Join The Implementation of India's New Labour Codes: A Comprehensive Overview of Reforms for Workers' Rights and Employer Compliance: Decode
The Government of India has effected a landmark transformation in the country's labour law framework by implementing four consolidated Labour Codes effective from 21 November 2025. These Codes—the Code on Wages, 2019; the Industrial Relations Code, 2020; the Code on Social Security, 2020; and the Occupational Safety, Health and Working Conditions Code, 2020—replace 29 pre-existing central labour legislations. This consolidation aims to simplify compliance, enhance worker protections, promote formalisation of employment, and align India's labour standards with contemporary global practices while fostering ease of doing business.
The reforms address longstanding issues in India's diverse workforce, which includes a substantial unorganised sector, gig and platform workers, contract labour, and traditional industrial employees. By establishing uniform definitions, expanding coverage, and introducing digital mechanisms for enforcement, the Codes seek to ensure equitable treatment, social security, and workplace dignity for all categories of workers. As of early 2026, central draft rules have been issued for public consultation, and several states, including Madhya Pradesh, have progressed toward notifying their respective rules to operationalise these provisions locally.
The Code on Wages, 2019: Ensuring Fair and Uniform Remuneration
This Code consolidates four earlier statutes—the Payment of Wages Act, 1936; the Minimum Wages Act, 1948; the Payment of Bonus Act, 1965; and the Equal Remuneration Act, 1976—into a single framework governing wages, bonuses, and equal pay. A pivotal change is the introduction of a uniform definition of "wages," comprising basic pay, dearness allowance, and retaining allowance, while excluding certain components such as house rent allowance, overtime, and employer contributions to provident funds. Importantly, if excluded components exceed 50 per cent of total remuneration, the excess is deemed part of wages for statutory computations, including gratuity and social security contributions. This "50 per cent rule" often results in an expanded wage base, thereby increasing employer liabilities for provident fund, gratuity, and related benefits.
The Code guarantees a statutory right to minimum wages for all workers, eliminating the earlier limitation to scheduled employments. The Central Government is empowered to fix a national floor wage, serving as the baseline below which states cannot set their minimum rates. States must notify minimum wages at or above this floor level, taking into account geographical zones, skill categories (unskilled, semi-skilled, skilled, and highly skilled), and factors such as cost of living and worker productivity. The national floor level minimum wage has remained at approximately ₹178 per day (equivalent to roughly ₹4,628 per month for a 26-day working month) as a non-binding reference, though actual state-notified rates vary significantly higher in urban and industrial areas to reflect local economic conditions.
Timely payment of wages is mandated, with full and final settlement required within two working days of separation from service. Gender-based discrimination in remuneration is expressly prohibited, reinforcing equal pay principles. Overtime compensation must be at double the ordinary rate, and bonus eligibility extends to a broader category of employees, subject to state-specific ceilings yet to be fully notified in many jurisdictions.
The Code on Social Security, 2020: Expanding Coverage to Vulnerable Workers
This Code integrates nine prior laws to create a comprehensive social security architecture applicable to employees across organised and unorganised sectors. It extends benefits such as provident fund, employees' state insurance, gratuity, maternity benefits, and disability coverage to gig workers, platform workers, and unorganised sector labourers through mechanisms like the e-Shram portal. Registration on e-Shram enables access to government schemes, promoting portability of benefits across states and employers.
The definition of "family" for benefit purposes has been broadened to include dependent relatives, enhancing coverage. Fixed-term employment now entitles workers to gratuity after one year of continuous service, aligning their entitlements with permanent employees. Employers are required to contribute to social security funds for contract and gig workers in specified cases, marking a significant step toward universal social protection. The Code also facilitates aggregation of contributions for unorganised workers, addressing historical gaps in coverage for informal employment.
The Occupational Safety, Health and Working Conditions Code, 2020: Prioritising Worker Well-being
Consolidating thirteen earlier laws, this Code mandates employers to ensure safe and healthy working environments. Annual free health check-ups for employees are compulsory, with particular emphasis on occupational hazards. For women workers, night shift employment requires adequate safety measures, including transportation facilities and creche provisions for children below six years where a specified number of women are employed.
