The Ministry of Labour and Employment (MoLE) has confirmed that India's four consolidated Labour Codes — replacing 44 archaic labour laws — are in advanced stages of implementation. The new framework represents the most significant restructuring of India's labour regulatory system in seven decades, and foreign companies operating in India must act now to ensure compliance.
The Four Labour Codes
The four codes consolidate India's fragmented labour law landscape:
- Code on Wages, 2019: Covers minimum wages, payment of wages, equal remuneration, and bonus for all workers across sectors.
- Industrial Relations Code, 2020: Governs trade unions, conditions of employment, industrial disputes, and retrenchment thresholds.
- Social Security Code, 2020: Consolidates EPF, ESIC, gratuity, maternity benefits, and cess laws into a single framework.
- Occupational Safety, Health and Working Conditions Code, 2020: Sets standards for workplace safety, working hours, and conditions across industries.
Key Changes Impacting Foreign Employers
The new codes introduce several compliance changes that foreign companies must address:
- Fixed-term Employment: All sectors can now hire on fixed-term contracts without requiring government approval, making project-based hiring easier.
- Universal Social Security: Gig workers and platform employees are now covered under social security provisions — relevant for tech companies with contractor workforces.
- Retrenchment Thresholds: Companies with up to 300 workers can now retrench without government approval (up from 100), providing more operational flexibility.
- Minimum Wage Simplification: Wage structure is simplified to Floor Wage + Allowances, reducing payroll complexity.
Foreign companies are advised to review their employment contracts, payroll systems, and HR policies against the new code requirements. Non-compliance post-implementation will attract penalties and operational disruption. This overhaul aligns with India's Viksit Bharat 2047 vision of creating a globally competitive labour environment.