India has officially entered a new era of labour reform — and whether you’re an MSME owner, startup founder, HR manager, or a curious employee, the Four Labour Codes are something you simply cannot afford to ignore.
For decades, India’s labour laws were like a maze — 29 different Acts, each with different definitions, compliance rules, forms, penalties, and interpretations. Small businesses especially struggled because compliance was confusing, expensive, and time-consuming.
Now the Government has replaced this clutter with 4 simplified, modern, technology-friendly labour codes.
But what has actually changed on the ground?
How are the new codes different from the old laws?
Is it good for businesses? Do employees lose or gain?
This guide breaks everything down in a clean, simple side-by-side comparison table — made especially for MSMEs and small businesses.
Let’s dive in.
related post: India Labour Law 2025: What the New Four Labour Code Means for MSMEs and Small Businesses
⭐ The Four Labour Codes: A Quick Refresh
The government has merged 29 central labour laws into four powerful, unified codes:
1. Code on Wages (2019)
– Deals with minimum wages, timely payments, salary structure.
2. Industrial Relations Code (2020)
– Governs hiring, firing, strikes, trade unions, and disputes.
3. Social Security Code (2020)
– Covers PF, ESI, maternity benefits, gig workers, gratuity.
4. Occupational Safety, Health and Working Conditions (OSH) Code (2020)
– Covers safety, health standards, contractor licensing, working conditions.
These codes aim to create one transparent, predictable, and business-friendly framework that also protects workers better.
⭐ Four Labour Codes vs. Old Labour Laws: Clean Side-By-Side Comparison
Below is your full comparison table — bookmark it for future compliance!
1️⃣ Coverage & Applicability
| Category | Old Labour Laws | Four Labour Codes |
|---|---|---|
| Number of laws | 29 separate Acts | 4 consolidated Codes |
| Definition of “worker” | Different in every law | One uniform definition |
| Appointment letter | Not mandatory everywhere | Mandatory for all workers |
| National floor wage | Not consistent | Standard minimum nationwide |
| Gig workers | No recognition | Officially recognised |
2️⃣ Salary, Wages & Payment Rules
| Category | Old Laws | New Four Labour Codes |
|---|---|---|
| Basic salary % | No fixed rule | 50% of CTC must be basic + DA |
| PF & gratuity | Varies | Higher PF & gratuity possible |
| Take-home salary | Usually higher | May reduce due to PF contribution |
| Overtime | Differs by state | Mandatory double wages |
| Pay cycle | Varied | Standardised across India |
3️⃣ Working Hours & Leave
| Category | Old Rules | New Labour Codes |
|---|---|---|
| Daily working hours | Mostly capped at 8 | 8–12 hours allowed (48 hours/week cap) |
| Weekly rest | Different state rules | One mandatory weekly off |
| Leave rules | Not uniform | Standardised leave provisions |
| Shift arrangements | Limited flexibility | More flexible arrangements |
4️⃣ Social Security & Employee Benefits
| Category | Old Laws | Four Labour Codes |
|---|---|---|
| Gratuity eligibility | 5 years | 1 year for fixed-term employees |
| PF/ESI coverage | Mostly formal sector | Wider coverage + gig workers included |
| Maternity benefits | Varied enforcement | Unified strong enforcement |
| Worker database | Scattered | Centralised digital database (proposed) |
5️⃣ Hiring, Firing & Industrial Relations
| Category | Old Rules | New IR Code |
|---|---|---|
| Retrenchment threshold | 100+ employees | Now 300+ employees |
| Notice before strike | Varied | 14-day notice mandatory |
| Fixed-term employment | No clarity | Fully legal + equal benefits |
| Dispute system | Slower | Faster digital-friendly process |
6️⃣ Safety, Health & Working Conditions
| Category | Old Laws | OSH Code |
|---|---|---|
| Contractor licence | State-wise multiple licences | One 5-year licence for PAN India |
| Women in night shift | Restricted | Allowed with safety |
| Safety norms | Fragmented | Standardised across sectors |
| Migrant workers | Weak protection | Improve portability & safety |
⭐ So, who gains & who struggles?
✔ Winners: Workers
- Appointment letters
- Timely wages
- Better social security
- Benefits for gig/platform workers
- Stronger safety measures
✔ Winners: MSMEs & Startups
- Fewer laws = fewer headaches
- More flexibility in hiring
- One licence instead of many
- Better clarity & transparency
⚠ Temporary Challenges for Businesses
- Adjusting salary structure (50% basic rule)
- Higher PF/Gratuity payouts
- Updating HR policies & documentation
But long-term?
A cleaner, more efficient, more digital labour system.
⭐ Final Thoughts — A Major Step Forward for India
The battle of Four Labour Codes vs. Old Labour Laws clearly shows that India’s labour ecosystem has evolved from a 30-year-old maze to a modern compliance-friendly structure.
For businesses: less confusion, more flexibility.
For employees: more security, better rights.
This is a win-win reform — and the earlier businesses adapt, the easier compliance becomes.
❓ Frequently Asked Questions (FAQ)
1. Are the Four Labour Codes officially implemented?
Yes. As of 2025, major provisions are notified and applicable. However, some rules may still depend on state notifications.
2. Will employees’ take-home salary reduce?
In many cases yes, because Basic Pay must be at least 50% of CTC — increasing PF/Gratuity contributions.
3. Are gig and platform workers covered?
Yes. For the first time, gig workers are included in social security provisions.
4. Are 12-hour work shifts allowed?
Yes, but only if total weekly hours remain 48, and overtime must be paid at double wages.
5. Do small businesses need to issue appointment letters?
Yes. Appointment letters are mandatory for all workers under the new codes.
👤 About the Author
Tabrez Khan
Founder of Business Zindagi, Tabrez writes in-depth, simple, and practical guides for MSMEs, startups, small business owners and budding entrepreneurs. His content focuses on business growth, government policies, finance, legal compliance, insurance, SME schemes, and digital entrepreneurship.
When not writing, he spends time analysing government reforms that impact the small business ecosystem in India.
🔗 Authentic Sources & References (Official Links)
Here are verified government and reputed sources:
- Ministry of Labour & Employment – Government of India
https://labour.gov.in - Official Labour Codes Page (Govt.)
https://labour.gov.in/labour-codes - Code on Wages (Full Act PDF – Govt.)
https://labour.gov.in/sites/default/files/Code%20on%20Wages%2C%202019.pdf - Industrial Relations Code 2020 (Govt.)
https://labour.gov.in/sites/default/files/Industrial%20Relation%20Code%202020.pdf - Social Security Code 2020 (Govt.)
https://labour.gov.in/sites/default/files/SocialSecurityCode2020.pdf - OSH Code 2020 (Govt.)
https://labour.gov.in/sites/default/files/OSHCode2020.pdf - Press Information Bureau (PIB) – Labour Reforms Updates
https://pib.gov.in
All links are official and fully clickable.
