Historic Labour Reforms Set to Transform India's Employment Landscape
India has taken a monumental step in labour reform with the central government implementing four long-awaited labour codes on Friday, November 21, 2025. This development marks what industry experts are calling a transformative moment in the country's employment ecosystem that could accelerate formal job creation and expand social security coverage for millions of workers.
Industry Welcomes Reforms with Cautious Optimism
Nasscom, India's premier IT industry association, described the notification as a significant milestone in India's labour reform journey. The technology sector particularly anticipates that these codes will bring much-needed clarity to employment documentation and benefit structures while potentially curbing widespread misuse of contract norms that have plagued the industry.
According to industry representatives, the immediate implementation without a transition period requires employers across sectors to promptly reassess their internal policies, HR practices, and operational processes. Akhil Chandna, partner at Grant Thornton Bharat, emphasized that employers must prepare for several key changes including mandatory annual health check-ups, gratuity entitlement for fixed-term employees, and social security benefits for gig and platform workers.
Addressing IT Sector Challenges and Worker Protections
The IT industry has expressed hope that the new framework will address persistent issues such as the misuse of fixed-term roles, unnecessary probation extensions, forced resignations, and the problematic classification of employees as 'consultants' to avoid providing statutory benefits.
Harpreet Singh Saluja, president of Nascent Information Technology Employees Senate (NITES), highlighted the importance of careful rule framing and enforcement. "If the rules are not framed and enforced carefully, companies may restructure contracts to bypass obligations. Trade union rights also need to be preserved because, without collective representation, employees in the technology sector may not be able to assert the protections promised to them," Saluja cautioned.
Nasscom noted that for the technology sector, the reforms offer potential for greater predictability and mobility through clearer employment documentation, parity of benefits for fixed-term workers, expanded social security, and structured grievance mechanisms.
Broader Economic Impact and International Recognition
Manish Sabharwal, Vice Chairman of Teamlease, characterized the new labour codes as an overdue gift to India's young women, factories, MSMEs, and backward states. He emphasized that this reform will accelerate formal, non-farm, high-productivity job creation in a country where 65% of the population is under 35 years old.
The International Labour Organisation has shown keen interest in these developments. Director-General Gilbert F. Houngbo stressed in a social media post that social dialogue among government, employers and workers will remain essential during implementation to ensure positive outcomes for both workers and businesses.
Platform companies like Uber have welcomed the government's move, particularly the Code on Social Security, and expressed eagerness to work closely with authorities to ensure speedy and effective implementation.
Simplifying Compliance and Formalizing Workforce
Suchita Dutta, executive director of Indian Staffing Federation (ISF), believes the implementation will simplify compliance for employers, reduce regulatory burdens, and foster a more flexible hiring environment. These reforms are expected to accelerate the formalization of India's workforce, boost ease of doing business, and drive formal employment growth.
Puneet Gupta of EY India pointed out that unlike earlier laws with multiple interpretations and overlapping authorities, the new codes bring clarity, digitization, and consistency across compliance requirements. "For workers, the impact is significant. Formal employees gain stronger protections and uniform benefits, while gig and platform workers are included in social security schemes for the first time," Gupta explained.
The transformation is expected to reshape compensation structures, HR policies, and employment models, creating what industry leaders describe as a more inclusive and future-ready labour ecosystem that could reinforce India's position as a global hub for high-value digital and technology services.
