India’s New Labour Codes Signal a Defining Workforce Shift
In a seismic shift for India’s workforce, the four consolidated Labour Codes—on Wages, Industrial Relations, Social Security, and Occupational Safety, Health, and Working Conditions—sprang to life on November 21, 2025, replacing 29 outdated laws that had stalled progress for decades. Prime Minister Narendra Modi described the reform as a “milestone for Atmanirbhar Bharat.” For millions of workers and businesses, the moment represents a long-awaited revival of workforce policy.
These reforms, debated for over ten years, address rigid rules from a pre-liberalization era where compliance hurdles discouraged investment and kept nearly 90% of the workforce in the informal sector.
New Labour Codes and Workforce Reform 2025: Why now?
As India aims for a $5 trillion GDP by 2027, antiquated mandates—such as a compulsory 240-day eligibility period for leave and fragmented social security norms—had become bottlenecks for formal employment and innovation. The new codes promise flexibility, equity, and security. They strengthen India’s position as a destination for global capital while giving structure and support to a labour force that exceeds 500 million individuals.
New Labour Codes: A Transformative Moment for Workforce Management
At Spectrum Talent Management, we see these four labour codes as a catalyst for India’s economic potential. This change is not limited to administrative relief; it establishes a stronger relationship between business performance and employee well-being.
A key shift is the formalization of the “precariat”—workers vulnerable to exploitation. The codes reduce risk and raise participation, especially among young professionals and women, who collectively form 40% of India’s gig workforce.
Traditional sectors benefit from revised work-hour models. The earlier rigid 48-hour weekly limit now allows flexible distribution, such as 12-hour shifts across four days. Worker consent remains central, and state governments can implement additional safeguards through defined limits on overtime.
Women, previously restricted from night duties, can now choose such roles when supported by mandated safety measures. This change could lead to the entry of nearly 50 million women into the workforce by 2030, according to ILO estimates.
Annual leave eligibility falls from 240 days to 180 days. Maternity benefits also extend universally, supporting retention, upskilling, and sustained workforce attachment.
Labour experts from organizations like FICCI anticipate a 10–15% rise in formalization, adding nearly 20 million jobs in MSMEs alone due to revised hiring and separation norms for firms with fewer than 300 employees.
Economic Impact: New Foundations for Growth
Economically, these codes are powerful drivers of inclusive growth. The requirement for 50% of CTC to be basic pay increases retirement savings. Provident Fund and gratuity contributions may grow by 20–50%, while reducing scope for wage structuring practices that diluted transparency in the past.
The World Bank estimates that these reforms could generate a 1–2% lift in GDP, fueled by higher productivity. Preventive medical checkups and creche facilities are expected to reduce absenteeism and improve workforce consistency.
Gig worker inclusion is another major milestone. By bringing nearly ₹2 lakh crore of annual transactions into formal reporting channels, the codes create taxable pathways and seed a social security foundation for nearly 80 million unorganized workers.
This moment represents a deep recalibration of India’s economic foundation. It is a decisive step toward using the country’s demographic strength effectively. The shift toward a flexible, structured, and participative labour market marks the beginning of a new era for India’s workforce and business ecosystem.
New Labour Codes Strengthening Global Workforce Competitiveness
India’s labour reform journey has been long and complex. While implementation across states will take time, businesses, HR leaders, and workers now have a clearer framework that supports long-term planning. As compliance becomes more consistent and worker protections more comprehensive, India’s position in global workforce competitiveness is likely to strengthen further.
By Atanu Banerjee, CEO, Spectrum Talent Management