New Labour Codes in India: Key Reforms, Legal Framework & Constitutional Backing

The Government of India has officially brought into force the four Labour Codes—a comprehensive reform designed to simplify, modernize, and consolidate 29 existing labour laws. These changes significantly impact worker welfare, employer obligations, and national labour standards.

1. Introduction to the New Labour Codes

On Friday, the Union Government notified the implementation of the four Labour Codes passed between 2019–2020:

  • The Code on Wages, 2019

  • The Industrial Relations Code, 2020

  • The Occupational Safety, Health and Working Conditions (OSH) Code, 2020

  • The Code on Social Security, 2020

These codes aim to redesign India’s labour governance, ensuring uniformity, transparency, and expanded social security across the workforce—including organized, unorganized, gig, and platform workers.

2. Gratuity Eligibility Reduced to One Year for Fixed-Term Workers

Under the Code on Social Security, 2020, fixed-term employees now become eligible for gratuity after just one year of continuous service—previously five years.

Relevant Statute

  • Section 53, Code on Social Security, 2020 – extends gratuity to fixed-term employees proportional to service.

Constitutional Backing

  • Article 43 (Directive Principles): Ensures living wages and decent working conditions.

  • Article 38, 39(e): Mandates the State to secure meaningful social security.

Judicial Precedent

  • Delhi Cloth & General Mills Co. Ltd. v. Workmen (1967) – Supreme Court recognized gratuity as a statutory right tied to long-term social welfare.

3. Introduction of a National Minimum Wage

The new Code on Wages, 2019 introduces a national floor wage, ensuring no worker is paid below a minimum threshold, regardless of industry.

Relevant Statute

  • Section 9, Code on Wages, 2019 – empowers the central government to fix a national minimum wage.

Constitutional Backing

  • Article 14: Ensures equal protection; no discriminatory wage practices.

  • Article 43: Ensures fair wages.

Judicial Precedent

  • Unichoyi v. State of Kerala (1962) – The Court upheld minimum wage laws, stating they are essential for worker dignity.

4. Definition of Gig and Platform Workers

For the first time, Indian law formally defines gig workers and platform workers, recognizing emerging digital labour systems.

Relevant Statute

  • Section 2(35), Code on Social Security, 2020 – defines gig workers.

  • Section 109–114 – introduce a social security framework for gig and platform workers.

Significance

This is a major step toward eventual social security benefits for workers in the digital economy.

5. Mandatory Annual Medical Checkups and Written Appointment Letters

Employers must now provide:

  • Annual medical checkups for all workers above 40 years

  • Mandatory written appointment letters for all employees

Relevant Statute

  • Section 23, OSH Code, 2020 – mandates free annual health checkups.

  • Rule provisions under OSH Code – require issuance of appointment letters.

Judicial Precedent

  • Consumer Education and Research Centre v. Union of India (1995) – SC held health protection as part of Article 21 (Right to Life).

6. Equal Benefits for Fixed-Term Employees

Fixed-term workers will now receive:

  • Leave entitlements

  • Regulated working hours

  • Medical benefits

  • Social security at par with permanent employees

Relevant Statute

  • Section 2(o), OSH Code, 2020 – equality in working conditions.

  • Section 10, Code on Wages, 2019 – equal wages for equal work.

Constitutional Backing

  • Article 14 & 16 – Equality and non-discrimination.

  • Article 21 – Right to dignity and humane working conditions.

7. Timely Payment of Salaries – Mandatory for All Companies

The labour codes ensure employer accountability.

Relevant Provision

  • Section 17, Code on Wages, 2019 – mandates timely wage payments.

  • IT companies must release salaries by 7th of every month.

Judicial Precedent

  • M.R. Prabhakar v. Canara Bank (2012) – timely wages considered an essential service benefit.

8. Greater Flexibility in Hiring and Firing

The Industrial Relations Code, 2020 enables smoother hiring and firing mechanisms, while ensuring dispute resolution through:

  • Industrial tribunals

  • Negotiating unions

  • Re-skilling funds

Relevant Statute

  • Sections 77–80, IR Code, 2020 – ease retrenchment and closure rules.

9. Women Working in Hazardous Industries & Night Shifts

Women are now legally permitted to work in:

  • Hazardous sectors (including mining)

  • Night shifts

Subject to their consent and adequate safety measures.

Relevant Statute

  • Section 43, OSH Code, 2020

Constitutional Backing

  • Articles 14, 15, 16 – prohibit gender discrimination.

  • Article 39(a) – equal right to livelihood.

Judicial Precedent

  • Vishaka v. State of Rajasthan (1997) – workplace safety part of Article 21.

10. ESIC Coverage Expansion

The Employees’ State Insurance Corporation (ESIC) will now cover:

  • All establishments nationwide

  • Even those with one worker involved in hazardous processes

Relevant Statute

  • Section 28–44, Code on Social Security, 2020

Judicial Precedent

  • ESIC v. S.K. Aggarwal (1998) – ESIC benefits interpreted broadly to protect labour rights.

11. Conclusion

The four labour codes represent one of India’s most ambitious labour reforms—expanding social protection, strengthening worker rights, modernizing compliance, and recognizing new forms of work. By streamlining 29 archaic laws, these codes aim to create a balanced labour ecosystem that promotes investor confidence while protecting workers’ dignity, health, and welfare.


Location: Pune, Maharashtra, India

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