The Code regulates working hours, rest intervals, and overtime, while prohibiting excessive workloads. Special protections apply to interstate migrant workers, including journey allowances and suitable accommodation. Inspector-cum-facilitators replace traditional inspectors, adopting a facilitative rather than purely punitive approach, supported by digital inspection schemes and randomised compliance checks to promote transparency and reduce arbitrary enforcement.
The Industrial Relations Code, 2020: Balancing Flexibility and Worker Rights
This Code merges three key statutes to modernise industrial dispute resolution and employment practices. Fixed-term and contract workers receive parity with permanent employees in social security and other benefits. The threshold for government prior approval in cases of retrenchment, lay-off, or closure has been raised from 100 to 300 workers, providing greater operational flexibility to establishments while mandating notice and compensation.
A reskilling fund is proposed to support workers affected by such actions, facilitating retraining and redeployment. Standing orders are required for establishments above a certain size, and bi-partite or tri-partite mechanisms resolve disputes more efficiently. The Code encourages negotiation and settlement to minimise industrial unrest.
Digital Compliance and Transitional Arrangements
To ensure effective implementation, the Codes promote digital registers, online filings, and centralised portals for compliance monitoring and grievance redressal. Inspector-cum-facilitators operate under web-based schemes, reducing physical inspections and enhancing accountability. As of February 2026, while the Codes are in force nationally, full operationalisation depends on state-specific rules. In Madhya Pradesh, amendments and draft rules align with central provisions, focusing on wage structures, shops and establishments, and enhanced thresholds for applicability.
These reforms represent a progressive shift toward a protected, future-ready workforce. They aim to boost formal employment, attract investment, and ensure social justice, though challenges remain in uniform state-level adoption, awareness among unorganised workers, and balanced enforcement. Employers must review salary structures, update HR policies, and prepare for revised contributions to remain compliant, while workers gain strengthened entitlements to fair wages, security, and safe conditions. This framework positions India to meet evolving economic and social demands in a globalised era.
The Implementation of India's New Labour Codes: A Comparative Analysis of Key Provisions with Pre-Existing Laws
The four Labour Codes—the Code on Wages, 2019; the Industrial Relations Code, 2020; the Code on Social Security, 2020; and the Occupational Safety, Health and Working Conditions Code, 2020—have been fully implemented effective 21 November 2025. These Codes consolidate and replace 29 central labour enactments, simplifying compliance, expanding coverage, and modernising protections for workers while balancing employer flexibility. Below is a structured comparison of major provisions under the old regime versus the new framework, presented in tabular format for clarity.
1. Code on Wages, 2019 (Replaces: Payment of Wages Act, 1936; Minimum Wages Act, 1948; Payment of Bonus Act, 1965; Equal Remuneration Act, 1976)
| Provision | Old Regime (Pre-2025 Laws) | New Code on Wages, 2019 | Key Impact/Change |
|---|---|---|---|
| Definition of Wages | Multiple varying definitions across acts; often excluded allowances led to lower base. | Uniform definition: Includes basic pay, dearness allowance, retaining allowance; excludes HRA, overtime, etc.; if exclusions >50% of total, excess deemed wages. | Expands wage base for PF, gratuity, and social security contributions; increases employer liability. |
| Applicability of Minimum Wages | Limited to scheduled employments notified by government. | Universal applicability to all workers/employees across sectors. | Broader coverage; eliminates gaps for unscheduled workers. |
| National Floor Wage | No central floor; states set independently. | Central Government fixes national floor wage; states cannot notify below this level. | Promotes uniformity and prevents undercutting across regions. |
