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Impact of India's New Labour Codes on Workers

Author

Listed:
  • Mehrotra, Santosh

    (University of Bath)

  • Sarkar, Kingshuk

    (affiliation not available)

Abstract

India introduced sweeping legal changes on labour laws in late 2025, summarising 29 laws into 4 labour Codes. The Key Changes and Concerns Industrial Relations Raises the threshold for requiring government permission for layoffs/retrenchments from 100 to 300 workers, encouraging firms to avoid permanent employees; Introduces "sole negotiating union" requiring 51% worker support; Imposes 14-day notices and prohibitions during conciliation, making legal strikes impossible Wages: Introduces unclear "floor wage" concept without adequate distinction from minimum wage; Lacks mechanism for revising the basic wage component based on changing consumption patterns; Social Security: Maintains 10-worker threshold for provident funds and benefits, excluding most unorganized sector workers; Misses opportunity to universalize social security as a legislative right Occupational Safety: Covers only establishments with 10+ workers, excluding smaller workplaces; The codes represent missed opportunities for genuine labor reform, avoiding issues like job security, collective bargaining rights, fair minimum wages, gender discrimination, and social security - especially for majority of India's workforce in the informal sector.

Suggested Citation

  • Mehrotra, Santosh & Sarkar, Kingshuk, 2025. "Impact of India's New Labour Codes on Workers," IZA Policy Papers 218, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izapps:pp218
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    Keywords

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    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation
    • J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence

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