While these codes have been passed by Parliament and assented to (in 2019 and 2020), they are

not yet in force as they await notification.

Overview of India’s Four New Labour Codes

The new framework replaces 29 existing labour laws with four consolidated codes, based on
recommendations from the Second National Commission on Labour (2002).

1. Code on Wages, 2019

2. Industrial Relations (IR) Code, 2020
3. Social Security (SS) Code, 2020
4. Occupational Safety, Health & Working Conditions (OSH) Code, 2020

Each code simplifies its domain (wages, industrial relations, social security, OSH) by unifying
definitions and standards.

1. Code on Wages, 2019

This Code primarily deals with wage and bonus payments and equal remuneration. It subsumes
four older laws: the Payment of Wages Act, 1936; the Minimum Wages Act, 1948; the Payment
of Bonus Act, 1965; and the Equal Remuneration Act, 1976. Its objective is to ensure timely
payment of wages and a minimum wage for all employees.

Key Changes and Provisions:

• Broad Applicability: The Code on Wages applies to all employees in all

establishments (organized or unorganized) for matters of wages, minimum wages, and
bonus. Unlike old laws, there is no wage ceiling or industry restriction for coverage.
For example, a private tuition center with 6 employees, which might not have been
subject to minimum wage laws before, now must pay minimum wages and follow wage
payment rules.
• Uniform Definition of "Wages": For the first time, a uniform definition of “wages” is
introduced, including basic pay, dearness allowance (DA), and retaining allowance.
Certain items like house rent allowance (HRA), bonus, pension contributions, overtime
pay, and gratuity are excluded.
o The 50% Rule: A crucial element is that exclusions from wages are capped at
50% of total remuneration. If excluded components exceed 50% of an
employee’s total pay, the excess amount is counted as part of “wages.” This
prevents employers from minimizing social security contributions by inflating
allowances.
• Minimum Wages for All: The Code guarantees minimum wages for all employees in all
industries, which was previously limited to "scheduled employments". The appropriate
government (Central or State) will fix minimum wage rates.
 • National Floor Wage: The Central Government will set a “floor wage” to establish a
baseline across regions. States cannot set their minimum wages lower than this floor,
ensuring a basic uniform living wage nationally, though states can set higher rates.
• Timely and Full Payment: Wages must be paid by the 7th or 10th day of the next
month, depending on the number of employees. For daily workers, payment is by the end
of the shift/day, and for weekly workers, within 2 working days after the week's end.
• No Gender Discrimination: It mandates equal pay for equal work for every gender
and prohibits gender-based discrimination in wages or recruitment for the same work or
work of a similar nature.
• Payment of Bonus: Eligible employees (typically earning up to ₹21,000/month) are
entitled to an annual bonus of 8.33% to 20% of wages, subject to allocable surplus. The
law itself applies to all employees, but bonus eligibility retains a wage threshold.
• Overtime Pay: Overtime must be paid at at least 2 times the normal rate for work
beyond normal hours.

2. Industrial Relations (IR) Code, 2020

This Code governs trade unions, conditions of employment, and industrial disputes. It merges the
Trade Unions Act, 1926, the Industrial Employment (Standing Orders) Act, 1946, and the
Industrial Disputes Act, 1947. Its aim is to foster harmonious industrial relations with simpler
dispute resolution.

Key Changes and Provisions:

• Broadened Definition of "Worker": The IR Code expands the definition of “worker” to

include supervisors drawing wages less than ₹18,000/month, which were often excluded
previously.
• Trade Union Recognition: For the first time, statutory recognition of trade unions is
provided at central and state levels. In establishments with multiple unions, the one with
51% or more workers as members is recognized as the sole negotiating union;
otherwise, a negotiating council is formed.
• Standing Orders Threshold: Establishments with ≥300 workers must have Standing
Orders (formal employment service rules). This threshold was raised from 100
employees, providing smaller firms more flexibility.
• Fixed-Term Employment (FTE): The IR Code legalizes fixed-term employment,
allowing employers to hire workers on fixed-term contracts with the same benefits as
permanent employees (wages, pro-rata gratuity, etc.). FTE employees are now eligible
for gratuity with no minimum service period.
• Hire & Fire Threshold (Layoffs): Establishments with up to 300 workers can lay-off,
retrench, or close without prior government approval. The previous limit was 100
workers, aiming to ease business operations.
• Dispute Resolution: Measures for faster resolution include dual members in Industrial
Tribunals and the ability for disputes to go straight to tribunals if conciliation fails.
Tribunal awards are to be implemented within 30 days.
 • Strikes & Lockouts: A 14-day prior notice is now mandatory for any strike (and
lockout) in all establishments, not just public utility services. The notice is valid for 60
days, after which a fresh notice is required. Mass casual leave by more than 50% of
workers on a given day is treated as a strike.
• Re-Skilling Fund: A new fund is established to help retrenched workers. Employers
must contribute 15 days’ wages for every retrenched worker into this fund within 45
days for skill upgradation.
• Women in Night Shifts: Women are now mandated to work night shifts in all sectors
with their consent and adequate safety arrangements. This promotes gender equality in
employment opportunities.

3. Social Security (SS) Code, 2020

This Code consolidates nine social security laws, including the EPF Act, ESI Act, Payment of
Gratuity Act, and Maternity Benefit Act. It creates a unified framework for provident fund,
insurance, gratuity, and maternity benefits.

