The Centre on Friday rolled out four new labour codes that extend basic social security and minimum wage guarantees to over 400 million workers across the formal and informal sectors.

Further, the codes include provisions such as equal pay for women, gratuity for fixed-term employees after one year, free annual health check-ups for workers above 40 years, double wages for overtime, and full health security for workers in hazardous sectors.

The codes replace a labyrinth of 29 fragmented laws, a statement by the labour ministry said, calling it a significant effort to modernise archaic laws. Some of these laws date back to the colonial and immediate post-Independence era (1930s–1950s), in a world that was “fundamentally different”, the statement added.

The new framework, effective immediately, consolidates the country’s employment statutes into four 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 (OSHWC) Code, 2020.

While the labour ministry’s statement said the government will engage with stakeholders in framing rules, regulations, and schemes, under the Code, a senior government official told Mint that the Centre will publish draft rules within a week, open them for 45 days of public comments, and finalise them within the following 45 days. Provisions that require no rules take effect immediately, while others will be notified after consultations.

A key feature across all four codes is the revised definition of ‘wages’, which will now include basic pay, dearness allowance and retaining allowance, and employers must ensure that at least 50% of total remuneration qualifies as wages.

That is different from earlier when employers often structured salary packages so that basic pay plus DA formed a small portion of total compensation, with large parts allocated to allowances that did not count towards benefits such as gratuity or provident fund.

The change is expected to impact the calculation of various social security contributions, including Provident Fund (PF), Employees' State Insurance Corporation (ESIC), Workmen’s Compensation, and maternity benefits.

The new labour codes have been widely welcomed, though accompanied by some caution.

Lohit Bhatia, president-workforce management at Quess Corp, said besides strengthening ease of doing business, “reducing the compliance burden by single register, reducing licensing across establishments will lead to additional investment including in labour dominated sectors and, thus, employment activity”.

“It is still early days and it formalises employment and protects the rights of employees,” Neeti Sharma, chief executive officer of TeamLease Digital told Mint. She noted that CTC (cost to company) may rise as benefits like gratuity and leave encashment will now be calculated on the 50% wage floor.

Madhu Damodaran, regional managing partner, AM Legals, a law firm, concurred: “While for employees this is great, it will also increase the cost for the employers who may pass on the cost. So in some cases it could have an adverse impact on the take-home salaries.”

Aditya Narayan Mishra, managing director of CIEL HR Services, said the transition will require preparation from employers, especially MSMEs and labour-intensive sectors. “Compliance costs may rise initially, and states must move in unison for smooth rollout,” he said. With phased implementation and supportive digital systems, he added, the reform could be transformative.

Varun Jain, head of retirement, India, for advisory, broking and solutions company, WTW, said while the codes enhance social security and coverage for employees, employers will need to operationalize the changes and assess any potential additional costs such as wage settlement, and financial implications on retiral benefits.

“It's a wait-and-watch on the implementation roadmap as it will be interesting to see if the government allows companies to have some transition time,” said Jain.

Gig economy formalized

Perhaps the most significant change is the expansion of social protection. For the first time, the codes formally recognise gig workers, platform workers and aggregators, and extend social security benefits to them.

Sonal Arora, country manager at GI Group Holding, said the codes legitimise gig work as a key part of India’s labour market and give delivery partners, drivers and independent contractors more transparent and accountable payout systems.

In a statement, the labour ministry said all workers — including gig workers — will now get PF, ESIC, insurance and other social security benefits. Niti Aayog estimates India’s gig workforce will grow from 10 million in 2024–25 to 23.5 million by 2029–30.

This means companies such as Flipkart, Amazon, Swiggy, Zomato, Blinkit, and Zepto, among others, must allocate 1–2% of annual turnover — capped at 5% — towards gig and platform workers.

Rajneesh Kumar, chief corporate affairs officer, Flipkart Group, said the codes offer a predictable framework for businesses and workers. Spokespersons of Uber and Amazon also welcomed the move.

