The consolidation of 29 laws into four labour codes is fundamental rethinking of how India governs employment, wages and worksite safety. Many of these drafted between the 1940s and 1980s involved more than 1400 provisions, over two dozen returns, close to 200 forms, 80-plus registers and multiple department-wise registrations. The new codes collapse this complexity into a single registration, a single licence and a single electronic return!
According to CMIE, 52 per cent of India’s workforce is self-employed and 24 per cent works as casual labour. This new code can bring millions of workers, particularly those employed in contractual, project-based and multi-location jobs, into the formal fold.
Clear-cut structure
The adoption of uniform wage definitions reduces disputes over allowances versus basic pay. Clear rules on overtime, safety standards and social-security contributions strengthen workplace protections. Social-security portability is especially impactful for India’s highly mobile workforce, allowing benefits to be retained when workers move across states — an option that did not meaningfully exist earlier.
The codes also recognise India’s shifting labour composition. More than one crore gig and platform workers, according to NITI Aayog, remain outside the safety net, despite contributing an estimated Rs 2.8 lakh crore to the economy. By creating a national architecture for social security for this group, the reforms acknowledge that the future of work is digital, mobile and task-based.
What is NFLMW?
Equally important is the introduction of a National Floor Level Minimum Wage (NFLMW), providing a consistent wage benchmark across states. Previously, India functioned like 28 separate wage geographies, with large variations in levels and frequency of revisions. This nudges towards a living-wage framework at a moment when the bottom half of the workforce still earns less than Rs 10,000 a month.
For employers, the simplified, tech-enabled compliance system brings needed predictability. Workforce-heavy sectors, such as textiles, auto components, warehousing, stand to gain the most, as lower paperwork and clearer rules translate into reduced administrative costs and better planning. However, companies will need to adjust payroll structures and plan for higher expenses. The extension of social security to gig and platform workers also means setting up processes for Welfare Fund contributions and e-Shram registrations, even as many details are still pending. The real test, however, lies in implementation. But directionally, the reforms shifts India towards a labour market that is more predictable, equitable and better aligned with its industrial ambitions.
The author is a Senior Vice President at Team Lease Services