Authors: Avik Biswas, Ivana Chatterjee, and Animay Singh
As we arrive in 2026, India’s labour and employment landscape stands at one of its most critical junctures. The introduction of the four Labour Codes represents the most ambitious and significant overhaul of India’s employment law regime since independence. While the Labour Codes were brought into effect on 21 November 2025, the real test lies in 2026 as employers now prepare for its implementation. In addition to the Labour Codes, some other areas of development are also anticipated in India’s labour and employment regime.
1. Gradual operationalisation of the Labour Codes
On 21 November 2025, the Central Government notified the: (i) Code on Wages, 2019 (“Wage Code”); (ii) Code on Social Security, 2020 (“SS Code”); (iii) Industrial Relations Code, 2020 (“IR Code”); and (iv) Occupational Safety, Health and Working Conditions Code, 2020 (“OSH Code”), which have repealed 29 central labour law legislations.
While few of the states have notified the corresponding rules under the Labour Codes, the Central Government and the majority of the States are still in the process of finalising the corresponding rules.
A few critical considerations under the Labour Codes have been set out below.
| Key Considerations |
| Wage Code[1]
Under erstwhile labour laws, the term ‘wages’ had been differing definitions in multiple statutes. The definition of ‘wages’ under the Labour Codes has now been made uniform to mean all remuneration earned whether in the form of salaries, allowances, or otherwise that are capable of being expressed in terms of money and are payable if the terms of employment are fulfilled.
‘Wages’ includes basic pay, dearness allowance, and retaining allowance and explicitly sets out the following exclusions: (a) bonus; (b) the value of any housing accommodation; (c) employer contributions to the provident fund and pension fund; (d) conveyance allowance and travelling concession; (e) sums paid to defray special expenses; (f) house rent allowance; (g) remuneration payable under a court / tribunal’s award or settlement; (h) overtime allowance; (i) any commission payable to employees; (j) gratuity; (k) retrenchment compensation or other retirement benefits and ex-gratia payments made upon the termination of employment.
A major addition to the definition of ‘wages’ is the factor that if the explicitly excluded components listed under (a) to (i) above exceed 50% of an employee’s overall remuneration, then the amount in excess of the 50% threshold will be notionally added to ‘wages’ to ensure it forms 50% of all remuneration.
- Equal remuneration: Transgender persons have been included in equal pay protections covering discrimination on grounds of gender.
- Universal coverage: The erstwhile Payment of Wages Act, 1936 applied only to employees earning less than INR 24,000 per month. However, provisions under the Wage Code relating to the payment of wages apply to all employees irrespective of their monthly remuneration.
- National ‘floor wage’: An additional ‘floor wage’ will be fixed by the Central Government considering the minimum living standards of workers. The minimum wages fixed by State Governments cannot be below the notified ‘floor wage’.
|
| Code on Social Security[2]
- Recognition of gig and platform work: The term ‘gig worker’ has been defined to mean a person who performs work and earns from activities ‘outside of the traditional employer-employee relationship’. Further, the term ‘platform worker’ encompasses all persons engaged in ‘platform work’, which is defined to mean a work arrangement wherein an organisation uses an online platform to access other organisations or individuals to solve specific problems or provide services in exchange for payment. Under the SS Code, the Central Government is empowered to frame schemes covering insurance and social security benefits for gig and platform workers, which cover life, disability, and accident insurance, health and maternity benefits, old age protection, and other benefits as determined by the Central Government.
- Equal benefits for fixed term employees: There is now a comprehensive statutory recognition to fixed term employees who are now entitled to equal treatment in terms of wages and benefits vis-à-vis permanent employees engaged in similar work.
|
| Industrial Relations Code[3]
- Formal recognition of negotiating unions: The IR Code provides a structured collective bargaining mechanism by introducing a statutory framework for the constitution of negotiating unions or a negotiating council.
- Simplification of dispute resolution: The dispute resolution mechanism under the IR Code has been significantly streamlined.
- Grievance redressal committee: Establishments with 20 or more workers are now mandatorily required to constitute a grievance redressal committee with representation from both the management and the workers.
- Higher threshold for workforce restructuring: Prior government approval for layoff, retrenchment, and closure now applies to certain establishments employing 300 or more workers.
- Time-bound disciplinary procedures: The IR Code provides for a time bound disciplinary procedure for certain establishments in certain cases.
|
| Occupational Safety, Health and Working Conditions Code[4]
- Comprehensive framework for workplace safety: The OSH Code requires employers to provide a safe, secure and hygienic work environment to its employees.
- Uniform working conditions: The OSH Code standardises working hours, weekly holidays, time of rest and leave entitlements, amongst other conditions of service.
|
[1] The Wage Code repeals: (a) The Payment of Wages Act, 1936; (b) The Minimum Wages Act, 1948; (c) The Payment of Bonus Act, 1965; and (d) The Equal Remuneration Act, 1976.
