Labour Code

Existing Laws Replaced

Key Changes

Code on Wages, 2019

1. Payment of Wages Act, 1936. 
2. Minimum Wages Act, 1948. 
3. Payment of Bonus Act, 1965. 
4. Equal Remuneration Act, 1976 

1. Universal Minimum Wages: The Code establishes a statutory right to minimum wages for all employees across both organized and unorganized sectors. Earlier, the Minimum Wages Act applied only to scheduled employments covering ~30% of workers.
2. Introduction of Floor Wage: A statutory floor wage shall be set by the Government based on minimum living standards, with scope for regional variation. No state can fix minimum wages below this level, ensuring uniformity and adequacy nationwide.
3. Gender Equality in Employment: Employers shall not discriminate on the basis of gender, including transgender identity, in recruitment, wages, and employment conditions for similar work.
4. Universal Coverage for Wage Payment: Provisions ensuring timely payment and preventing un-authorized deductions will apply to all employees, irrespective of wage limits (currently applicable only to employees earning up to Rs 24,000/month).
5. Overtime Compensation: Employers must pay all employees overtime wages at least twice the normal rate for any work done beyond the regular working hours.
6. Compounding of Offences: First-time, non-imprisonable offences can be compounded by paying a penalty. Repeat offences within five years, however, cannot be compounded.
7. Decriminalization of Offences: The Code replaces imprisonment for certain first-time offences with monetary fines (up to 50% of the maximum fine), making the framework less punitive and more compliance-oriented.

Industrial Relations Code, 2020

1. Trade Unions Act, 1926. 
2. Industrial Disputes Act, 1947. 
3. Industrial Employment (Standing Orders) Act, 1946 

1. Fixed Term Employment (FTE): Allows direct, time-bound contracts with full parity in wages and benefits; gratuity eligibility after one year. The provision reduces excessive contractualization and offers cost efficiency to employers.
2. Re-skilling Fund: To train retrenched employees, this fund has been set up from the contribution to be made by an industrial establishment for an amount equal to 15 days' wages for every worker retrenched. This is in addition to retrenchment compensation. The amount will be credited to the workers account within 45 days of retrenchment.
3. Expanded Worker Definition: Covers sales promotion staff, journalists, and supervisory employees earning up to ?18,000/month.
4. Broader Definition of Industry: Includes all systematic employer-employee activities, regardless of profit or capital, widening access to labour protections.
5. Higher Threshold for Lay-off/Retrenchment/Closure: Approval limit raised from 100 to 300 workers; States may enhance the limit further. The provision will simplify compliance and contribute to formalization.
6. Women’s Representation: Ensures proportional representation of women in grievance committees for gender-sensitive redressal.
7. Standing Orders Threshold: Raised from 100 to 300 employees, easing compliance and enabling flexible workforce management.
8. Work-from-Home Provision: Permitted in service sectors by mutual consent, improving flexibility.
9. Notice for Strikes/Lockouts: Mandatory 14-day notice for all establishments to promote dialogue and minimize disruptions.
10. Expanded Definition of Strike: Includes "mass casual leave also within its ambit” to prevent flash strikes and ensure lawful action.
11. Decriminalization & Compounding: Minor offences made compoundable with monetary penalties, promoting compliance over prosecution.

Code on Social Security, 2020

1. Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. 
2. Payment of Gratuity Act, 1972. 
3. Employees’ Compensation Act, 1923. 
4. Maternity Benefit Act, 1961. 
5. Employees’ State Insurance Act, 1948. 
6. Unorganised Workers’ Social Security Act, 2008 (Building & Other Construction Workers and similar)
7. Cine Workers Welfare Fund Act, 1981. 
8. Building & Other Construction Workers (Regulation of Employment & Conditions of Service) Act, 1996. 
9. Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959 

