global employers who want to stay in the know about cutting-edge employment issues worldwide. My name is Patty Shapiro, and I’m here today with my colleague, Goli Rahimi. We are cross-border attorneys here at Ogletree Deakins, and today we’re unpacking what is arguably the biggest labor law reform in India in decades. The implementation of four consolidated labor codes, which came into force on November 21st, 2025.

Goli Rahimi: That’s right, Patty. And for years, India’s labor law framework was a patchwork of 29 central statutes, many of them even dating back to the pre-independence era, which really made compliance not only complex, but inconsistent with today’s dynamic employment landscape. These four new codes are intended to consolidate, simplify, and modernize that framework. And it’s really worth noting at the outset, that while these codes were passed several years ago, their implementation was actually delayed. They only came into effect in November of 2025, following extended consultations, debate, and coordination between the central government and the states. That gap between passage in 2019 and 2020, and implementation several years later in 2025, has actually added to the confusion because many employers were essentially preparing for changes that did not immediately materialize. And now we’re all having to adjust quickly as the framework finally comes into force.

Patty Shapiro: Let’s start with the basics. The four codes are the code on wages, the industrial relations code, the code on social security, and the occupational safety, health, and working conditions code. Together, these codes replace the 29 existing labor laws Goli mentioned earlier and are meant to create a more coherent and easier to navigate system.

Goli Rahimi: The new codes essentially aim to streamline the existing processes and laws. Well, at least in theory. A lot still depends on how each individual state in India is going to implement the rules. India remains a federal system, so we will want to watch the state level rules quite closely.

Patty Shapiro: Let’s talk briefly about each code. A big starting point is the code on wages, which, for the first time, creates a uniform framework covering minimum wages, payment of wages, bonuses, and equal compensation. One important concept here is the national wage floor. While states still set their own minimum wages, they can’t go below this floor. The idea is to reduce wage disparities across states and sectors.

Goli Rahimi: Another significant change is the standardization of what counts as “wages.” Under the new framework, an employee’s wages will now include not only the base pay, but dearness allowance and retaining allowance. Other allowances are actually excluded, but—and here’s where it gets a little complicated—if these excluded allowances exceed half of the employee’s total compensation, then that excess is actually treated as wages. Why does this matter? Because wages are the basis for things like overtime, provident fund contributions, and gratuity calculations. So, even without a change in headline salary, the cost structures may shift.

Patty Shapiro: Social security is another major area of reform. The code on social security expands coverage well beyond traditional permanent employees. For the first time, gig workers and platform workers, think ride hailing, delivery and freelance digital work, are entitled to social security contributions. While the precise benefits will depend on government schemes, the legal framework is now in place. Fixed term employees also benefit from this code. They’re now explicitly entitled to the same pay and benefits as permanent employees doing similar work, and they may qualify for gratuity even without completing five years of service. Taken together, these changes signal a move toward broader inclusion and more uniform protections across India’s highly diverse workforce.

Goli Rahimi: Next up is the third code, the industrial relations code. This code consolidates laws dealing with trade unions, standing orders, and dispute resolution, all areas that directly affect how employers manage their workforce. One of the main changes is the increase in the employee threshold for government approval of layoffs, retrenchments, and closures. Employers below that threshold have more flexibility to make workforce adjustments without getting prior approval from the government. The industrial relations code also requires employers with at least 20 workers to form a GRC or a grievance redressal committee, which has specific composition requirements. Whereas before, forming the GRC was merely a recommendation.

Patty Shapiro: Last but not least is the OSH code, which brings together a wide range of workplace safety and working conditions laws. It introduces more uniform safety standards across industries, expands health check requirements, and addresses working hours, leave, and conditions in a more centralized way. It also permits women to work night shifts across sectors, subject to consent and prescribed safety measures, a notable shift from prior restrictions and something that was previously regulated at the state level.

Goli Rahimi: That was a lot.

Patty Shapiro: It is, but there’s more. Another noteworthy change is enforcement. The codes reduce criminal penalties for many technical violations and move toward monetary penalties and compounding of offenses. The idea is to encourage compliance rather than punishment, particularly for procedural lapses.

Goli Rahimi: Oh, man. Well, we’ve thrown a lot at everyone today, but I think it’s important to remember that implementation of these four codes is still evolving. While the central laws are in place, the state rules are really going to drive the details, and it’s those details that matter. As with any large reform, the real impact will depend on how the rules are implemented and enforced on the ground.

Patty Shapiro: Thanks, Goli, and thank you all for joining us for today’s Cross-Border Catch-Up. Follow us to stay in the know about cutting-edge employment issues worldwide.

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