| Timely Payment of Wages | Varied timelines; claims limited (e.g., 6 months under some acts). | Full payment within specified periods; claims up to 3 years. | Stronger enforcement of timely disbursement. |
| Bonus Eligibility | Limited to employees earning ≤ ₹21,000/month (under Payment of Bonus Act). | Threshold to be notified by appropriate government; broader potential coverage. | Potential expansion depending on final notifications. |
| Equal Remuneration | Prohibited gender discrimination but enforcement fragmented. | Explicit prohibition reinforced across all employments. | Strengthened gender parity in pay. |
2. Code on Social Security, 2020 (Replaces: 9 laws including Employees' Provident Funds Act, 1952; Employees' State Insurance Act, 1948; Maternity Benefit Act, 1961)
| Provision | Old Regime | New Code on Social Security, 2020 | Key Impact/Change |
|---|---|---|---|
| Coverage for Unorganised/Gig Workers | Limited or absent; mostly organised sector. | Extended to gig, platform, and unorganised workers via e-Shram portal registration. | Universal social security access; portability of benefits. |
| Gratuity for Fixed-Term Employees | Not entitled unless converted to permanent. | Eligible after 1 year of continuous service. | Parity with permanent employees. |
| Family Definition for Benefits | Narrower scope in some schemes. | Broadened to include dependent relatives. | Enhanced family coverage under schemes. |
| Provident Fund/ESIC Applicability | Threshold-based (e.g., 20 employees for EPF). | Retained thresholds but expanded voluntary coverage options. | Greater inclusion for smaller establishments. |
3. Occupational Safety, Health and Working Conditions Code, 2020 (Replaces: 13 laws including Factories Act, 1948; Mines Act, 1952; Contract Labour Act, 1970)
| Provision | Old Regime | New Code (OSHWC), 2020 | Key Impact/Change |
|---|---|---|---|
| Annual Health Check-ups | Not mandatory in most cases. | Compulsory free annual health check-ups for employees (emphasis on age 40+). | Preventive healthcare obligation on employers. |
| Women Workers' Night Shift | Restricted or required permissions in many states. | Permitted with safety measures, transport, and creche facilities (for children <6 years). | Increased flexibility with safeguards. |
| Working Hours/Overtime | Varied limits; overtime at double rate in some acts. | Standardised limits; overtime compensation at double rate. | Clearer regulation and worker protection. |
| Inspection Mechanism | Traditional inspectors; frequent on-site checks. | Inspector-cum-facilitators; risk-based, digital, randomised inspections. | Shift to facilitative, transparent enforcement. |
| Interstate Migrant Workers | Limited provisions. | Journey allowance, suitable accommodation mandated. | Improved welfare for migrants. |
4. Industrial Relations Code, 2020 (Replaces: Trade Unions Act, 1926; Industrial Employment (Standing Orders) Act, 1946; Industrial Disputes Act, 1947)
| Provision | Old Regime | New Industrial Relations Code, 2020 | Key Impact/Change |
|---|---|---|---|
| Fixed-Term/Contract Workers Benefits | Often inferior to permanent; no gratuity parity. | Parity in social security and other benefits; gratuity after 1 year. | Reduced exploitation in contractual employment. |
| Retrenchment/Lay-off/Closure Threshold | Government prior approval required for ≥100 workers. | Threshold raised to ≥300 workers. | Greater operational flexibility for mid-sized establishments. |
| Standing Orders | Mandatory for ≥100 workers in industrial establishments. | Retained but with digital compliance options. | Simplified for larger units. |
| Reskilling Support | No specific provision. | Reskilling fund for affected workers. | Support for transition amid changes. |
| Dispute Resolution | Lengthy adjudication processes. | Bi/tri-partite mechanisms; faster negotiation and settlement. | Reduced industrial unrest through efficient resolution. |
Overarching Reforms Across All Codes
- Consolidation: 29 laws reduced to 4 Codes with fewer sections and rules.
- Digital Compliance: Single registration/licensing, electronic returns, digital registers, and centralised portals.
- Penalties and Enforcement: Higher fines for violations; compounding of first offences allowed.
- State Variations: While central Codes apply nationwide, states (including Madhya Pradesh) notify rules aligning with central provisions; e.g., Madhya Pradesh has progressed on wage structures and shops/establishments amendments.