[2] The SS Code repeals: (a) The Employee’s Compensation Act, 1923; (b) The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952; (c) The Employees’ State Insurance Act, 1948; (d) The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959; (e) The Maternity Benefit Act, 1961; (f) The Payment of Gratuity Act, 1972; (g) The Cine-Workers Welfare Fund Act, 1981; (h) The Building and Other Construction Workers’ Welfare Cess Act, 1996; and (i) The Unorganised Workers’ Social Security Act, 2008.
[3] The IR Code repeals: (a) The Trade Unions Act, 1926; (b) The Industrial Employment (Standing Orders) Act, 1946; and (c) the Industrial Disputes Act, 1947.
[4] The OSH Code repeals: (a) The Factories Act, 1948; (b) The Plantations Labour Act, 1951; (c) The Mines Act, 1952; (d) The Working Journalists and other Newspaper Employees (Conditions of Service) and Miscellaneous Provisions Act, 1955; (e) The Working Journalists (Fixation of Rates of Wages) Act, 1958; (f) The Motor Transport Workers Act, 1961; (g) The Beedi and Cigar Workers (Conditions of Employment) Act, 1966; (h) The Contract Labour (Regulation and Abolition) Act, 1970; (i) The Sales Promotion Employees (Conditions of Service) Act, 1976; (j) The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979; (k) The Cine-Workers and Cinema Theatre Workers (Regulation of Employment) Act, 1981; (l) The Dock Workers (Safety, Health and Welfare) Act, 1986; and (m) The Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996
2. The right to disconnect
In 2025, India witnessed its first significant legislative movement toward recognising an employee’s right to disconnect from work-related digital communications outside prescribed working hours. This development began at the state level in Kerala and was subsequently followed by the introduction of a private member bill in Parliament, signalling a clear regulatory direction on employee work-life balance in the digital age.
Kerala took the lead with the Kerala Right to Disconnect Bill, 2025, which proposes statutory recognition of an employee’s right to refrain from responding to work communications beyond working hours, unless expressly agreed otherwise. The Bill prohibits any disciplinary or punitive action for non-responsiveness and establishes a district-level private sector workplace grievance redressal committee to investigate complaints, monitor compliance with work-hour norms, and issue corrective directions. This represents the first formal attempt in India to regulate after-hours digital engagement.
At the national level, the Right to Disconnect Bill, 2025 proposes a statutory framework applicable across companies and societies. It defines the phrase ‘out of work hours’ as time beyond contractually agreed working hours and establishes a central Employees’ Welfare Authority to oversee implementation. The Bill confers a legal right on employees to disconnect after hours, permitting employer contact only during mutually agreed windows, and mandates overtime compensation where employees choose to respond outside working hours.
Globally, similar regimes already exist. France pioneered the right to disconnect through its Loi du Travail, 2016, requiring companies with more than 50 employees to negotiate disconnection protocols with workers. Spain, Italy, and Belgium have since introduced comparable protections, recognising regulated digital disengagement as an essential component of humane working conditions. India’s emerging framework aligns with these international trends by favouring negotiated internal policies supported by statutory enforcement rather than imposing an absolute prohibition on after-hours communication.
3. Gig and platform workers
India has moved decisively to extend statutory social security to gig and platform workers through the SS Code supplemented by state specific legislations. The SS Code formally recognises ‘gig workers’, ‘platform workers’, and ‘aggregators’ for the first time, bringing this section of the workforce within a statutory social security framework while expressly preserving their non-employee status.
Under the SS Code, the Central Government is empowered to notify social security schemes covering benefits such as disability cover, health and maternity benefits, and old age protection. At the state level, Karnataka enacted the Karnataka Platform Based Gig Workers (Social Security and Welfare) Act, 2025 making it the second state after Rajasthan to introduce a dedicated gig worker law. This law applies to aggregators across various sectors including ride-hailing, delivery, logistics, e-commerce, healthcare, and digital services. It mandates registration of aggregators and workers, establishes a Welfare Board, and creates a state welfare fund financed through a welfare fee collected on payments made to the workers through each transaction on the aggregator’s platform. Aggregators must provide worker data, and comply with transparency, grievance redressal, and termination safeguards.
4. Focus on diversity, equity, and inclusion
Diversity and Inclusion (D&I) practices in organizations are anticipated to be a key area of focus in 2026. With an evolving legislative framework covering the prevention of sexual harassment at the workplace, protection of employees with disabilities, rights of transgender employees, protection of employees impacted by HIV/AIDS, and enforcement of equal pay for equal work, employers are increasingly expected to go beyond mere compliance. Companies are proactively reevaluating internal policies, HR practices, recruitment strategies, and workplace culture to ensure equitable opportunities, fair treatment, and a safe environment for all employees. Embedding D&I into governance, training, and monitoring mechanisms is likely to become essential not only to manage regulatory and reputational risks but also to enhance employee engagement, retention, and organisational performance, reflecting a broader shift toward inclusive and socially responsible workplaces.
