In a historic move that reshapes India's workplace landscape, the Central government has operationalised all four labour codes, five years after their parliamentary approval. This represents the most comprehensive overhaul of the country's labour framework since gaining independence, consolidating 29 Central laws into a streamlined new architecture.
What the New Labour Codes Promise
The revamped labour codes promise wider social security coverage, a national floor wage, and portability of benefits through Aadhaar-linked Universal Account Number (UAN). In a significant expansion, the codes now extend accident compensation coverage to commuters during their travel to and from workplaces.
For industries, the Industrial Relations Code provides increased hiring flexibility, while workers gain the right to gratuity benefits after just one year of service, a substantial reduction from previous requirements. The government maintained secrecy around the final implementation to avoid the kind of widespread backlash that affected the farm laws reform.
Political Divide and Implementation Timeline
The rollout has exposed sharp political divisions. Prime Minister Narendra Modi described the codes as comprehensive and progressive, emphasizing their potential to modernize India's labour ecosystem. However, trade unions have condemned the move as unilateral and anti-worker, pointing to contentious provisions regarding fixed-term employment, relaxed retrenchment norms, and restricted strike rights.
With draft rules scheduled for publication within a week, some industry-facing provisions are expected to become operational by April 2026. The reform now enters a critical implementation phase that will test both administrative capacity and political will.
Challenges in the Implementation Tunnel
The path forward faces significant hurdles. Several states lag in framing their corresponding rules, while some have begun moving independently on issues like gig-worker welfare. The success of this ambitious reform depends on demonstrating political conviction through effective communication and ensuring all stakeholders come on board.
The push comes at a crucial time when investment sentiment remains muted and global protectionism is rising. In opinion pieces, experts like Manish Sabharwal argue that Bihar's real crisis isn't unemployment but employed poverty, suggesting the new labour codes could help backward states transition from migration-dependent economies to creating meaningful local employment opportunities.
As India positions itself as a global manufacturing alternative, these labour reforms represent a fundamental reset of workplace regulations that could shape the country's economic trajectory for decades to come.
