From Fragmentation to Consolidation: Enforcement of Labour Codes & Road Ahead

India’s decision on 21 November 2025 to operationalise key provisions of all four Labour Codes marks a structural reset of labour regulation rather than a mere consolidation exercise. The move promises simplification, wider coverage, and digital compliance, yet simultaneously exposes serious constitutional, institutional, and distributive questions that will determine whether the reform deepens or dilutes labour protection. This article (1) compresses and systematises the core legal changes under each Code, (2) situates them within existing constitutional and judicial labour jurisprudence, and (3) critiques the enforcement architecture and transitional design, with particular focus on employers’ compliance strategies and the Codes’ treatment of informal, gig and platform workers.

I. Context and Legislative Design

With 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Health and Working Conditions Code, 2020 now substantially in force, twenty-nine disparate central statutes stand repealed or subsumed. The official narrative frames this as rationalisation and universalisation: removing the “scheduled employment” limitation in minimum wages, extending social security to informal workers, and harmonising definitions and registers.

Academic writing, however, has consistently cautioned that universalisation on paper may coexist with exclusions, ambiguous definitions and weak enforcement, thereby undermining constitutional guarantees under Articles 14, 21 and 23. The reform must therefore be read not only against the text of the Codes but against Supreme Court jurisprudence on minimum wages, social security and industrial peace, and contemporary litigation around gig workers and the constitutionality of the Codes’ institutional design.

II. Code on Wages, 2019: Universalisation with Gaps

1. Universal minimum wage, floor wage and wage protection

Sections 3–9 of the Wages Code extend the right to minimum wages to all employees, replacing the “scheduled employment” model.[1][8] The Central Government is empowered to fix a national floor wage, below which no State may set its minimum wage. In theory, this aligns with the long-standing judicial view that minimum wages are non-waivable and integral to the right against forced labour under Article 23, as developed in cases under the Minimum Wages Act.

However, critical scholarship shows that exclusions for specific categories of workers and definitional ambiguities may still leave substantial segments of wage labour outside effective coverage. This critique resonates with earlier jurisprudence where the Court emphasised that any legislative or executive action that allows wages below subsistence would be constitutionally suspect under Articles 21 and 23; the Codes will inevitably be tested against that standard.

The Code also codifies timely payment rules, expands their scope to all employees, and imposes a cap on permissible deductions, strengthening the statutory basis for claims akin to those that previously arose under the Payment of Wages Act.[1][8] Combined with criminal and administrative sanctions, this gives labour inspectors and tribunals a clearer legal hook in wage-non-payment disputes, provided inspection capacity is not simultaneously hollowed out.

2. Uniform definition of “wages” and the 50% rule

The cross-cutting redefinition of “wages” may be the single most consequential technical reform. “Wages” now predominantly comprise basic pay, dearness allowance and retaining allowance, while most other allowances are excluded up to 50% of total remuneration; any excess is added back into wages for computing statutory benefits such as provident fund, gratuity and bonus.

Employers must therefore restructure salary components so that the core wage is at least 50% of cost-to-company to avoid unexpected add-backs in litigation and inspections. Contrary to common commentary, this does not automatically reduce take-home pay; it re-balances the distribution between fixed wage and allowance components for the purpose of social security calculations. For employers, this requires granular payroll audits, renegotiation of compensation structures, and careful documentation in appointment letters and HR policies.

III. Industrial Relations Code, 2020: Flexibility versus Associational Rights

1. Fixed-term employment and retrenchment thresholds

The IR Code explicitly recognises fixed-term employment, granting fixed-term workers parity in wages and benefits with permanent employees and pro-rata gratuity after one year of continuous service. This partially responds to judicial discomfort with disguised contract labour arrangements used to evade social security obligations and permanency.[9][10]

At the same time, the threshold for prior government approval of lay-off, retrenchment and closure in factories, mines and plantations is increased from 100 to 300 workers. Critics argue that this shifts the balance towards managerial prerogative, potentially undermining job security in the organised sector and weakening the protective logic that underpinned Supreme Court jurisprudence under the Industrial Disputes Act. The creation of a Worker Reskilling Fund—funded by employer contributions of fifteen days’ wages per retrenched worker—is normatively progressive but its real impact will depend on design, governance and utilisation.

2. Trade union recognition, strikes and adjudicatory design

The Code introduces majority-union recognition (51% membership) as the sole negotiating agent, or a Negotiating Council where no union meets that threshold. This addresses classic disputes around rival unions and the absence of any statutory recognition rule that previously fuelled industrial conflict, including in sectors like automobile manufacturing.

