From Wages To Wellness: Worker Wellness Under The New Labour Codes

1. Overview

Effective 21 November 2025, India implemented the long-awaited four Labour Codes - Code on Wages, 2019, the Code on Social Security, 2020, the Industrial Relations Code, 2020, and the Occupational Safety, Health and Working Conditions Code, 2020, consolidating 29 central labour laws into a unified, modern regulatory framework. This shift marks one of the most significant labour reforms in the country's history, aimed at simplifying compliance, enhancing worker protection and creating greater uniformity across sectors. As organisations transition to the new regime, they will need to navigate a critical compliance window, during which elements of both the old and new regulatory environments may operate in parallel. This article examines the implications of the newly notified codes and what they mean for India's evolving labour landscape.

2. The Four Labour Codes and the "Well-being" Lens

2.1 Redefined Wage Structure

The Code on Wages¹ establishes a standardised and comprehensive definition of "wages," which includes basic pay, dearness allowance, and retaining allowance, while expressly excluding components such as bonus, house rent allowance, conveyance, and gratuity. Employers are required to ensure that statutory wage components constitute at least fifty percent of the employee's total remuneration, with permissible deductions capped at fifty percent of such wages. This recalibration is expected to increase contributions towards provident fund, gratuity, and other social security entitlements, though it may correspondingly result in a lower net take-home salary for employees.

2.2 Introduction of a National Floor Wage

A key innovation introduced under the Code on Wages is the establishment of a Floor Wage, to be determined by the Central Government, taking into account the cost-of-living factors and regional disparities. States will be prohibited from prescribing minimum wages below this nationally notified floor, thereby promoting greater wage uniformity and mitigating the risk of downward wage competition across jurisdictions.

2.3 Universal Minimum Wage Coverage

The Code on Wages extends minimum wage coverage to all employees, irrespective of sector, category, or wage threshold. This marks a significant departure from the earlier regime, under which minimum wage protection was limited to scheduled employments or employees earning below ₹24,000 per month. The expanded framework is intended to reduce wage inequities and ensure statutory protection for casual labourers, daily wage earners, and migrant workers.

2.4 Mandatory Timely Payment of Wages

The Code stipulates stringent timelines for wage disbursement: daily-rated employees must be paid at the close of each working day; weekly-rated employees before the weekly rest day; fortnightly-rated employees within two days of the end of the wage period; and monthly-rated employees within seven days of the succeeding month. Additionally, final settlements consequent to resignation, termination, or dismissal must be completed within two working days.

2.5 Working Hours and Weekly Limits

The Occupational Safety, Health and Working Conditions Code² introduces flexibility in the structuring of working hours while maintaining adherence to the International Labour Organization's prescribed 48-hour weekly limit. Depending on whether an establishment adopts a five-day or four-day workweek, daily working hours may extend from 8 to 12 hours. The accompanying rules are expected to delineate the requisite rest intervals and mandate weekly rest days to ensure employee health and safety.

Higher Overtime Compensation

The Cod2.6 e requires that any work beyond the prescribed hours be undertaken with the employee's consent and mandates compensation at not less than twice the ordinary wage rate. State governments are further empowered to prescribe the maximum permissible hours of overtime. This framework marks a significant improvement over the earlier, fragmented state-level overtime regulations, creating a uniform and enforceable national standard.

2.7 Gratuity Eligibility for Fixed-Term Employees

The introduction of Fixed Term Employment (FTE) under the Code on Social Security³ enables employers to engage workers for defined durations while ensuring full parity with permanent employees in respect of wages, working hours, and statutory benefits. Notably, FTE employees will now qualify for gratuity upon completing one year of continuous service, a significant relaxation from the earlier requirement of five years.

2.8 Expanded Social Security, Including Gig and Platform Workers

The Code on Social Security substantially broadens the scope of statutory protection. Coverage under the Employees' Provident Fund Organisation (EPFO) will now extend to all establishments employing twenty or more persons, regardless of industry classification. A landmark reform is the inclusion of gig and platform workers within the social security framework for the first time, enabling access to benefits such as disability insurance, life cover, maternity support, and health-related assistance. Further, specified aggregators are mandated to contribute between 1–2% of their annual turnover towards the welfare of gig and platform workers.

2.9 Broadened Scope of "Dependant" and "Family"

The Code on Social Security expands the definition of 'Dependant' to include widowers and grandparents, thereby extending the applicable dependant benefits to individuals within this category. Likewise, the definition of 'Family' has been broadened to include the father-in-law and mother-in-law of a female employee, making these individuals eligible for the benefits provided under the Code. This expansion offers greater financial protection and support for employees' extended families, strengthening overall social welfare coverage.

2.10 Formal Documentation: Appointment Letters and Wage Slips

The Industrial Relations Code, 2020⁴, strengthens worker well-being by ensuring formal recognition and documentation for all employees, including permanent, fixed-term, and contract staff, through appointment letters that clarify terms and benefits. The Code mandates that every employee be issued a formal appointment letter specifying wages, duties, and applicable benefits, along with wage slips provided in physical or electronic form. These measures are designed to enhance transparency, minimise disputes, and foster the formalisation of the informal workforce.

2.11 Eliminating Gender-Based Discrimination and Allowing Night-Shift Work for Women

The Code on Wages expressly prohibits gender-based wage discrimination, mandating equal remuneration for work of a similar nature. The Occupational Safety, Health and Working Conditions Code further enables women to work during night hours, subject to their consent and the employer's implementation of adequate safety and security measures.

