It’s My Right: New Labour Codes Set to Redefine Employee Rights Across India
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As India moves closer to implementing its long-awaited Labour Codes, employees across sectors are closely watching how the sweeping reforms will reshape workplace rights, wages, social security, and dispute resolution. The Government of India formally announced the rollout framework for the four Labour Codes on November 21, 2025, marking one of the most significant overhauls of labour legislation since Independence.
The new framework consolidates 29 existing labour laws into four comprehensive codes: 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. While the government has described the reform as a move toward simplification and uniformity, employees and employers alike are assessing its real-world impact.
What Is a Labour Code and Why It Matters
A labour code defines the relationship between workers, employers, and the state. It governs wages, working hours, workplace safety, social security, trade union rights, and mechanisms for dispute resolution. The consolidation aims to reduce compliance complexity, standardise benefits, and improve enforcement across India’s vast workforce.
With India’s formal workforce expanding and fixed-term employment becoming more common, the new labour framework has direct national implications for job security, retirement savings, and industrial harmony.
Faster Full and Final Settlements: A Key Change
One of the most immediate changes concerns full and final settlements, a long-standing grievance among employees. Under earlier laws, settlements often took 30 to 45 days, frequently resulting in delays.
Supreme Court Advocate Aseem Mehrotra, who specialises in civil and criminal litigation, told Daily Jagran that the new law sets a far stricter timeline.
“Under the new Labour Codes, fixed-term employees must receive their full and final settlement within two working days of resignation or termination,” Mehrotra explained.
If payments are delayed or withheld, Section 45 of the Code on Wages, 2019, provides a clear enforcement route. Employees can approach the notified authority, which can issue a recovery certificate to the District Collector, enabling recovery as arrears of land revenue.
Gratuity Rights Expanded for Fixed-Term Employees
Another significant reform impacts fixed-term employees, who were previously excluded from several long-term benefits. Under the Industrial Relations Code, 2020, gratuity eligibility now begins after one year of service, instead of the earlier five-year requirement applicable to permanent employees.
“This is a major shift toward parity,” Mehrotra noted, adding that it recognises the growing number of professionals working on contractual and project-based roles.
Will Take-Home Salary Change?
The restructuring of wage components is among the most debated aspects of the new codes. As per government guidelines, wages must now constitute at least 50 per cent of an employee’s CTC. Wages include basic pay, dearness allowance, and retaining allowance.
A government press release clarified that any excess allowance beyond the 50 per cent threshold will be added back while calculating wages. This directly impacts gratuity, provident fund (PF), pension, and other social security contributions.
While this may reduce immediate take-home pay for some employees, experts point out that it strengthens long-term financial security and retirement benefits.
Legal Remedies for Misleading CTC Structures
Concerns have also emerged around opaque CTC structures offered by employers. According to Mehrotra, employees now have clearer legal remedies if salary promises are not honoured.
“If the CTC structure is misleading or components are not paid as promised, employees can approach the gazetted officer under Section 45 of the Code on Wages,” he said. Complaints can also be filed with the Inspector-cum-Facilitator under Section 51 for violations.
How Employees Can Approach Labour Courts
The dispute resolution process under the new framework remains structured. Employees must first approach the Labour Officer. After hearings, the matter can be referred to the appropriate government, which may then forward it to the Labour Court or Industrial Tribunal.
According to Mehrotra, termination disputes continue to dominate labour litigation. “The majority of industrial disputes before courts relate to termination of services,” he said, underlining the importance of clear procedural safeguards.
Why the Labour Codes Matter Nationally
The implementation of the Labour Codes is expected to affect millions of workers, from factory floors to corporate offices. For employers, it promises simplified compliance and reduced legal fragmentation. For employees, it strengthens enforcement, ensures quicker settlements, and expands social security coverage.
As states begin notifying rules for implementation, the coming months will determine how effectively the new laws translate from paper to practice.
Our Final Thoughts from TheTrendingPeople
India’s Labour Codes mark a decisive shift toward uniformity and enforcement in employment law. While some employees may feel short-term salary adjustments, the long-term gains in social security, gratuity access, and legal clarity could redefine workplace fairness across sectors. The true test now lies in transparent implementation and consistent enforcement at the state level.