The new system is also encouraging sectors like logistics to hire more gig workers, as documentation and onboarding are expected to become easier. “We will now invest in training more workers to incorporate them in the skilled workforce,” said Jitendra Kumar, co-founder and executive director of third-party logistics firm Emiza.

Kumar added that high-attrition sectors like quick commerce and logistics also stand to benefit, though issues related to interpretation and organization structures may arise initially.

“For employers, this is the moment to proactively reassess workforce structures, update employment documentation and realign compliance systems to ensure a smooth, risk-free transition to the new regime,” said Pooja Ramchandani, partner at law firm Shardul Amarchand Mangaldas & Co.

GI Group Holding's Arora added that gig-heavy companies need integrated databases consolidating wages, working hours and social security contributions. “Compliance will become proactive rather than reactive,” she said.

Textiles

For the textile sector, which relies heavily on migrant labour, the codes place direct, contractor-based and self-migrated workers on a level playing field with equal wages, welfare benefits and PDS (public distribution system) portability regardless of migration status.

Workers are protected by provisions for double overtime wages and the ability to claim pending dues for up to three years, easing dispute resolution.

The sector has largely welcomed the changes. Industry leaders praised the removal of the restriction on women working night shifts, saying it will smoothen factory operations and increase production. Exporters believe this will boost productivity and competitiveness in global markets.

Industry players welcomed single registration, single licence and single return for employers, and the move to an inspector-cum-facilitator regime that they said will strengthen ease of doing business.

Yarn producers and exporters said better wages will encourage workers to stay longer, reducing attrition in spinning units. However, they cautioned that gratuity eligibility after one year may also increase attrition.

Technology

The IT and ITES sectors see a renewed focus on transparency and fixed employment. Employers must release salaries by the 7th of each month, and companies have to create facilities enabling women to work night shifts and consequently earn higher wages.

Harpreet Singh Saluja, president of Nascent Information Technology Employees Senate (NITES), said equalising benefits for fixed-term and permanent employees, and standardising rules on work hours and overtime, he said, are important in a sector known for extended workdays, weekend work and high-pressure project cycles.

But he also warned that misuse of fixed-term roles, probation extensions, forced resignations and classifying employees as “consultants” to avoid benefits is already widespread. “If rules are not framed and enforced carefully, companies may restructure contracts to bypass obligations,” he said, adding that NITES will monitor implementation closely.

Meanwhile, in a statement, IT industry body Nasscom said eventual full implementation of the Codes can bring greater predictability and transparency.

“As rules are finalised, Nasscom will focus on supporting a smooth and practical transition for the industry,” the statement said. “A key priority will be to help ensure that the central framework under the Codes is harmonised with state level requirements, including shops and establishments laws, so that overlapping obligations and unintended compliance challenges do not arise.”

Focus on flexibility and welfare

The new codes also emphasise worker welfare. Women workers are now permitted to work night shifts and in all types of work, including underground mining, subject to consent and safety measures — expected to raise female participation in better-paying industrial roles.

Manish Sinha, former advisor to Coal India, said many reforms — workplace safety practices and higher women’s participation — were already implemented at top mining companies. The codes will now formalise these across the sector, including in smaller firms.

Next steps

According to the government official cited earlier, who spoke on condition of anonymity, the plan is to operationalise the law from the next financial year to help facilitate businesses.

With labour being a concurrent subject, this time period will also allow the Centre to work with the states to bring their rules in sync to the extent possible, and also help the state governments prepare and upgrade their IT infrastructure for e-forms and registers.

The Centre will pre-publish rules within a week, which will be in the public domain for 45 days for comments, post which suggestions will be incorporated within another 45 days. “For some provisions no rules are required, they are effective from today. For certain other provisions, rules will be framed after necessary consultation,” explained the official.

