The Bengal News, India : In a historic move transforming India’s industrial and workforce landscape, the Government of India has formally brought into effect the four consolidated Labour Codes nationwide from November 21, 2025. This landmark reform replaces 29 fragmented, decades-old central labour laws with a unified, simplified, and modern framework.

The four Codes—the Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020, and the Occupational Safety, Health and Working Conditions Code (OSHWC), 2020 – aim to achieve a dual objective: enhancing worker protection and promoting the Ease of Doing Business.

The Game-Changer: Redefining ‘Wages’

Perhaps the most immediately impactful change for every salaried employee and employer is the uniform redefinition of ‘Wages’ under the Code on Wages.

• 50% of CTC Rule: For the calculation of key statutory benefits like Gratuity, Provident Fund (PF), Statutory Bonus, and Leave Encashment, the new law mandates that the core components of pay (Basic Pay, Dearness Allowance, and Retaining Allowance) must constitute at least 50% of an employee’s total remuneration (CTC).
• Impact on Take-Home Salary: Companies that previously structured salaries with a low basic pay (e.g., 30-40% of CTC) and high allowances (like HRA, conveyance) must now reconfigure their payroll. This change will likely lead to higher employer and employee contributions towards PF and an increased gratuity payout, as the base for calculation is now higher. While this boosts long-term savings and retirement security, it may result in a slightly lower monthly ‘take-home’ salary.
• Universal Minimum Wage: The Code establishes a statutory right to minimum wages for all workers across the organized and unorganized sectors. The Central Government will set a National Floor Wage that no state can undercut, ensuring a minimum standard of living nationwide.

Expanded Social Security for the New Workforce :

The Code on Social Security, 2020, significantly broadens the social safety net to encompass the rapidly growing flexible workforce.

• Inclusion of Gig and Platform Workers: For the first time, ‘Gig Worker’ and ‘Platform Worker’ are formally defined. The Code mandates the creation of a Social Security Fund for these workers, requiring platform aggregators (e.g., food delivery, cab services) to contribute 1-2% of their annual turnover (capped at 5% of the total payments made to gig/platform workers). This provides a legislative foundation for their welfare schemes, including health and maternity benefits.
• Gratuity for Fixed-Term Employees: Fixed-term employees are now eligible for pro-rata gratuity after just one year of continuous service, removing the previous five-year requirement.
• Portability of Benefits: The new framework promotes the portability of social security benefits, ensuring that a worker’s Provident Fund and other entitlements remain accessible across jobs and states via an Aadhaar-linked Universal Account Number (UAN).

The Industrial Relations Code and the OSHWC Code introduce reforms affecting workplace operations and working conditions.

Challenges and the Way Forward :

While the Codes are effective from November 21, 2025, their successful implementation will depend heavily on the finalisation and harmonisation of the corresponding state-level rules. Since labour is a concurrent subject, both the Central and State Governments must align their compliance mechanisms. For employers, the immediate priority is to conduct a full financial sensitivity analysis to align their compensation structures with the 50% wage definition, which may require significant payroll restructuring. For India’s vast workforce, these Codes represent a significant step toward a modern, protected, and formal working environment, expanding the dignity of labour to millions previously excluded.