India has officially entered a new era of labour reforms with the implementation of the New Labour Codes 2025 by replacing 29 earlier labour legislations with four simplified and modernized labour codes.
These reforms focus to modernize employment regulations, streamline compliance, improve worker welfare, enhance social security coverage and strengthen worker rights across all categories including permanent employees, contract staff, fixed-term workers, gig/platform workers and the unorganized workforce.
This detailed guide explains how the new labour law affects salary structure, take-home salary, PF, gratuity, appointment letters, working hours, job security and long-term financial benefits while also identifying who benefits the most and what challenges may occur.
What Are the New Labour Laws in India 2025?
The new labour laws in India 2025 consolidate 29 fragmented and outdated labour regulations into four unified labour codes who are designed to simplify compliance and modernize the country’s employment framework.
These labour codes 2025 focus to standardize wage systems across industries, strengthen worker protection and social security by expanding statutory benefits to unorganized sector workers, and promote transparent documentation, structured workplace policies, and inclusive labour practices.
Understanding what are the 4 labour codes is important for both employers and employees navigating the labour law new rules 2025.
1. Code on Wages, 2019
The Code on Wages, 2019 creates a fair wage system for all types of workers. It sets minimum wage and national floor wage across states and job types.
It orders timely salaries and supports equal pay for men, women, and transgender workers. It stops unfair pay gaps between permanent, contract, gig, and informal workers.
2. Industrial Relations Code, 2020
The Industrial Relations Code, 2020 guides the bond between bosses and workers and keeps peace at work.
It brings fixed-term jobs with benefits like permanent workers. It quickly solves problems at work and creates clear exit rules for everyone.
3. Social Security Code, 2020
The Social Security Code, 2020 expands PF, ESIC, maternity, pension and gratuity coverage to a wider workforce, extending social protection benefits to gig workers, platform workers and unorganized employees.
It enables the creation of dedicated social-security funds for digital workforce and aggregator-based industries while strengthening long-term financial protection for contract, temporary and short-term workers.
4. Occupational Safety, Health & Working Conditions (OSH) Code, 2020
The Occupational Safety, Health & Working Conditions (OSH) Code of 2020 focuses on improving workplace safety, employee welfare and healthy working environments by regulating working hours, shift limits and night-duty norms.
It mandates compulsory health checkups, safety protocols, hygienic facilities and improved living and working conditions for employees, and applies to factories, construction sites, mines, transportation, export units and other hazardous industries.
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Key Highlights of the New Labour Law 2025
These labour law new rules 2025 introduce several major changes directly impacting salary structure, employment rules, workplace safety, and social security for workers across sectors.
Universal Minimum Wage
Mandatory minimum wage for permanent, contractual, fixed-term, gig and unorganized workers, aligned with national floor wage.
Mandatory Appointment Letters
Every employer must provide written employment letters, including to contract & gig workers — ensuring transparency.
Equal Pay for Equal Work
Eliminates gender-based wage discrimination and expands workplace equality protections.
Improved Working Hours & Overtime
- Regulated working-hour limits
- Double wages for overtime
- Weekly rest and shift scheduling norms
- Women permitted night shifts (with safety provisions)
Expanded Social Security
- PF, ESIC, pension & gratuity coverage for gig, informal & fixed-term workers
- Welfare funds for platform workforce
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New Labour Code 2025 Salary Structure Change
The labour code 2025 changes introduce a major restructuring in salary calculation, heavily impacting labour code 2025 salary impact, take-home pay, PF contributions, and new labour law gratuity eligibility. One of the biggest updates involves redefining how Basic Salary is determined within CTC.
Basic Salary Must Be Minimum 50% of Total CTC
Under the new rules:
- Basic salary must be at least 50% of the total CTC
- This change automatically increases PF contribution, bonus calculation and gratuity payouts
- Take-home salary may reduce slightly due to higher statutory deductions
- Earlier, companies kept basic pay low and shifted earnings to allowances to reduce PF and gratuity liabilities — this is no longer permitted under the new law
How Will Salary Change Under the New Rules?