A second senior official who also did not want to be named said all states are ready, and have pre-published their rules except West Bengal. “Tamil Nadu on its part has pre-published the rules for the three codes, except for the one on Code on Social Security. Talks with Tamil Nadu are on to bridge the divergence. Also, with the new government in Delhi, the rules for the remaining two codes will be pre-published. Also in the case of Lakshadweep, everything is ready and only needs to be approved by the administrator,” the second official said.

“The rules were pre-published around five years back but a lot has changed since then. The law ministry is of the view that given the time that has passed, the rules need to be pre-published again,” added the official.

The Centre on Friday implemented four new labour codes, marking the biggest overhaul of workers’ laws in decades. The government says the move aims to simplify rules and improve worker protection.

One of India’s largest employment-generating sectors, the IT and ITES industry, now faces a major overhaul of employment norms under the new codes. A key feature of the reforms is that fixed-term employees must now receive the same benefits as permanent staff, including provident fund, ESIC, insurance, and other social security entitlements, for the duration of their contract.

“With the new codes, fixed-term employees must now receive the same benefits as permanent employees for the duration of their contract. Rules around working hours and overtime also become more uniform, which is important in an industry where extended workdays, weekend work and high-pressure project cycles are common,” said Harpreet Singh Saluja, President of the IT and ITES sector workers’ union, Nascent Information Technology Employees Senate (NITES).

The four new labour codes are effective immediately. According to the Ministry of Labour & Employment, prior to the new rules, there was no mandatory compliance for employers paying wages.

The codes also mandate that IT companies give ‘equal pay for equal work’, while strengthening the participation of women in the workforce. Companies are further required to provide facilities for women to work night shifts, giving them more opportunities to earn higher wages, aimed at boosting financial stability, morale, and workforce participation.

According to the Ministry of Labour & Employment, prior to these reforms, there was no mandatory compliance for employers on timely wage payments.

Under the new framework, IT companies will have to ensure all employees receive social security benefits, including provident fund, ESIC, insurance, and gratuity. This addresses a long-standing demand from the sector, where large portions of the workforce operate on fixed-term contracts, vendor arrangements, or project-based deployments.

The codes also direct companies to ensure the timely resolution of harassment, discrimination, and wage-related issues, while issuing mandatory appointment letters and guaranteeing social security benefits for fixed-term employees.

The IT sector will witness significant changes, as a large portion of the industry works through fixed-term contracts, vendor arrangements, staffing agencies and project-based deployments, Saluja added.

Saluja, however, also warned that misuse of fixed-term roles, probation extensions, forced resignations and classifying employees as “consultants” to avoid benefits is already widespread. “If rules are not framed and enforced carefully, companies may restructure contracts to bypass obligations,” he said, adding that NITES will monitor implementation closely.

Salaries by the 7th

The reforms aim to bring greater transparency in salary payments, with companies now required to pay employees by the 7th of every month. This is expected to improve trust between workers and employers and reduce financial stress.

Additionally, the codes expand labour protections and social security coverage, modernizing practices that were previously fragmented across 29 separate labour laws. The government says the reforms will help build a future-ready workforce, better aligned with evolving work patterns, while supporting both worker welfare and productivity.

Big change for IT companies?

For the IT and ITES sectors, the changes mean a more uniform approach to wages, benefits, and work conditions, particularly for contract staff who were previously at a disadvantage compared to permanent employees. Companies now face a clear legal framework for compliance, which could also encourage better gender inclusivity and overall workforce participation.

In a statement, IT industry body Nasscom said eventual full implementation of the new codes can bring greater predictability and transparency.

“As rules are finalised, Nasscom will focus on supporting a smooth and practical transition for the industry,” the statement said. “A key priority will be to help ensure that the central framework under the Codes is harmonised with state level requirements, including shops and establishments laws, so that overlapping obligations and unintended compliance challenges do not arise.”

With the implementation of the four labour codes on 21 November, India takes a decisive step towards modernising its labour regulations, ensuring fixed-term employees enjoy parity with permanent staff and creating a more transparent, secure, and equitable workplace for millions of workers.