Key Changes and Provisions:

• Wider Definition of Employee: The SS Code significantly expands who is considered

an “employee” to ensure broader coverage. It explicitly includes inter-state migrant
workers, casual workers, gig workers, platform workers, and film/TV workers for
the first time.
o Gig and Platform Workers: This is a landmark inclusion, recognizing
individuals outside traditional employer-employee arrangements (like ride-share
drivers and food delivery personnel) for social security benefits.
• Applicability Thresholds:
o EPF: Applicable to all establishments with ≥20 employees (now universal
coverage, unlike earlier limited to scheduled industries). Establishments with
fewer than 20 employees can opt in voluntarily.
o ESI: Covers all establishments with ≥10 employees (as earlier) but is extended to
all 740 districts (previously 566 districts). Hazardous industries are covered even
if there is only 1 worker.
• Gratuity Changes: A major change is that Gratuity is now available to Fixed-Term
Employees with no minimum service period. Previously, 5 years of continuous service
were required. For working journalists, the qualifying service for gratuity is reduced to 3
years.
• Maternity Benefits: The provisions remain essentially the same as the Maternity Benefit
Act, ensuring 26 weeks of paid maternity leave (for the first two children) for female
employees, and crèche facility requirements.
• Boards & Funds: The Code provides for a National Social Security Board for
unorganized workers, gig workers, etc., to recommend and monitor schemes. It also
mandates the creation of a Social Security Fund for the unorganized sector.
 • Compensation for Injury: If a worker dies or is injured in an accident, 50% of the
penalty fined on the employer is to be given to the worker or dependents in addition
to other dues.
• Universal Social Security Vision: The code aims for universal social security, extending
PF and ESI beyond the organized sector, including self-employed individuals or those in
new forms of work.

4. Occupational Safety, Health & Working Conditions (OSH) Code, 2020

This Code consolidates 13 Acts related to occupational safety, health, and working
conditions, such as the Factories Act, Mines Act, and Contract Labour Act. Its intention is to
create one uniform law for work conditions, health, and safety standards across industries.

Key Changes and Provisions:

• Applicability – Factories: The definition of “factory” has changed. Establishments with

≥20 workers (if using power) or ≥40 workers (without power) in manufacturing come
under this code. This raises the old threshold (10/20 workers), exempting smaller units
from onerous factory regulations.
• Contract Labour: The code applies to contractors employing 50 or more workers
(raised from 20 under the old CLRA).
• Inter-State Migrant Workers: The definition is expanded to include any worker who
moves by themselves to another state for employment (earning ≤ ₹18,000/month),
significantly increasing coverage.
o New Protections: New benefits include portability of ration and
building/construction welfare benefits to the destination state. Also, a “Journey
Allowance” is introduced, requiring employers to pay a lump-sum fare for a
migrant worker’s trip back home for visits or at the end of the job.
• Work Hours & Leave: The OSH Code caps daily work hours at 8 hours and normal
weekly hours at 48. Overtime must be paid at twice the normal rate. Workers earn 1 day
of paid leave for every 20 days worked, provided they work at least 180 days in a year
(a relaxation from the old 240 days requirement).
• Safety Provisions: Employers must provide a safe working environment, including
annual free health check-ups for workers above a certain age, compliance with safety
standards, and welfare facilities (e.g., canteens, crèches, first aid) based on establishment
size.
• Women Employment: The code ensures women’s right to work in all establishments
and at night (7 PM to 6 AM), conditional on their consent and the employer providing
safety measures.
• Coverage Expansion: The code broadens coverage to new sectors like audio-visual
workers (including digital media/OTT platform workers) and explicitly covers
IT/ITES and service sector workers under its ambit.
 • Inspectorate Reforms: Introduces an “Inspector-cum-Facilitator” system where
inspectors guide compliance rather than solely penalize. A web-based random inspection
system aims to curb harassment.
• Penalties: Stricter penalties are introduced, and for serious accidents, half of the penalty
goes to the affected workers’ families.

Important Figures to Remember (Across Codes)

• 50%: Maximum limit for exclusions from "wages" for calculations (Wage Code).
• 300 workers: New threshold for Standing Orders and government permission for
layoffs/closures (IR Code).
• 14 days: Mandatory prior notice period for strikes and lockouts (IR Code).
• 15 days' wages: Employer's contribution to the re-skilling fund for retrenched workers
(IR Code).
• 20 employees: EPF applicability threshold (Social Security Code).
• 10 employees: ESI applicability threshold (Social Security Code).
• 20 workers (with power) or 40 workers (without power): New definition for a
"factory" (OSH Code).
• 50 workers: Contract labour applicability threshold (OSH Code).
• 0 years: Minimum service period for gratuity eligibility for Fixed-Term Employees
(Social Security Code), compared to 5 years for others (except journalists).
• 3 years: Minimum service period for gratuity eligibility for working journalists (Social
Security Code).
• 26 weeks: Paid maternity leave duration (Social Security Code).
• 8 hours/day, 48 hours/week: Normal work hours (OSH Code).
• 1 day per 20 days worked (after 180 days): Annual leave earning rate (OSH Code).
• ₹18,000/month: Wage ceiling for a supervisor to be considered a "worker" (Wage Code,
IR Code) or for an inter-state migrant worker to be covered (OSH Code, Social Security
Code).
• ₹21,000/month: Wage threshold for bonus eligibility (Wage Code).
• ₹15,000/month: Wage ceiling for mandatory EPF membership (Social Security Code).

These codes are expected to transform India's labour law landscape, universalizing worker
welfare while easing compliance for businesses.