India’s labour laws have always been perceived as being complicated and tense Various Acts tended to include different definitions of terms such as “wages” or “workmen,” which resulted in confusion, conflicts, and compliance issues for companies. To solve these problems, the government initiated one of the largest reforms in the history of India’s labour laws by consolidating over 40 central laws into a mere four broad labour codes.
Why were the labour codes introduced in India?
For years, companies had to deal with several labour laws, many of which overlapped and caused unnecessary complexities. For instance, the definition of workmen or basic wages varied from one Act to another.
In 2015, Mr. Narendra Modi, our Prime Minister and his government had started a proposal to rationalize these legislations and enhance the ease of doing business. Finance Minister Mrs.Nirmala Sitharaman, in the 2019 Union Budget, emphasized that unification of laws would make registration and filing of returns more uniform and minimize conflicts by virtue of uniform definitions.
The reform also followed the recommendation of the International Labour Organisation (ILO), in which India is a prominent member. The idea was to find a balance between worker and business convenience, so that both gain from a simpler and less opaque framework.
What are the four labour codes?
The government consolidated existing Acts into four broad categories. These are:
- Code on Wages (2019)
- Merges the Payment of Wages Act, Minimum Wages Act, Payment of Bonus Act, and Equal Remuneration Act.
- Focuses on ensuring fair wages, timely payment, and equality in remuneration.
- Code on Occupational Safety, Health and Working Conditions (2019)
- Brings together laws like the Factories Act, Mines Act, Dock Workers Act, and several others.
- Aims to improve workplace safety, health standards, and employee welfare across industries.
- Industrial Relations Code (2019)
- Consolidates laws such as the Factories Act, Mines Act, Dock Workers Act, and a number of other acts.
- Gives guidelines for settlement of disputes, regulating strikes, and control over employer-employee relationships.
- Code on Social Security (2019)
- This Act consolidates several enactments, such as the Employees’ Provident Fund Act, the Employees’ State Insurance Act, the Maternity Benefit Act, and the Payment of Gratuity Act.
- Guarantees social protection to workers, including pensions, insurance, maternity leave, and other amenities.
Together, these codes look to introduce uniformity, minimize ambiguity and develop a contemporary framework that benefits both employers and employees.
Why has the implementation been delayed?
Although the Union government has completed drafting and passed these codes, implementation requires both the Centre and states to notify the rules. Labour is a subject in the Concurrent List of the Indian Constitution, meaning both levels of government share responsibility.
While the Centre has published its draft rules, many states are yet to finalise theirs. Without these state-level rules, the codes cannot come into force nationwide. This explains why companies are still following older Acts in 2025.
However, with growing pressure to improve compliance, attract investment, and modernise workplaces, several states are now accelerating the process of notifying rules.
How will the labour codes change the business environment?
The four codes governing labour are to revolutionise the manner in which businesses and employees interact in India. Some of the key advantages are:
- Simplified compliance – Companies will no longer need to navigate multiple conflicting Acts. Registration and filing of returns will be uniform.
- Fewer disputes – With consistent definitions across all codes, the chances of disputes between employers and workers will reduce.
- Better worker protection – Social security coverage will increase to a greater portion of the workforce, including the unorganised sector.
- Boost to ease of doing business – Easy rules will lower bureaucratic barriers and enhance India’s position in worldwide ease of doing business lists.
What challenges remain in 2025?
Implementation is challenging while the vision of the labour codes is clear:
- State delays – States continue to finalize rules at their pace, hindering countrywide rollout.
- Awareness gaps – Employers, particularly small enterprises, might not be aware of all the changes made.
- Technology readiness – New registration, compliance, and dispute resolution systems need digital infrastructure and training.
- Uncovered Acts – Certain acts are still outside the four codes, implying full uniformity has not been established.
In spite of all these challenges, the codes are one of the largest labour reforms independent India has seen.
FAQs
1. Are all old labour laws replaced by the new codes?
Not entirely. Whereas most key laws have been encompassed, certain Acts are still outside the codes and still exist.
2. When will the labour codes actually come into effect?
No time frame is set yet. It depends on states informing their regulations. When that takes place, the codes can be implemented in India.
3. How do the labour codes benefit workers?
Workers will have access to better social security benefits, better safety at work, more equitable wages, and easier dispute settlement.