4 Labour Codes 2020 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
India consolidated its complex web of 29 central labour laws into 4 Labour Codes between 2019-2020. These Codes represent the most comprehensive labour law reform since independence. Though enacted, implementation is pending as states are still drafting rules.
Overview of 4 Labour Codes
| Code | Year | Laws Replaced |
|---|---|---|
| Code on Wages | 2019 | 4 laws (Minimum Wages, Payment of Wages, Bonus, Equal Remuneration) |
| Industrial Relations (IR) Code | 2020 | 3 laws (Trade Union Act, Standing Orders Act, Industrial Disputes Act) |
| OSH Code | 2020 | 13 laws (Factories, Mines, Plantations, Dock Workers, Building Workers, etc.) |
| Social Security Code | 2020 | 9 laws (EPF, ESI, Gratuity, Maternity Benefit, BOCW, ESIS, etc.) |
Code on Wages 2019 — Key Provisions
National Floor Wage
Central Government sets a National Floor Wage (NFW) below which no state can fix minimum wages. This prevents a "race to the bottom" in wage competition. Minimum wages for unskilled/semi-skilled/skilled/highly-skilled by sectors.
Universal Coverage
All employees (including piece-rate, time-rate) in all establishments covered — no minimum employee threshold. Previously, Minimum Wages Act applied only to scheduled employments.
Bonus
Retained bonus provisions (20% max, 8.33% min) but extended to all establishments with 20+ employees and employees earning up to Rs.21,000/month (salary cap for eligibility).
Industrial Relations Code 2020 — Key Changes
Retrenchment and Closure Threshold
- Old law: Establishments with 100+ workers needed government permission for retrenchment/lay-off/closure
- New Code: Threshold raised to 300+ workers
- States can raise the threshold further (but not lower it)
Fixed-Term Employment
Formalized fixed-term employment contracts — employees on fixed-term contracts get same benefits (PF, ESI, gratuity pro-rata) as permanent employees. Proportionate gratuity for fixed-term workers completing 1 year.
Standing Orders
Mandatory standing orders now only for establishments with 300+ workers (previously 100+).
Strikes and Lockouts
60-day notice required before strike in all industries (not just essential services). Prohibition on strikes during conciliation, arbitration, and tribunal proceedings.
OSH Code 2020 — Key Provisions
- Universal health and safety obligations applicable to all establishments with 10+ workers
- Working hours: Max 8 hours/day, 48 hours/week; overtime: 2x wage rate
- Annual leave: 1 day for every 20 days of work (previously 1 in 20 for adults in factories)
- Crèche facilities mandatory in establishments with 50+ women workers
- Inter-State Migrant Workers: registration of establishments hiring 10+ migrants; welfare facilities; return journey allowance
- Single licensing for factories instead of multiple approvals
Social Security Code 2020 — Key Extensions
Gig Workers and Platform Workers
- First-ever legal recognition of gig workers (app-based delivery, cab drivers) and platform workers
- Aggregators (Swiggy, Zomato, Ola, Uber) to contribute 1%-2% of annual turnover to a Social Security Fund for these workers
- Workers can access life/disability insurance, accident benefits, provident fund, health schemes
Retaining Core Provisions
- EPF: 12% employee + 12% employer (8.33% EPS pension fund)
- ESI: 0.75% employee + 3.25% employer (reduced from 1.75%/4.75%)
- Gratuity: 15/26 formula (15 days per year of service); 5-year minimum service
- Maternity benefit: 26 weeks (for first 2 children); 12 weeks for 3rd child and beyond
Implementation Status (2025)
- All 4 Codes received Presidential assent (2019-2020)
- Central rules partially framed; pending complete notification
- States required to frame their own rules under IR Code and OSH Code (concurrent list)
- Several states (Gujarat, UP, MP) have drafted rules; others pending
- Existing 29 laws continue to operate until central + state rules fully notified
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Get Free ConsultationKey Facts About 4 Labour Codes 2020
- Applies in: All states across India, under the relevant central law.
- Mode: Mostly online via the official government portal.
- Typical timeline: Ranges from a few days to a few weeks depending on the case.
- Non-compliance: May attract penalties, interest or late fees.
- Expert help: TaxClue completes the entire process end to end for you.
Have the 4 Labour Codes been implemented?
The 4 Labour Codes received Presidential assent in 2019-2020 but have not been fully notified/implemented as of 2025. Most states are in the process of drafting their rules. Implementation pending.
What is the Code on Wages 2019?
Replaces 4 laws: Minimum Wages Act, Payment of Wages Act, Payment of Bonus Act, Equal Remuneration Act. Introduces a National Floor Wage below which states cannot set minimum wages. Covers all employees.
Over 90% of compliance penalties in India arise from missed due dates — timely handling can save businesses thousands of rupees each year.
4 Labour Codes 2020: a key compliance topic in Indian tax and corporate law that businesses and individuals must understand to remain compliant.