Why in News The Government of India between May 9 and May 11, 2026 notified the residual Central Rules under the four Labour Codes, completing operationalisation that had begun with the codes in force since 2025 (specifically November 21, 2025). The exercise consolidates 29 pre-existing Central labour statutes into four codes – the most extensive labour-law overhaul since Independence.
The Four Codes
| Code | Year | Subsumes | Highlights |
|---|---|---|---|
| Code on Wages | 2019 | Payment of Wages Act 1936; Minimum Wages Act 1948; Payment of Bonus Act 1965; Equal Remuneration Act 1976 | Universal minimum wage; floor wage by Centre; equal remuneration across genders |
| Industrial Relations Code | 2020 | Trade Unions Act 1926; Industrial Employment (Standing Orders) Act 1946; Industrial Disputes Act 1947 | Fixed-term employment; raised threshold (300 workers) for Govt approval of layoff/closure; worker re-skilling fund |
| Code on Social Security | 2020 | EPF Act 1952; ESI Act 1948; Maternity Benefit Act 1961; Payment of Gratuity Act 1972; Building & Other Construction Workers Act 1996; 4 more | Coverage extended to gig and platform workers; aggregator contribution 1-2 per cent of turnover |
| OSH Code | 2020 | Factories Act 1948; Mines Act 1952; Contract Labour Act 1970; Inter-State Migrant Workers Act 1979; 9 more | Single registration, single licence, single return; 10-worker factory threshold |
Key Substantive Reforms
Wage architecture
- Universal minimum wage across States (no employee shall be paid below the prescribed minimum, irrespective of sector)
- Floor wage to be fixed by the Central Government on the recommendation of a tripartite committee
- Basic salary + allowances must equal at least 50 per cent of total remuneration – a structural change with downstream impact on PF, gratuity and leave encashment
Workweek and overtime
- Statutory 48-hour workweek retained
- Up to 12 hours per day permissible (subject to weekly cap of 48 hours and overtime ceilings)
- Permits flexible four-day workweek if statutory caps are met
- Quarterly overtime cap raised
Gig and platform workers
- For the first time, gig and platform workers (Swiggy, Zomato, Ola, Uber, Urban Company, etc.) brought under the Code on Social Security, 2020
- Aggregator contribution: 1-2 per cent of annual turnover (subject to a cap of 5 per cent of payments to gig workers)
- Funds to be deposited into a Social Security Fund – benefits to include life and disability cover, old-age protection, accident insurance
Industrial relations
- Fixed-term employment formalised across sectors – such workers receive the same statutory benefits (including gratuity even after one year) on a pro-rata basis
- Worker re-skilling fund: employer to pay 15 days’ wages on retrenchment to the fund
- Threshold for Government approval for layoff/retrenchment in factories raised from 100 to 300 workers (IR Code)
Internal grievance redressal
- Internal Grievance Committees mandatory for establishments with 20 or more workers
- Time-bound disposal; equal worker-management representation
Women workers
- Night-shift work permitted with consent and prescribed safeguards
- Equal pay across genders for the same/similar work (Code on Wages)
Inspection regime
- Inspector-cum-Facilitator role; risk-based inspections; web-based randomised allocation
- Reduces face-to-face discretion in factory inspection
Constitutional and Federal Architecture
| Element | Detail |
|---|---|
| Subject | Labour – Concurrent List; Entries 22 (Trade unions), 23 (Social security, social insurance, employment and unemployment), 24 (Welfare of labour) |
| Drafting authority | Centre |
| State role | States must notify State Rules to complete operationalisation – many States have published draft rules |
| Tribunals | Industrial Tribunals continue under IR Code |
| Dispute resolution | Conciliation -> tribunal -> appeal |
Why It Matters
Economic impact
- Simpler compliance: 29 statutes -> 4 codes; single registration, single licence, single return
- Higher PF and gratuity outgo for many private-sector employees, due to the 50 per cent basic-pay rule
- A short-term hit to take-home pay; a long-term gain to retirement corpus
Labour and gig economy
- ~ 8-10 crore gig and platform workers covered for the first time
- Aggregator levy (1-2 per cent of turnover) is a structural change in platform economics
Investor sentiment
- World Bank Doing Business 2020 (the last edition) had flagged labour-law complexity as a binding constraint
- The four codes are intended to ease compliance and improve formalisation
Risk areas
- State-level variation in rules may erode “single regulatory framework” promise
- Trade unions (CITU, AITUC, INTUC etc.) have challenged the codes – pending writ petitions in High Courts
UPSC Relevance
GS Paper 2 – Polity, Welfare Legislation
- Labour as a concurrent subject; federal challenges
- Welfare and protective legislation; gig workers
GS Paper 3 – Economy
- Labour-market formalisation; ease of doing business
- Social security extension; aggregator economy
Mains Angles
- Discuss the salient features of the four Labour Codes. Are they pro-employment, pro-employer, or both?
- Inclusion of gig and platform workers under the Code on Social Security, 2020 is a structural advance. Evaluate.
- How do the Labour Codes reconcile the imperatives of investment promotion and workers’ protection?
Facts Corner – Knowledgepedia
The four Labour Codes: Code on Wages 2019; Industrial Relations Code 2020; Code on Social Security 2020; Occupational Safety, Health and Working Conditions (OSH) Code 2020.
In force since 2025 (specifically November 21, 2025); residual Central Rules notified May 9-11, 2026 – completing operationalisation.
29 statutes consolidated: Including Minimum Wages Act 1948, Payment of Wages Act 1936, EPF Act 1952, ESI Act 1948, Factories Act 1948, Industrial Disputes Act 1947, Contract Labour Act 1970, and 22 others.
Constitutional placement: Concurrent List (Entries 22, 23, 24).
Floor wage: Fixed by the Central Government under the Code on Wages, on the recommendation of a tripartite committee.
50 per cent basic rule: Basic salary + allowances must be >= 50 per cent of total remuneration (affects PF and gratuity).
Workweek: 48 hours per week; up to 12 hours/day permitted within overtime caps; permits a 4-day workweek.
Gig workers: Defined in Section 2(35) of the Code on Social Security, 2020; aggregator contribution: 1-2 per cent of annual turnover (cap 5 per cent of gig payments).
IR Code threshold: Government approval for layoff/retrenchment/closure raised from 100 to 300 workers.
OSH Code threshold: 10 workers (with power) for factory registration.
Grievance Committee: Mandatory at 20+ workers establishments.
Court challenges: Pending petitions filed by CITU, AITUC, INTUC and other federations.