More controversially, the Code mandates a 14-day prior notice requirement for all strikes and lockouts across all establishments, not just public utilities, and creates procedural hurdles for industrial action. Scholarly analysis characterises this as an “imbalancing act”, arguing that the Code systematically privileges continuity of production over the right to strike, in tension with international labour standards and domestic jurisprudence that treats collective bargaining and industrial action as core incidents of the right to association.

The IR Code restructures industrial tribunals into two-member bodies and centralises some adjudicatory powers. This design is already under challenge: a petition before the Delhi High Court argues that notifying the IR Code without simultaneously constituting the new tribunals or framing rules has paralysed pending industrial disputes, violating Articles 14 and 21 by effectively denying access to justice. The outcome of this and similar challenges will be pivotal for assessing the constitutional sustainability of the enforcement architecture.

IV. Code on Social Security, 2020: Between Constitutional Mandate and Fiscal Caution

1. Universalisation and inclusion of gig and platform workers

The Social Security Code amalgamates nine earlier statutes on provident fund, employees’ state insurance, gratuity, maternity benefits and more, and formally extends coverage to unorganised, gig and platform workers. It creates a framework for a social security fund, mandates contributions from aggregators (1–2% of turnover, capped at 5% of payouts), and envisages portable Universal Account Numbers.

This legislative move tracks constitutional jurisprudence that has repeatedly treated social security and just and humane conditions of work as emanations of Articles 21, 41, 42 and 43, while also reflecting newer political-economic realities of platform work. Yet, implementation remains stalled, and litigation has outpaced rule-making.

In a pending public interest litigation by the Indian Federation of App-Based Transport Workers (IFAT), the Supreme Court is examining whether gig workers on platforms like Uber, Ola, Zomato and Swiggy are entitled to be recognised as “unorganised workers” and extended statutory benefits. The Court has already indicated that gig workers’ social security rights cannot be indefinitely deferred under the guise of “policy decisions” when a statutory framework exists. The eventual judgment is likely to read the SS Code through the lens of equality and dignity, and may push the executive to operationalise the gig-worker provisions with greater urgency.

2. Gratuity, maternity and creche obligations

The SS Code expands gratuity by covering fixed-term employees on a pro-rata basis and, read with the IR Code, erodes the historical exclusion of many categories of precarious workers. Maternity entitlements (26 weeks’ leave and cash benefits) are reinforced, and establishments with 50 or more workers are mandated to provide crèche facilities and nursing breaks—obligations that are mirrored in the OSH Code. These measures build on earlier Supreme Court jurisprudence recognising maternity benefits and childcare as integral to equality and non-discrimination for women workers.

For employers, this translates into concrete infrastructure and policy requirements: on-site or proximate crèches (potentially via shared facilities), documented policies on nursing breaks and creche visits, and integration of these obligations into standing orders and HR manuals.

3. Contract labour and principal employer liability

By broadening the definition of “employee” and explicitly including many categories of contract and unorganised workers, the SS Code sharpens the liability of principal employers for provident fund, ESI and gratuity contributions in contract-heavy supply chains. This aligns with existing case law under the EPF and ESI Acts that looked beyond formal contractual arrangements to impose liability based on economic dependence and integration into the core enterprise.

Principal employers must therefore treat contractor compliance as a primary risk issue, embedding social security obligations into contracts, audit mechanisms and vendor-selection processes.

V. OSH Code, 2020: Safety, Migrant Labour and the Limits of Formalism

The OSH Code creates a single safety and welfare framework for factories, mines, docks, construction, plantations and other establishments, with a unified registration threshold of ten workers and an electronic licensing and return system.

1. Working conditions, safety committees and inspection-cum-facilitation

Working hours are harmonised with the Wages Code at 8 hours per day and 48 per week, with overtime at twice the ordinary rate. Establishments employing 500 or more workers must constitute joint safety committees, and employers must provide free annual health check-ups for workers above a prescribed age. Criminal sanctions for minor contraventions are replaced by monetary penalties and compounding, reflecting a policy shift towards “facilitative” labour inspection.

Whether this will meaningfully improve workplace safety depends on the integrity and capacity of the new inspector-cum-facilitator model and the design of risk-based, computerised inspections. Comparative experience and empirical studies on labour inspection in India show that limited enforcement in small and micro enterprises has historically left vast numbers of workers without effective protection. A purely formal compliance approach risks reproducing that pattern in a digital guise.

2. Inter-State migrant workers and gendered vulnerabilities

The OSH Code broadens the definition of inter-State migrant worker and mandates an annual lump-sum travel allowance to the native place, at least partially responding to the humanitarian crisis witnessed during the COVID-19 lockdowns. Yet, gender-focused analyses highlight that the Code remains insufficiently attentive to the specific vulnerabilities of inter-State women migrants, particularly in sectors such as domestic work and construction, where informality, lack of registration and social norms intersect to exclude them from the protective net.

