India has introduced one of its biggest labour reforms by enforcing the four labour code, replacing 29 old and complex labour laws. This marks a historic shift in India labour law, designed to simplify compliance, improve worker protection, and give small businesses more flexibility.
For MSMEs—which contribute nearly 30% to India’s GDP—these reforms bring both opportunities and responsibilities.
Let’s break it down in simple, practical language.
you may also like to read: The Ultimate Guide to Indian Labour Laws for MSME Owners
For decades, India’s labour framework was fragmented across dozens of overlapping Acts. Some of these laws were outdated, inconsistent, or difficult for small businesses to comply with.
The government introduced the four labour code to:
These codes have finally been implemented uniformly in 2025.
These replace 29 older laws such as Minimum Wages Act, Factories Act, Contract Labour Act, Payment of Wages Act, ESIC/EPF Acts, etc.
Under the new four labour code, MSMEs no longer handle 29 separate laws.
This means:
This directly reduces administrative and legal costs.
Earlier, companies with more than 100 workers needed government approval for layoffs and structural changes.
Under the new India labour law, this threshold is raised to 300 workers.
This helps MSMEs:
The Code on Wages introduces a National Floor Wage.
This brings clarity to MSMEs operating across multiple states.
Benefits include:
The Social Security Code acknowledges gig and platform workers — a major gap in old India labour law.
This affects MSMEs using:
It builds a more organised and secure workforce ecosystem.
Every employer must issue a formal appointment letter to each employee.
This helps MSMEs:
The new four labour code allows:
This is great for:
Even small workshops must ensure:
This lifts overall workplace quality and productivity.
✔ Provide appointment letters
✔ Update wage structure based on new “wage” definition
✔ Maintain attendance & work-hour records
✔ Register eligible employees under EPF/ESI
✔ Prepare basic safety arrangements
✔ Update contractor documentation
✔ Maintain digital or written wage receipts
If you want, I can convert this into a downloadable PDF checklist.
To simplify 29 complex labour laws into 4 simple codes, reduce compliance burden, modernise labour rules, and improve worker protection.
Yes. MSMEs get easier compliance, hiring flexibility, clearer wage rules, and improved consistency across states.
Mandatory appointment letters, uniform wage definition, and more flexibility in hiring/firing (up to 300 employees).
In some states, yes. The national floor wage may increase minimum wage requirements.
Yes. For the first time, gig and platform workers get social-security recognition.
Yes, but compliance requirements are lighter and simpler than earlier.
Tabrez, founder of BusinessZindagi.com, writes practical and easy-to-understand guides on MSMEs, small business growth, entrepreneurship, and government schemes related to msme , small business in India. His mission is to make business knowledge simple, actionable, and accessible for the common Indian entrepreneur.
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