Online food delivery, e-commerce and quick-commerce companies including Swiggy, Zomato, Amazon, Flipkart and peers will now have to allocate up to 2% of their annual turnover for the welfare of gig and platform workers as India unveiled new labour codes on 21 November.

The ministry of labour and employment announced that with the new reforms, all workers would get benefits such as retirement savings via provident fund, coverage under the Employees' State Insurance Corporation, other insurance and social security benefits.

They currently receive only limited social security coverage, if any.

On Friday, the Union government announced four labour codes that will come into effect immediately. They aim to rationalise India’s 29 existing labour laws — and, for the first time, officially define ‘gig workers’, ‘platform workers’, and ‘aggregators’.

India’s gig economy has ballooned over the past decade, thanks to the proliferation of online commerce and marketplaces such as Zomato, Swiggy, Uber, Amazon and Flipkart. These temporary workers are typically hired via third-party staffing firms. The country’s gig workforce is projected to grow from 10 million in 2024-25 to 23.5 million by 2029-30, according to a Press Information Bureau note on 30 August.

What will the companies do?

The government has increased the liability on aggregators, which will now be required to contribute 1-2% of their annual turnover, capped at 5% of the amount paid or payable to gig and platform workers, towards these benefits.

It added that an Aadhaar-linked Universal Account Number (UAN) will also be rolled out to help make welfare benefits, along with full portability, easily available to gig and platform workers across India, regardless of whether they migrate to another state.

“For employers, this is the moment to proactively reassess workforce structures, update employment documentation, and realign compliance systems to ensure a smooth, risk-free transition to the new regime,” said Pooja Ramchandani, partner at Shardul Amarchand Mangaldas & Co, a law firm.

Moreover, retail businesses with a nationwide presence, especially those employing gig workers for delivery and warehouse work, will need to keep track of state-level variations in salaries, benefits, and other statutory obligations, said Sonal Arora, country manager at HR services platform GI Group Holding.

“A practical approach is needed to maintain a dynamic, state-by-state compliance tracker and integrate geo-tagged employee data so that salaries, benefits and statutory obligations automatically align with the relevant state jurisdiction. In short, while the codes simplify the overall structure, implementation remains state-driven. Organisations will need adaptable systems and processes to stay fully compliant across locations,” Arora added.

Payouts and social security benefits for such workers are not streamlined and often depend on the nature of the jobs they pick. Gig workers also typically have long hours and no fixed timings. Payouts can differ depending on demand, time of day, and festive periods. Most gig workers also battle harsh weather and traffic, and often need to have their own vehicles, which adds overhead costs such as fuel.

A spokesperson for Uber said, “Uber welcomes the government’s move to implement the new labour codes, including the Code on Social Security. Uber looks forward to working closely with the government to ensure the speedy and effective implementation of these reforms.”

Rajneesh Kumar, chief corporate affairs officer, Flipkart Group, said, “The new labour codes provide a clearer and more predictable framework for businesses and workers. We are reviewing the notification and will remain fully compliant with all requirements.”

An Amazon spokesperson said that the Code on Social Security aligns with its priorities of providing safety, security, and welfare to its employees already. “While welcoming the govt’s intent of implementation of labour reforms , we are evaluating the impact on the industry and the changes which would have to be ushered in,” the spokesperson added.

Mint has also reached out to Zomato, Swiggy, Zepto, Delhivery, Shiprocket, Porter, Urban Company, Myntra and Meesho, and will update the story if and when they respond.

The goal of the new Labour Codes

Through these codes, the government aims to modernize India’s labour regulations to improve workers’ welfare and align the rules with similar ones in other countries. The labour ministry said the 29 labour laws they have replaced operated under fragmented, complex and outdated provisions drafted between the 1930s and 1950s.

“The reforms will significantly impact sectors such as IT/ITES, manufacturing, MSMEs, gig and platform work, textiles, logistics and hazardous industries, each facing new obligations around wages, social security, safety standards and women’s night-shift participation,” Ramchandani said.

