Immediately after a thunderous victory in the Bihar Assembly elections, in a sharp and surprising move, Prime Minister Narendra Modi introduced new Labour Codes with the announcement that "it is one of the most comprehensive and progressive labour-oriented reforms since independence," leading to the promotion of "Ease of Doing Business" in India. On the other hand, the trade unions and social policy analysts say that actual gains to workers remain unclear and doubtful.

The four labour code bills, first introduced in Parliament in 2019 and of which three were replaced in September 2020, consolidate 29 central labour laws. The four Codes introduced are - the Code on Wages, the Industrial Relations Code, the Code on Social Security, and the Occupational Safety, Health and Working Conditions Code.

The Codes that become effective from November 21, 2025, claim to simplify compliance and workers' protection, and to align with global standards. The codes introduce mandatory appointment letters, universal social security and timely minimum wages for all workers, including gig and platform employees.

The new Codes cover all categories of workers: full-time, on contract, part-time, and even workers on digital platforms, and could impact earnings, job terms, benefits, and rights. The main features of the new codes are as follows:
1.    All employees, regardless of employment sector (organised or unorganised) or wage ceiling, now have a statutory right to minimum wages, with a national "floor wage" set by the central government.
2.    A standardised definition of "wages" mandates that basic pay must constitute at least 50% of the total remuneration. This may, in some cases, reduce immediate take-home pay for employees, but it is claimed to lead to higher contributions to social security benefits such as Provident Fund (PF) and gratuity, thereby enhancing long-term retirement security.
3.    Employers are now required to issue a formal appointment letter to all new workers, including those in the unorganised sector, as documentary proof of social security entitlements. This applies even in informal or gig-work settings where such formalities often didn't exist.
4.    The eligibility period for annual paid leave has been reduced from 240 days of work to 180 days per year, allowing newer employees to access leave benefits sooner.
5.    Women workers are now permitted to work on night shifts across all establishments (before 6 am and after 7 pm), subject to their consent and to the employer's mandatory safety and security measures.
6.    Accidents during travel between home and workplace are now deemed employment-related and qualify for compensation.
7.    There are provisions for an inspector and a facilitator who will help the industry and workers.
8.    Trade unions with 51% membership will be recognised as the negotiating union; otherwise, a Negotiating Council will be formed from trade unions with at least 20% membership.
Among other provisions are work-from-home, free annual health check-ups, payment of wages within 7 days of the next monthly wages, etc.

India's workforce comprises organised and unorganised workers. India's main socio-economic issue is poverty. The trouble stems from poor-quality employment, low and insecure salaries, and poor work environments, regardless of where they work. India, the world's fifth-largest economy, had 501 million workers in 2020. Agriculture employs 41.19% of the workforce, industry 26.18% and services 32.33%. Nearly 90% of the workforce is in the unorganised sector, and only 8-9% is covered by labour laws.

Unemployment is the biggest problem haunting backward states. Those who favour argue that these new Codes empower chief ministers to introduce employment-oriented policies and industries. It is further said that notifying the labour codes would help backwards states that experience migration.
Those who favour these Codes say that India's trade unions have a vested interest in the old labour laws because their membership is mostly older people.

Opposition parties and several trade unions have expressed concern over the notification of the four Labour Codes, many of them demanding that they be revoked as the Codes are incomplete, regressive, pro-corporate and imposed without democratic consultation."

Knowledgeable sources and trade union leaders say that India's new Labour Codes prioritise economic flexibility for employers over worker protection, potentially diluting rights and weakening collective bargaining power. They contend the codes reverse decades of progress in labour welfare and were passed without sufficient democratic debate. Key areas of criticism are:
1.    The Industrial Relations Code raises the threshold for firms requiring government approval for layoffs and closures to 300 workers from 100, which they argue gives companies greater ease to randomly fire their workforce at the expense of job security.
2.    The codes promote modes such as fixed-term employment and apprenticeships (e.g., the National Employability Enhancement Mission scheme), which may replace permanent jobs with more temporary roles, thereby reducing overall job stability.
3.    Critics argue that while the Code on Social Security aims to cover gig and platform workers, it still has limited coverage for many informal and home-based workers.
4.    By defining a contractor as an employer, the law allows the primary (principal) employer to avoid responsibility for workers' rights.
5.    All major trade unions, except BMS (affiliated to the BJP), fear potential dilution of trade unions' bargaining power and exclusion of their concerns from the formulation process, thereby weakening the tripartite social dialogue.
6.    The split of responsibilities between central and state governments in rule-making can cause ambiguity and an inefficient enforcement mechanism, leaving workers' rights vulnerable in the unorganised sector.
7.    The provision for e-registration and Aadhaar linking for social security raises concerns about accessibility for workers who face digital illiteracy or poor infrastructure in many parts of the country.
8.    Though the government claims that the new codes will reduce complexity, improve ease of compliance, usher in transparency and accountability, and help both employees and the analysis shows that the uneven pace of implementation across states, and explore legal and practical changes as labour is a concurrent subject.

In fact, there has been no large-scale consultation on these codes, as the Indian Labour Conference has not been convened since 2015, despite repeated requests by the trade unions. Instead of simplification, the new Codes seek to dilute and abolish long-established rights and entitlements, and to shift the balance sharply in favour of employers.

Employment laws in India have generally been favourable to employees (protection bias). The new Labour Codes introduce an unusual phenomenon: putting a cat among pigeons, and we know what happens next. The need is for the paradigm driving employment and labour policies to change for better-quality livelihoods, now and ahead.