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On 21 November 2025, the Government of India announced the implementation of the four Labour Codes, marking what some are calling the most significant labour law reform in India's history. In this brief employer alert, we set out the action that needs to be taken for those with operations in the jurisdiction.
Back in 2021, we republished an article (first published in the India Business Law Journal) from our Indian firm, Kochhar & Co, confirming that the four new Indian Labour Codes had been enacted. Four years later, this transformative reform, implementing the Code on Wages 2019, Industrial Relations Code 2020, Code on Social Security 2020, and Occupational Safety, Health and Working Conditions Code 2020, has now been formally announced.
The new Labour Codes
These Codes consolidate and replace 29 existing labour laws. However, employers should note that the Central Rules required to fully operationalise major provisions in the Codes are still being finalised. The Government has indicated that draft rules will be published for stakeholder consultation, with final notification expected within two and half to three months. During this transition, existing labour laws and rules will continue to remain in force.
Key takeaways for employers
Notwithstanding the above, employers with operations in India should use this window to prepare. Key areas requiring attention include wage structure review (basic pay must now constitute at least 50% of total remuneration), fixed-term employment policies (gratuity eligibility will be reduced from five years to one year), contract labour arrangements, and updated employment documentation including mandatory appointment letters.
Organisations should initiate labour compliance assessments, model the impact of wage restructuring on payroll costs, and review contingent workforce arrangements. The Codes introduce unified definitions, streamlined compliance processes, and enhanced penalties for violations, making early preparation advisable even as the detailed rules are awaited.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
