India's four labour codes

For decades, Indian labour law was spread across dozens of central acts, many written for a very different economy. Parliament passed four labour codes between 2019 and 2020 to bring them together. After a long wait, the government notified key provisions of all four codes with effect from 21 November 2025.

For companies, the codes change how wages are defined, which affects gratuity and other benefits, extend social security to gig and platform workers, and make it easier for larger firms to restructure. For analysts, they are both a cost item and a social factor: they change employee costs, and they change protections for workers.

The four codes

Together they replace 29 central labour acts.

Key changes

• One definition of wages across the codes, used for minimum wages, overtime, gratuity, leave encashment, ESI and bonus. Allowances above a set share of pay count towards wages, so at least half of an employee's cost to company is in effect treated as wages for these calculations.
• Fixed-term employees are formally recognised and become eligible for gratuity after one year of continuous service.
• Gig and platform workers are brought under social security. Aggregators may be asked to contribute 1% to 2% of annual turnover, capped at 5% of the amounts paid to platform workers.
• Women's night work is allowed more widely, with safeguards.
• Appointment letters become mandatory, and workers aged 40 and above get a free yearly health check-up.
• Layoffs, retrenchment and closure need prior government approval only for establishments with 300 or more workers, up from 100. Retrenched workers get a contribution to a reskilling fund equal to 15 days of their last wages.

Rules and transition

Final central and state rules were still being notified after November 2025. Until they replace them, relevant provisions of the old acts and their rules continue, so companies may face two sets of rules for a while.

State gig worker laws

• Rajasthan (2023): the first state law on platform-based gig workers.
• Bihar (August 2025): a welfare fee of 1% to 2% of payouts, registration duties and grievance systems.
• Karnataka (September 2025): a welfare fee of 1% to 5% of payouts, transparency about automated decision-making, and 14 days' notice with written reasons before termination.

Core obligations under these state laws depend on rules being framed.

Costs already booked

In the October to December 2025 quarter, TCS, Infosys and HCLTech reported one-time charges of about ₹2,128 crore, ₹1,289 crore and ₹956 crore, mostly for higher gratuity and leave liabilities under the new wage definition.