1. Expanded ESIC (Employees' State Insurance) Coverage: ESIC now applies pan-India, eliminating the criteria of “notified areas.” Establishments with fewer than 10 employees may voluntarily opt in with mutual consent of employers and employees. Coverage would be mandated for hazardous occupation and extended to plantation workers.
2. Time-bound EPF (Employees’ Provident Fund) Inquiries: A five-year limit has been set for initiating EPF inquiries and recovery proceedings, to be completed within two years (extendable by one). Suo-moto reopening of cases has been abolished, ensuring timely resolution.
3. Reduced EPF Appeal Deposit: Employers appealing EPFO orders now need to deposit only 25% of the assessed amount (down from 40–70%), reducing financial burden and ensuring ease of business and access to justice.
4. Self-assessment for Construction Cess: Employers can now self-assess cess liabilities in respect to Building and Other Construction Work, previously assessed by the notified Government authority. It reduces procedural delays and official intervention.
5. Inclusion of Gig and Platform Workers: New definitions are included- “aggregator,” “gig worker,” and “platform worker” to enable social security coverage. Aggregators to contribute 1- 2% of annual turnover (capped at 5% of payments to such workers).
6. Social Security Fund: A dedicated fund to finance schemes for unorganised, gig, and platform workers, covering life, disability, health, and old-age benefits has been proposed. The amount collected through the compounding of offences will be credited to this Fund and used by the Government.
7. Expanded Definition of Dependents: Coverage extended to maternal grandparents and in case of female employees it also includes dependent parents-in-law, broadening family benefit access.
8. Uniform Definition of Wages: “Wages” now include basic pay, dearness allowance, and retaining allowance; 50% of the total remuneration (or such percentage as may be notified) shall be added back to compute wages, ensuring consistency in calculating gratuity, pension, and social security benefits.
9. Commuting Accidents Covered: Accidents during travel between home and workplace are now deemed employment-related, qualifying for compensation.
10. Gratuity for Fixed-Term Employees: Fixed-term employees become eligible for gratuity after one year of continuous service (earlier five years).
11. Decriminalization & Monetary Fines: The code has replaced imprisonment with monetary fines for certain offences. The employer will be given mandatory 30 days’ notice for compliance before taking any legal action.
12. Compounding of Offences: First-time offences punishable with fines are compoundable- for fine-only: 50% of maximum fine and for fine/imprisonment cases: 75% of maximum fine- reducing litigation and improving ease of doing business.
13. Digitization of Compliance: Mandates electronic maintenance of records, registers, and returns, cutting costs and improving efficiency.
14. Vacancy Reporting: Employers shall report vacancies to specified career centres before recruitment, promoting transparency in employment opportunities.

OSHWC Code, 2020

1. Factories Act, 1948
2. Mines Act, 1952
3. Dock Workers (Safety, Health & Welfare) Act, 1986 
4. Building and Other Construction Workers (Regulation of Employment & Conditions of Service) Act, 1996
5. Plantations Labour Act, 1951
6. Contract Labour (Regulation & Abolition) Act, 1970
7. Inter-State Migrant Workmen (Regulation of Employment & Conditions of Service) Act, 1979
8. Working Journalists & Other Newspaper Employees (Conditions of Service) Act, 1955
9. Working Journalists (Fixation of Rates of Wages) Act, 1958
10. Motor Transport Workers Act, 1961
11. Sales Promotion Employees (Conditions of Service) Act, 1976
12. Beedi & Cigar Workers (Conditions of Employment) Act, 1966
13. Cine-Workers & Cinema Theatre Workers Act, 1981 

1. Unified Registration: A uniform threshold of 10 employees is set for electronic registration. One registration for an establishment has been envisaged in place of 6 registrations in the Acts. This will create a centralised database and promote ease of doing business.
2. Simplified Compliance: Introduces one license, one registration, one return framework for the establishments, reducing redundancy and compliance burden.
3. Health and Formalization: Free annual health check-ups for employees,
4. Formalization via appointment letters: Appointment letters specifying job details, wages, and social security will be given to enhance transparency and accountability.
5. Women’s Employment: Women can work in all types of establishments and during night hours (before 6AM, beyond 7PM) with consent and safety measures, fostering equality and inclusion.
6. Contract Labour Reform: Applicability threshold has been raised from 20 to 50 contract workers. All India license valid for 5 years against work-order based license to be provided to the contractor. For contract labour, beedi and cigar manufacturing and factory: a common license is envisaged and provision of deemed license after expiry of prescribe period is introduced. Moreover, the license shall be auto-generated. Provision of contract labour board has been done away with and provision for appointment of designated authority to advise matters on core and non-core activities is introduced.
7. Safety Committees: Establishments with 500 or more workers will form safety committees with employer-worker representation, enhancing workplace safety and shared accountability.
8. Decriminalisation & Compounding of Offences: Offences punishable by fine only to be compounded by paying 50% of the maximum fine; those involving imprisonment or fine or both by 75%. Criminal penalties (imprisonment) replaced by civil penalties like monetary fines, promoting compliance over punishment.
9. Revised Factory Thresholds: Applicability increased from 10 to 20 workers (with power) and 20 to 40 workers (without power), reducing compliance burden for small units.
10. Contract Labour- Welfare & Wages: Principal employers to provide welfare facilities like health and safety measures to contract workers. If the contractor fails to pay wages, the principal employer has to pay unpaid wages to the contract labour. 
11. Working Hours & Overtime: Normal working hours capped at 8 hours/day and 48 hours/week. Overtime allowed only with worker consent and paid at twice the regular rate.