New Labour Codes Explained: Gratuity, Gig Worker Insurance, Wage Rules & Workplace Reforms

India’s labour system underwent its most sweeping overhaul since Independence as the government implemented the four new labour codes on November 21, 2025. Replacing 29 separate laws with a unified, modern framework, the codes reshape how salaries, benefits, job security, and workplace regulations will function for millions of workers across the country.

The timing is significant. Between 2017–18 and 2023–24, India added more than 16 crore jobs, unemployment fell sharply, and over 1.5 crore women joined the formal workforce. Yet these advancements were governed by decades-old laws designed for a very different labour market.

The new codes aim to eliminate this mismatch through a digital-first, simplified, and worker-centric model that offers clearer wage rules, broader social security, and streamlined compliance systems for employers.

1. Gratuity After One Year for Fixed-Term Workers

One of the biggest shifts comes from a uniform definition of wages and a new gratuity rule.

• Permanent employees: Still need 5 years of continuous service.

• Fixed-term employees: Eligible after just 1 year.

This is a major change for industries like IT, manufacturing, apparel, media, startups and export units where short-duration contracts dominate. Workers who previously never qualified for long-term financial benefits will now receive gratuity even if their contract ends after a year.

2. A Modern, Consistent Definition of Wages

The codes standardise “wages” across all labour laws, affecting:

• PF calculations

• Gratuity

• Bonus

• Overtime

• Leave encashment

• Statutory benefits

At least 50% of total salary must now count as wages — a clarification that reshapes compensation structures across industries.

Deloitte India’s Sudhakar Sethuraman calls this a “long-awaited structural reset,” bringing uniformity and simplifying compliance.

3. Social Security for Gig and Platform Workers

For the first time, India’s vast gig workforce — delivery personnel, taxi drivers, freelancers, service-platform workers — is legally recognised.

Aggregators must contribute to a social-security fund that will cover:

• Health insurance

• Disability protection

• Accidental coverage

• Old-age benefits

A new national database for unorganised workers will ensure portability and easier access to welfare schemes.

This marks one of the largest expansions of India’s social protection net in modern history.

4. Women Can Now Work Night Shifts Across All Sectors

The codes remove long-standing restrictions and allow women to work night shifts in:

• Manufacturing

• Mining

• Logistics

• IT/ITES

• Hazardous sectors (with safety measures)

Employers must ensure transport, security arrangements, and written consent. The move aligns India with global standards of gender inclusion and opens higher-paying job opportunities.

5. Mandatory Annual Health Check-Ups

Uniform safety standards now apply across industries previously governed by scattered rules.

Workers above 40 years must receive free annual health check-ups in several sectors, including:

• Textiles

• Beedi and tobacco

• Media and entertainment

• Plantations

• Dock work

• Audio-visual production

This is a significant step toward preventive healthcare in labour-heavy industries.

6. Single Registration, Fewer Inspections, Digital Compliance

Employers now benefit from:

• Single registration

• Single licence

• Single return system

• Digital, risk-based inspections

The role of inspectors shifts from policing to facilitation.
Trilegal’s Atul Gupta calls it a “landmark moment,” adding that old British-era laws have finally been replaced.

However, he warns that the absence of a grace period means companies must take immediate action to review HR policies, wage structures, grievance mechanisms, and contract-labour definitions.

7. Industrial Relations & Dispute Resolution Overhauled

The Industrial Relations Code introduces:

• Formal recognition of work-from-home arrangements

• Two-member tribunals for quicker dispute resolution

• A wider definition of “worker”

• A reskilling fund providing 15-day wages for retrenched employees

States also have greater flexibility on retrenchment thresholds and working-hour caps, which could reshape manufacturing operations.

8. Expanded Safety Rules and New Protections

The Occupational Safety Code:

• Widens the definition of migrant workers

• Includes digital and audio-visual professionals

• Makes safety committees mandatory in larger establishments

• Allows safety rules to apply even to establishments with just one worker if the job is hazardous

• Treats certain commuting accidents as employment-related

These changes reflect a modern, comprehensive understanding of workplace risk.

What This Means for India’s Workforce

The labour codes mark a pivotal move away from fragmented colonial-era rules toward a cohesive, technology-enabled system that emphasises protection, portability, and predictability.

If states implement the rules smoothly:

• Workers will enjoy stronger rights,

• Gig and contract workers gain formal security,

• Employers face simpler compliance,

• The economy gains a more flexible and competitive labour market.

India’s labour system has entered a new phase — and its success will depend on how well the country manages the transition.