2.12 Free Annual Health Check-Ups

Under the OSH Code, all employees are entitled to an annual health examination at no cost to them. This provision supports early detection of health issues and contributes to overall workforce well-being and productivity.

2.13 Creation of Workplace Safety Committees

Large establishments are required to constitute Safety Committees with worker representation that is at least equal to, and in some cases greater than, employer representation. This framework promotes participatory governance and strengthens collaborative oversight of workplace health and safety practices.

3. Alignment of India's New Labour Codes with OECD Approaches to Minimum Wages and Low-Wage Worker Support

India's newly notified Labour Codes move the country closer to the mainstream policy architecture adopted across OECD economies⁵, where minimum wages are viewed as part of a broader package of wage protection, social security, and enforcement measures⁶. India's 2025 labour framework aligns with the OECD's core philosophy in four ways:

1. A clear, statutory wage floor with national-level criteria.
2. Regular review mechanisms aimed at preserving real wages.
3. Expanded social protection, particularly for vulnerable categories such as gig workers.
4. Stronger enforcement and compliance norms, addressing India's historically high informality.

Where India diverges is primarily in its limited use of tax-based income support for low-wage workers and in the relatively modest role of collective bargaining. Nonetheless, the direction of reform shows strong convergence with global, especially OECD, trends that integrate wage floors, social protection, and workplace standards into a cohesive framework for worker well-being.

4. Key Client Impact Areas

The newly notified Labour Codes introduce several critical changes that will directly impact organisational policies, workforce planning and compliance structures. One of the most consequential reforms is the revised statutory definition of wages, which may require companies to realign existing salary structures to ensure compliance with limits on allowances and the recalibration of components such as provident fund, gratuity, and leave encashment. The Codes also extend significant benefits to fixed-term employees, including eligibility for gratuity after just one year of service, an important shift from earlier thresholds. Further, the social security net has been widened to include gig workers, platform workers and other non-traditional forms of employment, signalling the government's intent to bring unstructured labour segments into formal protections. Alongside these changes, the new regime places greater emphasis on workplace safety and health standards, requiring employers to strengthen welfare measures, conduct periodic health assessments and ensure safer working conditions across establishments. Together, these reforms represent a comprehensive evolution of employer responsibilities and worker entitlements under India's labour framework.

5. Immediate Compliance Priorities

In the immediate transition phase, organisations will need to adopt a structured, time-bound approach to compliance under the new Labour Codes.

1. Within the first 30 days, companies should conduct a comprehensive payroll audit aligned with the revised wage definition, particularly the requirement that at least 50% of total remuneration constitute basic wages. This window should also be used to reassess employee classifications across worker, employee, gig and platform categories, and to review contract labour arrangements to ensure clear differentiation between core and non-core activities.
2. Within 60 days, employers should focus on revising employment documentation, including contracts, offer letters and appointment letters, alongside updating HR policies, standing orders and employee handbooks to reflect new statutory obligations. A detailed gap analysis of current workplace safety and operational standards against OSHWC requirements should also be completed.
3. Within 90 days, organisations can prepare for the rollout of single registration and unified returns (as these become operational), initiate structured training programmes for HR and compliance teams on the new provisions, and establish grievance redressal mechanisms as prescribed under the Industrial Relations Code.

During this transition period, it is important to note that several existing laws and rules will continue to apply until corresponding state-specific rules are notified, creating a temporary dual regulatory environment. However, enforcement is expected to be calibrated, with regulators recognising good-faith efforts toward compliance and allowing a phased adoption period for businesses to adjust.

6. Conclusion

The November 2025 notification of the Labour Codes marks a structural transformation of India's labour framework, introducing reforms that will reshape organisational policies, workforce planning, and compliance systems. The revised statutory definition of wages alone will require employers to reassess compensation structures, while expanded benefits for fixed-term employees and the inclusion of gig and platform workers significantly broaden the scope of social protection. Enhanced OSH obligations and mandatory health assessments further elevate workplace well-being standards. To realise the full potential of these reforms, employers should proactively audit current practices against the new Codes, invest in occupational safety and psychosocial programmes, adjust wages where required, disclose well-being KPIs, and involve workers in policy design. Ultimately, the promise of these Codes will depend on thoughtful rule-making, consistent enforcement, and committed employer action.

Footnotes

1 The Code on Wages, 2019 No.29 of 2019 available at https://egazette.gov.in/WriteReadData/2019/210356.pdf

2 The Occupational Safety, Health and Working Conditions Code, 2020, No.37 of 2020, available at: https://labour.gov.in/sites/default/files/osh_gazette.pdf

3 The Code on Social Security, No. 36 of 2020, available at: https://labour.gov.in/sites/default/files/ss_code_gazette.pdf

4The Industrial Relations Code, No.35 of 2020, available at: https://labour.gov.in/sites/default/files/ir_gazette_of_india.pdf

5Detailed Description Of Employment Protection Legislation, 2019, OECD available at: https://www.oecd.org/content/dam/oecd/en/data/datasets/indicators-of-employment-protection/OECD2019-EPL.pdf

6 OECD (2018), Good Jobs for All in a Changing World of Work: The OECD Jobs Strategy, OECD Publishing, Paris, https://doi.org/10.1787/9789264308817-en.

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