The minimum wage rules in Madhya Pradesh, as applicable in February 2026, are governed primarily by the Code on Wages, 2019, which has been in force nationally since November 2025. This Code provides for universal applicability of minimum wages across all employments (not limited to scheduled employments as under the erstwhile Minimum Wages Act, 1948), a uniform definition of wages, timely payment obligations, and prohibition of gender-based discrimination in remuneration.
In Madhya Pradesh, the state government continues to notify minimum wage rates periodically, incorporating a basic wage component and Variable Dearness Allowance (VDA), which is revised semi-annually (typically effective from 1 April and 1 October) based on changes in the All India Consumer Price Index (AICPI). These rates apply to various scheduled employments and categories of workers: unskilled, semi-skilled, skilled, and highly skilled.
Current Minimum Wage Rates in Madhya Pradesh (Effective 1 October 2025 to 31 March 2026)
The latest revision, notified around October 2025 (with some sources indicating issuance on or about 1 October 2025 or 8 October 2025), reflects an adjustment due to a modest increase in the AICPI. The rates are generally uniform across zones for most scheduled employments (though certain notifications may specify variations for shops and establishments or other sectors).
| Worker Category | Basic Wage (₹ per Day) | Basic Wage (₹ per Month, approx. for 26 days) | VDA (₹ per Day) | VDA (₹ per Month) | Total Minimum Wage (₹ per Day) | Total Minimum Wage (₹ per Month) |
|---|---|---|---|---|---|---|
| Unskilled | 368.27 | 9,575 | 99.04 | 2,575 | 467 | 12,150 |
| Semi-skilled | 406.58 | 10,571 | ≈109 | ≈2,834 | ≈516 | 13,146 (approx.) |
| Skilled | 472.85 | 12,294 | ≈127 | ≈3,302 | ≈600 | 14,869 (approx.) |
| Highly Skilled | 535.35 | ≈13,919 | ≈144 | ≈3,744 | ≈679 | 16,494 (approx.) |
These figures are derived from consistent notifications across reliable compliance portals and represent the prevailing rates for the period ending 31 March 2026. Monthly calculations assume a standard 26 working days; actual payments may vary based on attendance and applicable dearness allowance adjustments.
Key Provisions Under the Code on Wages, 2019 (Applicable in Madhya Pradesh)
- National Floor Wage: The Central Government has set a national floor wage (approximately ₹178 per day or ₹4,628 per month as a baseline reference). Madhya Pradesh's notified rates exceed this floor significantly, ensuring compliance.
- Wage Definition and 50% Rule: Wages include basic pay, dearness allowance, and retaining allowance. If excluded components (e.g., house rent allowance, overtime) exceed 50% of total remuneration, the excess is treated as wages for purposes of provident fund, gratuity, and other statutory contributions.
- Revision Mechanism: Minimum rates are revised at intervals not exceeding five years, with VDA adjusted more frequently (as seen in semi-annual updates).
- Payment Rules: Wages must be paid timely (before the 7th or 10th of the following month, depending on establishment size), in current coin or bank transfer, with full settlement upon termination within two working days.
- Overtime and Bonus: Overtime is compensated at double the ordinary rate; bonus provisions apply subject to eligibility thresholds (to be notified further under state rules).
Status of State-Specific Rules
The Madhya Pradesh Code on Wages Rules, 2026 were published in draft form on or around 5 January 2026. These drafts outline detailed procedures for minimum wage fixation (based on norms such as a standard family of three consumption units, 2,700 calories per unit daily, clothing, rent, fuel, and miscellaneous expenses at specified percentages), revision of dearness allowance, appellate mechanisms, and compliance. The 45-day objection period has likely concluded or is nearing completion as of February 2026, but the rules have not yet been finalised and notified in the Official Gazette. Therefore, current operations rely on:
- The parent Code on Wages, 2019.
- Existing notifications under the pre-Code regime (transitionally applicable).
- Central provisions where state rules are pending.
