Authors: Avik Biswas, Vaibhav Bharadwaj, Ivana Chatterjee, Animay Singh
As we step into 2025, the landscape of labour and employment law in India continues to evolve, driven by technological advancements, shifting societal expectations, and changing regulatory frameworks. This year promises to bring new challenges and opportunities for both employers and employees, with an increased focus on workplace rights, diversity and inclusion, and the adaptation of policies to meet the demands of a globalized workforce. Below, we have set out certain key developments that employers and HR leaders should consider while evaluating and preparing their organisational policies and practices for the year ahead.
1. Implementation of Labour Codes
In 2020, India introduced four labour codes aimed at consolidating and codifying 29 central legislations related to labour, industrial, and social security matters. These codes include: (i) the Code on Wages, 2019; (ii) the Code on Social Security, 2020; (iii) the Industrial Relations Code, 2020; and (iv) the Occupational Safety, Health, and Working Conditions Code, 2020 (collectively the “Labour Codes.”)
While the Labour Codes received Presidential assent, they have not been brought into effect as various State governments are in the process of finalizing their respective rules under each of the Labour Codes. Presently, most States have released draft versions of their rules under the Labour Codes, and only a few have not completed this process. The central Ministry of Labour and Employment has indicated that all States and Union Territories are expected to complete the process of publishing their draft rules and ensuring their provisions are harmonized with the central draft rules by 31 March 2025. This is to ensure that compliance requirements and labour standards are uniform and consistent across India.
2. Strengthening Regulatory Framework Governing Gig and Platform Workers
Over the past year, the Ministry of Labour and Employment has been engaging in stakeholder consultations and working closely with platform aggregators, gig and platform worker organizations, industry associations, and social security agency representatives. The goal has been to develop a comprehensive framework for providing social security benefits to gig and platform workers. As a result, it is anticipated that robust social security schemes for gig workers and platform workers will be rolled out in the coming year. Correspondingly, the trend of State governments releasing their own social security schemes for gig and platform workers has resulted in questions about the interplay of such schemes with those envisaged under the Code on Social Security, 2020. Further, the manner in which key terms such as ‘platform’ and ‘platform-based gig worker’ are defined in State laws vis-à-vis Central laws has reignited concerns around the misclassification of these workers.
3. A New Data Privacy Regime for Employers
Following the enactment of the Digital Personal Data Protection Act, 2023 (“DPDP Act”), on 3 January 2025, the Central government released the draft rules under the DPDP Act to obtain suggestions and recommendations from all stakeholders.
Although the general industry consensus seems to be that the DPDP Act primarily affects the information technology (IT) and information technology-enabled services (ITeS) sectors, it is important to recognize that the DPDP Act is industry-agnostic. It impacts any entity that falls within its scope, meaning any organization that processes personal data is subject to its provisions.
Under the DPDP Act, consent is the basis for the processing of personal data of data principals. In the employment context, an employee will be considered a ‘data principal’ and their employer a “data fiduciary.”
The DPDP Act also provides for “certain legitimate uses” as a ground of processing personal data where consent is not required. One of these purposes relating to employment and other purposes include safeguarding an employer from loss, maintaining confidentiality of trade secrets, or the provision of service or benefits sought by employees. However, the scope and extent to which this ‘legitimate use’ can be applied is still unclear.
Given this, it is important for employers to internally evaluate their obligations under the DPDP Act and the corresponding rules (once finalized) to ensure that their internal policies and employment practices are aligned with the requirements of law.
4. Employment Linked Incentive Scheme
In the Union Budget for 2024-25, the Central Government announced three schemes as part of its Employment Linked Incentive Scheme. Under the first, all first-time employees entering the workforce will receive 1 month’s wages up to INR 15,000 in 3 instalments. The second scheme aims to drive job creation in the manufacturing sector by incentivizing both employers and employees by reimbursing their social security contributions for a period of 4 years (subject to specific guidelines). The third scheme provides support to employers by reimbursing their share of social security contributions for an amount of up to INR 3000 per month for a period of 2 years. This is applicable to employees drawing a salary of up to INR 1 lakh per month.
It is important to note that the Employment Linked Incentive Scheme was announced as part of the Central government’s interim budget. Therefore, it is likely that eligibility criteria and other specifics governing the disbursal of incentives under the abovementioned schemes are expected to be outlined in the Union budget for 2025-26.
5. Work-Life Balance: Working Hours and Overtime
Over the past year, working hours and overtime pay have become prominent subjects of discussion. Reports of employees being overburdened or experiencing health issues due to excessive work have been widely discussed in the media and on social platforms.
In this context, exemptions granted by certain State governments have attracted public scrutiny. For example, employers in the IT/ITes sector were exempted from complying with provisions relating to working hours in Gujarat for a period of two years from 5 February 2024, subject to certain terms and conditions. Similarly, the Karnataka State government contemplated extending the daily working hours limit to 12 hours for employees in the IT/ITes/BPO sectors, subject to the condition that employees are not required to work for more than 125 hours in 3 continuous months. Trade unions vehemently opposed this proposed move, citing concerns over monitoring an employer’s compliance with this limit and the impact on employees’ mental health.
This has led to employees raising concerns over internal monitoring mechanisms relating to their working hours, resulting in questions over overtime pay.
