India’s labour overhaul: Faster gratuity, national minimum wage, stronger rights

India’s new labour codes, now in force, expand social security, redefine worker categories, and introduce stronger protections across all sectors.

India has officially brought its four major labour codes into effect, introducing one of the most significant updates to worker rights, social security, and workplace rules in decades. The Code on Wages, Industrial Relations Code, Occupational Safety and Health Code, and the Code on Social Security, passed between 2019 and 2020, have now become operational after earlier delays.

A key shift under the new framework is the reduction of gratuity eligibility for fixed-term employees. Instead of completing five years, workers on fixed-term contracts will now receive gratuity after completing just one year of uninterrupted service. These employees will also receive benefits similar to permanent staff, including paid leave provisions, regulated working hours, and medical coverage.

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The codes introduce a national minimum wage applicable to all workers, replacing the earlier system that covered only designated industries. Salary timelines have also been tightened, and IT sector employees must be paid no later than the 7th of every month.

For the first time, the laws formally recognise gig and platform workers, describing them as individuals earning outside the traditional employer–employee structure. This inclusion widens access to social security benefits for a rapidly growing workforce involved in digital platforms and flexible work arrangements.

Stronger workplace protections have also been built in. All establishments must provide free annual medical examinations to workers aged 40 and above, promoting preventive healthcare. No one can now be hired without being issued a written appointment letter, making employment terms clearer and enforceable.

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The reforms give companies more flexibility in hiring and managing labour while introducing updated safety standards across sectors. Women are now permitted to take up night shifts and even roles in traditionally hazardous industries, including mining, subject to safety measures and their consent. These steps are seen as efforts to increase women’s participation in the workforce.

Social security coverage has widened, with Employees’ State Insurance Corporation enrolment becoming compulsory for any establishment engaging even a single worker in hazardous processes. ESIC coverage now extends across the entire country rather than only notified regions.