India’s labour law landscape has witnessed a major transformation in recent years, with the government consolidating and reforming decades-old regulations into simplified and modern frameworks. The year 2025 brings fresh updates to the long-anticipated Four Labour Codes, which aim to streamline compliance, enhance worker protections, and make it easier to do business in India.
Whether you’re an employer, HR professional, or an employee, staying informed about the latest labour law amendments is critical. Here’s a detailed look at what changed in 2025 and how it may impact your organization.
Background: The Four Labour Codes
To simplify and modernize India’s complex labour laws, the Government of India introduced four comprehensive labour codes, replacing 29 central labour laws. These codes are:
- The Code on Wages, 2019
- The Industrial Relations Code, 2020
- The Code on Social Security, 2020
- The Occupational Safety, Health and Working Conditions Code, 2020
While passed earlier, the implementation of these codes had been deferred across states. In 2025, several states have finally begun rolling out the codes with customized rules, making this a pivotal year for compliance.
Key Updates in Labour Laws (2025)
1. Implementation Begins in Major States
As of 2025, states like Maharashtra, Gujarat, Uttar Pradesh, Karnataka, and Haryana have formally notified the rules for all four labour codes. This means the unified structure is now enforceable in many industrial regions, making it important for businesses operating in multiple states to realign their compliance strategies.
2. Changes to Working Hours
The new labour codes allow for flexible working hours — up to 12 hours per day — provided the total working hours don’t exceed 48 hours per week. This update offers employers more scheduling freedom but also mandates increased overtime pay and proper employee consent.
3. Gratuity Eligibility for Contract Workers
Under the Code on Social Security, contract workers are now eligible for gratuity after just one year of continuous service, instead of the earlier five-year requirement. This boosts financial security for temporary employees and increases responsibility for employers to maintain clear service records.
4. Universal Definition of Wages
The Code on Wages introduces a standardized definition of “wages”, which includes basic pay and excludes allowances beyond 50%. This has a direct impact on the calculation of PF, gratuity, and bonuses — potentially increasing the cost of compliance for many businesses.
5. Easier Hiring & Firing Rules
The Industrial Relations Code allows companies with up to 300 workers (previously 100) to hire or lay off employees without government approval. While this offers flexibility to businesses, it also emphasizes the importance of well-documented employment contracts and HR policies.
6. Mandatory Digital Records
Employers must now maintain digital records of attendance, salary payments, and social security contributions. This digital shift not only improves transparency but also facilitates audits and inspections through online portals.
What Employers Should Do Now
- Update Employment Contracts & Policies: Ensure your contracts reflect the new definition of wages, working hours, and leave policies.
- Audit Your Compliance Structure: Conduct internal compliance audits or partner with a labour law consultant to avoid penalties.
- Train Your HR Teams: Your HR staff should understand the new laws, especially related to social security and industrial relations.
- Engage in Employee Communication: Educate your workforce about changes that affect them, such as gratuity eligibility and overtime rights.
Penalties for Non-Compliance
With digitized inspections and increased regulatory oversight, non-compliance can result in heavy fines and legal consequences. In many cases, penalties are now graded based on the size of the company and the nature of the offense — ranging from ₹10,000 to ₹5 lakh or more.
Conclusion
The 2025 updates to India’s labour laws are not just regulatory changes — they’re an opportunity to build stronger, more transparent, and compliant workplaces. While the reforms aim to simplify processes, they also bring more accountability and responsibility for employers.
If you’re unsure how these changes impact your business or need help with realignment, our consultancy is here to assist. With over 30 years of experience in labour law, compliance audits, and employee policy management, we help you stay one step ahead.