Balasubramanian A, senior vice president at TeamLease Services, a recruitment and human resources services company, said the move was a big win for the gig economy, including aggregators, because it gave them a framework to follow. "A lot of insurance companies are not willing or forthcoming in giving such insurance policies to gig workers, because the same workers may work across different platforms. That’s a big challenge, but if the government makes it a law then somehow it will have to be done.”

He added, “The code on social security clearly states that gig and platform workers also need to be brought under the purview of social security. They number over one crore in India—working primarily in e-commerce, quick-commerce, logistics, etc. These workers are at high risk of accidents, illness and so on, but do not get any benefits under ESI, PF, EDLI, etc.”

The four Labour Codes made effective from Friday, 21 November are 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.

India’s private-sector expansion slowed in November, with early survey data indicating a softer manufacturing momentum, even as services activity remained resilient.

According to HSBC’s Flash India Purchasing Managers’ Index (PMI), released on Friday, growth in both new orders and business activity eased to their weakest pace since May.

The flash survey, an advance estimate ahead of final PMI readings, offers an early indication of shifts in economic sentiment and output.

The HSBC Flash India Composite PMI Output Index, compiled by S&P Global, is expected to edge down to 59.9 in November from 60.4 in October, signalling a moderation in overall private sector growth. Despite the slowdown, the reading remains comfortably above the 50-point threshold that separates expansion from contraction.

The services sector showed continued strength: the Flash Services Business Activity Index is projected to rise to 59.5 in November from 58.9 in October, reflecting steady demand and healthy business confidence.

Manufacturing, however, showed signs of cooling. The Flash India Manufacturing PMI Output Index is forecast to decline to 60.7 in November from 63.7 in October, signalling a loss of momentum in factory production.

The broader Flash India Manufacturing PMI is expected to drop more sharply, to 57.4 from October’s final reading of 59.2, still expansionary, but at a meaningfully slower pace.

The final PMI data for October will be released early in December.

Sentiment dips

“Input costs rose at the weakest rate in nearly five-and-a-half years, while output charge inflation eased to an eight-month low,” the survey said.

“Survey participants remained upbeat towards the year-ahead outlook for output, but the overall level of positive sentiment slipped to the lowest since July 2022,” it added.

The flash PMI data is based on responses from around 400 manufacturers and 400 service providers.

"The HSBC flash manufacturing PMI eased, though the improvement in operating conditions remained healthy. The rise in new export orders matched that seen in October,” said Pranjul Bhandari, chief India economist at HSBC.

“However, overall new orders came in soft, indicating that the GST-led boost may have peaked. Cost pressures eased considerably, and so did prices charged,” Bhandari added.

The slowdown in growth reflected a softer increase in factory production, one that was the weakest since May, according to the survey.

“Some manufacturers reported subdued intakes of new business in November. Concurrently, the latest rise in services activity was faster than that recorded in the previous month,” the survey added.

US tariff effect

To be sure, the renewed US tariffs are beginning to weigh on India’s manufacturing and services sectors, disrupting supply chains and denting export sentiment.

Higher duties, raised by as much as 50% on a wide range of Indian goods, along with visa restrictions, are tightening conditions for exporters and service providers alike.

Incidentally, the US remains India’s largest export market.

The survey showed that manufacturers experienced a softer increase in new orders compared to the previous month, while demand growth ticked higher in the service economy.

“At the composite level, international sales rose at a marked pace that was the weakest since March. Survey members indicated that the upturn was curbed by fierce competition in global markets and the offer of cheaper products and services elsewhere,” the survey said.

“The combination of slower sales growth and falling backlogs reportedly stymied job creation across India's private sector midway through the third fiscal quarter,” it added.

The survey noted that while private-sector firms in India still expect output to grow over the coming year, buoyed by competitive pricing, recent marketing pushes, and ongoing capacity expansion, sentiment softened in November, with overall confidence slipping to its lowest level since mid-2022.