Govt notifies rules for all labour codes, minimum wage criteria dropped
The central government has notified final rules for all four labour codes, completing a multi-year legislative consolidation that replaces 29 existing labour...
What Happened
- The central government has notified final rules for all four labour codes, completing a multi-year legislative consolidation that replaces 29 existing labour laws.
- A key sticking point — a formula-based minimum wage calculation criteria — was dropped from the notified rules; instead, the framework retains a statutory national floor wage that no state may fall below.
- The codes were made effective from November 21, 2025, with full rule-sets now published for all four: the Code on Wages (2019), the Industrial Relations Code (2020), the Code on Social Security (2020), and the Occupational Safety, Health and Working Conditions Code (2020).
- The notification mandates appointment letters for all workers, fixes basic pay plus dearness allowance at not less than 50% of total cost-to-company, and formally recognises gig and platform workers under the social security framework.
- Implementation follows prolonged delays caused by incomplete state-level rule notifications, with many states expressing concern that minimum wage criteria provisions would override state autonomy in wage fixation.
Static Topic Bridges
The Four Labour Codes — Legislative Background
India's labour law framework was historically fragmented across 29 central statutes, some dating to the 1920s, covering wages, industrial relations, social security, and working conditions. Parliament consolidated these into four codes between 2019 and 2020. The Code on Wages, 2019 was the first, followed by the Industrial Relations Code, the Code on Social Security, and the Occupational Safety, Health and Working Conditions Code — all passed in 2020. The constitutional authority rests in the Concurrent List (Seventh Schedule), Entries 22 and 24, which empowers both the central and state governments to legislate on labour welfare.
- Code on Wages, 2019 — subsumes the Minimum Wages Act 1948, Payment of Wages Act 1936, Equal Remuneration Act 1976, and Payment of Bonus Act 1965
- Industrial Relations Code, 2020 — subsumes the Industrial Disputes Act 1947, Trade Unions Act 1926, and Industrial Employment (Standing Orders) Act 1946
- Code on Social Security, 2020 — subsumes the Employees' Provident Funds Act 1952, Employees' State Insurance Act 1948, and seven other laws
- Occupational Safety Code, 2020 — subsumes the Factories Act 1948 and 12 other statutes
- All four came into force on November 21, 2025
Connection to this news: The final rule notification completes the implementation chain — Parliament had passed the codes, states had published draft rules, and the central government's final rules now create a binding enforcement framework.
Floor Wage vs Minimum Wage — The Constitutional Debate
Section 9 of the Code on Wages, 2019 introduces the concept of a national "floor wage" — a statutory floor below which no state government may set its minimum wages. The floor wage is to be fixed by the central government based on minimum living standards (food, clothing, housing). This is constitutionally grounded in Articles 42 and 43 of the Directive Principles of State Policy: Article 42 requires the state to secure just and humane conditions of work, and Article 43 directs it to ensure a living wage and a decent standard of life.
The dropped "minimum wage criteria" referred to a formula-based calculation methodology (using consumption units and caloric norms) that several state governments objected to as overriding their discretion. By retaining floor wage as a floor but removing the prescriptive calculation criteria from the central rules, the framework preserves state flexibility above the floor.
- Article 42 (DPSP): just and humane conditions of work and maternity relief
- Article 43 (DPSP): living wage and conditions of work ensuring decent standard of life
- Article 43A (inserted by 42nd Constitutional Amendment, 1976): worker participation in management
- Concurrent List, Entries 22 and 24: legislative authority for labour laws
- Floor wage concept: no state minimum wage may fall below the centrally-notified floor
- Basic + DA must constitute ≥ 50% of CTC under the new wage structure rules
Connection to this news: Dropping the prescriptive calculation criteria while retaining the floor wage concept was the compromise that allowed states to adopt the codes without surrendering wage-setting autonomy.
Gig and Platform Workers — First Formal Recognition
The Code on Social Security, 2020 formally recognises gig workers and platform workers for the first time in Indian labour law — bringing them within the ambit of social security without classifying them as traditional "employees." A "gig worker" is defined as a person who performs work outside traditional employer-employee relationships; a "platform worker" is one who accesses organisations through an online platform for payment. "Aggregators" — digital intermediaries connecting buyers and service providers — are required to contribute 1–2% of their annual turnover (capped at 5% of payments made to gig/platform workers) to a dedicated Social Security Fund.
- Gig/platform worker coverage: life insurance, disability insurance, health and maternity benefits, old-age protection
- Aggregator contribution: 1–2% of annual turnover, capped at 5% of worker payments
- Karnataka was the first state to introduce standalone gig worker legislation (Platform-Based Gig Workers Social Security and Welfare Bill, 2024)
- India has an estimated 7–8 million platform workers (gig economy), projected to grow significantly
Connection to this news: The notified rules operationalise the Social Security Code's gig worker provisions, creating enforceable contribution obligations for aggregators (app-based delivery, ride-hailing, freelance platforms).
Industrial Relations Code — Key Changes to Dispute Resolution
The Industrial Relations Code, 2020 reforms strike notice requirements, layoff and retrenchment thresholds, and dispute resolution mechanisms. Notably, the threshold for requiring government permission for layoffs and retrenchments was raised from 100 workers to 300 workers — a provision that faced significant trade union opposition as it reduces protection for workers in medium-sized establishments.
- Standing Orders now apply to establishments with ≥ 300 workers (up from ≥ 100)
- Two-member Industrial Tribunals replace earlier complex tribunal structures
- Notice period for strikes in essential services: 60 days (increased from earlier provisions)
- Re-skilling fund established for retrenched workers
- Fixed-term employment contracts — benefits must be proportional to tenure (no minimum tenure requirement for gratuity)
Connection to this news: The notified rules now make the new thresholds and procedures legally operative, changing the compliance obligations for industrial establishments across the country.
Key Facts & Data
- Number of laws consolidated: 29 central labour laws into 4 codes
- Effective date of all four codes: November 21, 2025
- Final rules notification: May 2026
- Wage structure requirement: Basic + DA ≥ 50% of total CTC
- Gig/platform worker aggregator contribution: 1–2% of annual turnover
- Layoff/retrenchment permission threshold (IR Code): raised to 300 workers (from 100)
- Cotton productivity mission (same period): 32 lakh farmers targeted — unrelated but contextual
- Constitutional basis: Concurrent List, Entries 22 and 24; Articles 42, 43, 43A (DPSP)
- States required to also notify their own state-level rules for full implementation