India’s 2025 Labour Codes explained: New wage rules, gratuity changes, WFH norms and more — Key highlights

The Indian government has launched a sweeping reform of labour laws by consolidating 29 existing norms into four new codes that came into effect on November 21. These include the Code on Wages, 2019, the Code on Social Security, 2020, the Industrial Relations Code, 2020 and the Occupational Safety, Health and Working Conditions Code, 2020.

The new framework sets mandatory minimum wages for workers in both the organised and unorganised sectors, extending social security for gig workers, reducing the gratuity eligibility period to one year, and recognising work-from-home arrangements, among other measures.

Here is a breakdown of the key changes under 2025 labour rules

Gratuity

The labour codes introduced a change for workers on fixed-term contracts by reducing the gratuity eligibility to just one year of service, compared to the previous requirement of five years. It is a lump-sum monetary benefit given as a gesture of appreciation for long service in the same organisation, which will significantly improve financial security for short-term and project-based workers.

Guaranteed minimum wages

All employees, including organised and unorganised sectors, have a statutory right to minimum wages, with a national "floor wage" to be set by the central government.

Revised wage structure and impact on take-home pay

Under the new uniform definition of “wages”, basic salary must make up at least half of an employee’s total earnings. While this may lower the immediate take-home pay for some workers, it will increase contributions to schemes such as the Provident Fund and gratuity, strengthening long-term retirement benefits.

Social security for gig workers

For the first time, gig and platform workers, including delivery staff, app-based drivers and freelancers, will receive social security coverage. Aggregators will be required to set aside a portion of their revenue into a dedicated fund that will support benefits like life insurance, disability protection and health assistance. This marks a significant step toward safeguarding a fast-expanding workforce that has so far lacked formal protection.

Mandatory appointment letters

Employers must now provide formal appointment letters to all new the hired employees, including the unorganised and gig sectors. These documents act as proof of employment, pay details and social security eligibility, improving transparency and offering better job security in sectors where such paperwork was previously uncommon.

Overtime at double wages

All those employees working overtime must be compensated at a rate of at least twice their normal wage rate. Additionally, the eligibility for annual paid leave has been lowered from 240 days of work to 180 days in a year.

Women are allowed to work night shifts

The code clearly bans gender-based wage discrimination. Women can now work night shifts in any establishment—before 6 a.m. and after 7 p.m., provided they consent and employers ensure proper safety and security arrangements.

Provision for work from home

Remote working will be allowed in the services sector based on mutual agreement, offering greater flexibility for both employers and employees.

Free yearly health screenings

All employees aged 40 and above must receive free annual medical check-ups from their employers, encouraging preventive health practices at the workplace.

Coverage for commuting mishaps

Travel-related accidents occurring between home and the workplace will now be treated as work-related incidents, making employees eligible for compensation.

Mandatory timely payment of wages

The code requires employers to follow strict timelines for salary disbursement, for instance, paying monthly wages within seven days of the following month or settling dues within two working days of an employee’s exit, ensuring better financial certainty for workers.