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Labour Codes notified

22 Nov 2025 GS 3 Economy
Labour Codes notified Click to view full image

Context

  • Parliament passed four Labour Codes between 2019–2020, consolidating 29 existing labour laws.

  • The Union Government notified their implementation for provisions that do not require fresh rule-making.

  • Draft rules (published earlier) will be revised and placed in public domain for 45 days for consultation before full implementation.

  • States can now notify rules in their domain.

Four Labour Codes

  1. Code on Wages, 2019

  2. Industrial Relations Code, 2020

  3. Code on Social Security, 2020

  4. Occupational Safety, Health and Working Conditions Code, 2020

Key Changes Introduced

Appointment and formalisation

  • Mandatory appointment letters for all workers → drives formalisation.

  • Earlier no statutory requirement.

Social Security coverage

  • Coverage extended to all workers, including

    • Gig workers

    • Platform workers

    • Fixed-term employees

  • Aggregators must contribute 1–2 per cent of annual turnover, capped at 5 per cent of payments to gig/platform workers.

Minimum wages

  • Statutory minimum wage applicable to all employments, not only scheduled industries.

Health and safety

  • Mandatory free annual health check-ups for workers above 40.

  • Women allowed to work at night and in all job categories with adequate safeguards.

Wage and employment conditions

  • Timely payment of wages mandatory.

  • Equal benefits for fixed-term employees as permanent employees.

  • Gratuity eligibility for fixed-term employees reduced to 1 year (earlier 5 years continuous service).

ESIC and social protection

  • ESIC coverage extended pan-India, including previously uncovered regions.

Compliance reforms

  • Reduction of compliance burden:

    • Single registration

    • Single licence

    • Single return

    • Replaces multiple registrations and licences under 29 laws.

                 

Implications

For workers

  • Greater protection, social security, universal minimum wages.

  • Enhanced safety, formalisation, and transparency.

  • Special benefits for gig/platform workers and fixed-term employees.

For employers

  • Simplified compliance regime.

  • Need to restructure wage components due to new definitions.

  • Higher financial obligations (contributions for gig/platform workers).

For economy

  • Moves towards a unified labour market, supporting investment and ease of doing business.

  • Push toward formalisation could increase workforce documentation and productivity.

Prelims Practice MCQs

Q. Which of the following provisions is explicitly introduced under the new Labour Codes?

  1. Mandatory appointment letters for all workers

  2. Mandatory free annual health check-up for all workers

  3. Gratuity for fixed-term employees after one year

  4. Statutory minimum wages across all employments

Select the correct answer:
a) 1, 3 and 4 only
b) 1, 2 and 4 only
c) 1, 2, 3 and 4
d) 2 and 3 only

Answer: c)
Explanation: All four are directly provided under the Codes: appointment letters, health check-up for 40+ workers, gratuity after one year for fixed-term workers, and universal minimum wages.

Q. Under the Code on Social Security, aggregators must contribute to the social security fund for gig and platform workers. This contribution is:

a) 1–5 per cent of annual turnover
b) 1–2 per cent of annual turnover, capped at 5 per cent of payments to workers
c) 2–3 per cent of annual turnover
d) 5 per cent of total workforce compensation

Answer: b)
Explanation: Contribution range: 1–2 per cent of annual turnover, but cannot exceed 5 per cent of the amount payable to gig/platform workers.



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