These changes reshape how employers calculate salaries and how much employees receive as take-home pay versus long-term savings.
| Salary Component | Earlier Structure | New Law 2025 |
| CTC | ₹10,00,000 | ₹10,00,000 |
| Basic Pay | ₹3,50,000 | ₹5,00,000 |
| PF & Gratuity Contribution | Low | Higher |
| Take-home Salary | Higher | Slightly lower |
| Long-term Financial Benefit | Limited | Significantly stronger |
Under earlier salary models, basic pay was typically 30–35% of total CTC. Under new labour code 2025 salary restructure, it must now be 50% minimum.
Result
This structure may temporarily reduce monthly disposable income, but employees benefit through:
- Higher PF accumulation
- Larger gratuity payouts under the new labour code gratuity rules
- Stronger retirement savings
- Better long-term financial security
In simple terms, the new salary structure reduces short-term disposable income but substantially strengthens long-term financial health through improved social security benefits.
New Gratuity Rules Under Labour Code 2025
One of the most transformative parts of the new labour laws in India 2025 is the expansion of gratuity eligibility across multiple employment formats.
| Worker Type | Old Gratuity Rule | New Rule 2025 |
| Permanent Employees | Eligible only after completing 5 years of continuous service | Now eligible after 1 year of continuous service, enabling faster financial security |
| Fixed-term / Contract Workers | Not eligible earlier due to short employment duration | Eligible for gratuity after 1 year, same benefits as permanent employees |
| Gig & Platform Workers | Not covered under previous labour laws | Included under Social Security, with access to welfare funds and gratuity support |
| Daily Wage / Unorganized Workers | Very limited or no access to gratuity benefits | Expanded coverage & structured entitlement, improving long-term protection |
Gratuity Formula
[ Gratuity = (15/26) × Last Drawn Basic Salary × Years of Service]
Since basic salary must now be 50% of CTC, new labour laws gratuity payouts will be substantially higher.
Who Benefits the Most Under the New Labour Laws?
The New Labour Code 2025 brings significant advantages to a wide range of workers as well as employers by formalizing employment practices, improving social security, and standardizing workplace policies. Below are the groups that benefit most from the reforms:
Major Employee Beneficiaries
- Contract & fixed-term workers — Now eligible for social security and gratuity benefits similar to permanent employees.
- Gig workforce (delivery partners, ride-hailing drivers, freelancers, platform-based workers) — Included under social security coverage through dedicated welfare funds.
- Informal & unorganized workers — Receive access to minimum wages, structured employment documentation, and welfare protections.
- Factory & MSME workforce — Better wage protection, safety regulations and grievance redressal systems.
- Women employees — Equal pay provisions and permission to work night shifts with mandatory safety compliance, expanding career opportunities.
How Employers Benefit
- Simplified & digitized compliance processes, reducing paperwork and time spent on regulatory requirements.
- Reduced legal disputes and smoother operations due to standardized labour rules.
- Uniform documentation and transparent workforce records, enabling better workforce planning and minimizing conflicts.
Final Conclusion
The Labour law in India for private companies is undergoing a landmark transformation. While take-home salary may reduce slightly due to PF and gratuity increases, the reforms significantly strengthen worker protection, social security, wage fairness and long-term welfare.
For employees, awareness is essential; for employers, compliance is critical; and for the economy, these changes establish a more structured and transparent labour environment.
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FAQs on New Labour Law India 2025
1. What is the New Labour Code 2025?
A unified framework combining four major labour codes on wages, social security, industrial relations & safety.
2. Will take-home salary reduce?
Yes, due to higher PF and gratuity calculations based on 50% basic salary.
3. Are private companies included?
Yes, all organizations must comply with the labour law new rules 2025.
4. Do gig/platform workers get PF & gratuity?
Yes, they are now included under Social Security Code benefits.