The combined operation of the OSH and SS Codes will require proactive identification and registration of migrant workers, robust grievance redressal mechanisms, and gender-sensitive implementation if they are to move beyond paper compliance.

3. Contract labour in core activities

A notable innovation is the prohibition on deployment of contract labour in “core activities” of an establishment, subject to limited exceptions. This may be seen as a legislative response to case law where courts repeatedly confronted sham contract arrangements masking core, continuous work. Yet, the concept of “core activity” is inherently contestable and likely to be a fertile ground for industrial disputes and litigation.

For businesses built around extensive outsourcing of production, assembly or service delivery, this prohibition demands a fundamental re-evaluation of staffing models, cost structures and risk allocation.

VI. Enforcement Architecture, Constitutional Challenges and Transitional Design

1. The “two-track” problem and constitutional scrutiny

Although the Central Government has notified major substantive provisions, the success of the Codes depends on an enormous volume of State rules and institutional set-up: tribunals, inspectorates, digital portals and schemes. Labour being in the Concurrent List, this centre–state coordination problem is acute. Empirical work on non-implementation of the Codes prior to 2025 already showed that differing rule-making speeds, low administrative capacity and limited awareness were the major bottlenecks.

The Delhi High Court petition challenging the IR Code notification without simultaneous establishment of tribunals illustrates the constitutional stakes of poor sequencing: without forums, pending cases cannot proceed, effectively suspending labour adjudication and violating Articles 14 and 21. Similar challenges may arise if workers or unions can show that the Codes have formally repealed earlier protections without putting an equivalent or better functional system in place.

2. Digital compliance, data and access to justice

The shift to “one registration, one licence, one return” and e-governance—while clearly beneficial for large, formal employers—raises questions about access and capacity among small establishments and workers in the informal sector. Without simple, multilingual, mobile-friendly interfaces and on-ground facilitation, digitalisation can translate into exclusion rather than inclusion.

From a rights-based perspective, tribunals and authorities under the Codes must ensure that digital filing and hearing processes do not create new procedural barriers for workers, especially gig and platform workers dispersed across cities and lacking traditional union representation. Ongoing judicial engagement with technology and access to justice in other domains will likely influence how labour adjudication adapts.

VII. Compliance Strategy for Employers: Beyond Checkbox Reform

For employers, the enforcement of the Codes is not merely a matter of amending a few policies. A credible and litigation-resistant approach requires an integrated compliance programme addressing at least the following dimensions:

• Wage structure and documentation: realigning basic and allowance components to comply with the 50% wage rule; ensuring appointment letters and wage slips clearly reflect statutory entitlements; and auditing overtime, bonus and deduction practices.
• Employment models: re-evaluating reliance on fixed-term and contract labour in light of gratuity, social security and OSH restrictions on contract labour in core activities; and formally extending parity of benefits to FTEs.
• Social security and contractor oversight: mapping all categories of workers (including contract and outsourced workers) for EPF, ESI and gratuity coverage; embedding social security compliance obligations and audit rights in vendor contracts.
• Gender and care infrastructure: planning for crèche facilities where headcount crosses the statutory threshold; updating internal policies to incorporate maternity benefits, childcare and nursing breaks in a manner consistent with both SS and OSH Codes.
• Industrial relations and dispute systems: updating standing orders, grievance redressal mechanisms and collective bargaining protocols to incorporate notice periods for strikes and lockouts, representation requirements and the new tribunal structure, while remaining sensitive to constitutional constraints on over-regulation of industrial action.
• Migrant and gig-worker engagement: proactively identifying inter-State migrant workers on rolls or through contractors to ensure compliance with travel and welfare obligations; monitoring judicial developments in gig-worker litigation to anticipate future contribution and benefit flows.

VIII. Conclusion: Towards a Constitutional, Worker-Centric Implementation

The formal enforcement of the four Labour Codes on 21 November 2025 undeniably marks a watershed in Indian labour law. Yet, the true measure of this reform will lie in how the Codes are interpreted and operationalised by courts, tribunals, inspectorates and employers.

On one side stands a rich line of constitutional jurisprudence treating minimum wages, social security, safe working conditions and maternity protection as embodiments of dignity, equality and freedom from exploitation. On the other stands a policy drive towards flexibility, cost-competitiveness and procedural rationalisation, sometimes at the expense of associational rights and substantive security.

The challenge for Indian labour law in the coming decade will be to ensure that consolidation does not mean contraction. For employers, this is an opportunity to move from a fragmented, reactive approach to labour compliance towards a strategic, rights-respecting model that anticipates judicial scrutiny and societal expectations. For the judiciary and academia, the Codes open a new field of doctrinal and empirical work: on gig and platform work, on the constitutionality of enforcement architectures, and on whether the promised universalisation of labour protection can be made real for India’s predominantly informal workforce.