New labour codes expand social security and simplify employer compliance

India’s new labour codes significantly expand social security coverage, formalise gig and platform workers, and streamline compliance for businesses. The reforms introduce universal wages, fixed-term employment benefits, simplified registrations, and higher thresholds for retrenchment approvals, aiming to create a modern, balanced labour ecosystem

New Delhi: India’s new labour codes significantly enhance social security coverage and worker protections while easing compliance burdens for employers, a report said on Thursday. The report by credit rating agency Brickwork Ratings called the reforms a step toward a more inclusive, modern, and competitive labour ecosystem that balances worker welfare with industry efficiency.

Higher thresholds for retrenchment approvals and simplified compliance mechanisms reduce regulatory burden, fostering a more investment-friendly environment. The reforms have simplified digital filings, reduced administrative burden, and improved flexibility for enterprises to adjust their workforce, the report said.

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“Although gig platforms face new welfare costs, the segment finally gains the formal worker status. For businesses, the higher thresholds for workforce downsizing approvals and simplified compliance mechanisms and reduced regulatory burden,” it noted.

Key changes include universal minimum and floor wages, gender‑equal pay, and overtime work at twice the normal rate. Further, it formally recognised fixed‑term employment, re‑skilling fund, work‑from‑home, 60‑day strike notice, and raised the retrenchment threshold to 300 workers under the Industrial Relations Code.

Fixed‑term employees become eligible for gratuity after one year, and trade unions with 51 per cent votes gain exclusive negotiating rights in industrial establishments, the report said. The Code on Social Security, 2020, extended Employees’ Provident Fund Organisation, Employees’ State Insurance, and gratuity coverage to gig and platform workers.

National social security coverage is also projected to exceed 64 per cent of the total workforce in 2025, up from 19 per cent in 2015, the report noted. The codes simplify compliance with single registration or licensing, digital registers, and inspector cum-facilitator systems.

The four unified labour codes — on wages, industrial relations, social security and occupational safety, health and working conditions — consolidated 29 prior acts and took effect on November 21.