BEYOND COMPLIANCE: TURNING INDIA’S NEW LABOUR CODES INTO A STRATEGIC ADVANTAGE

A) Here’s what these reforms mean and why they matter:

• Promoting Gender Equality: For the first time, women’s ability to work night shifts across various sectors is permitted, provided they consent and safety measures are ensured. This opens doors to higher-paying roles traditionally closed off to women. The codes also mandate women’s representation in grievance committees, ensuring their voices are heard in workplace decision-making. Discrimination based on gender or identity is explicitly prohibited, fostering equal opportunity for all.


• Clear and Fair Notice Periods: The reforms standardise notice and severance provisions, making it easier for businesses and workers to plan transitions without uncertainty or conflicts.


• Decriminalisation & Facilitation: Minor labour offences now focus on compliance promotion rather than harsh punishment, helping businesses adopt better practices without the fear of severe legal consequences.


• Higher Thresholds & Simplified Rules: Registration, standing orders, and layoff approval thresholds have increased, offering businesses greater operational flexibility and reducing unnecessary regulatory hurdles.


• Flexible Work & Work From Home: The codes formally recognise remote work in the services sectors and encourage flexible scheduling, supporting modern workforce expectations.


• Inclusive Coverage of Gig & Platform Workers: This long-overdue acknowledgement brings millions of informal workers into the social security and legal protection fold.

B) What does this mean for employers and businesses?

• Short-term impact: Companies must update HR policies and compliance frameworks. This includes ensuring protective night-shift infrastructure, clear grievance redressal mechanisms, and realignment of wages to new statutory minimums and social security contributions. Early audits and risk assessments are recommended.


• Long-term advantage: The formalisation of flexible employment models like gig and fixed-term work stabilises workforce dynamics. Streamlined dispute resolution mechanisms reduce litigation risk and downtime. Empowering women and enhancing workplace equality not only opens up a broader talent pool but also improves organisational culture and retention.

C) Some key actions for organisations include:

• Evaluating Workforce Categories: Review employee roles to determine who qualifies as a ‘worker’ under the new expansive definitions, accounting for the substantial work nature rather than narrow contractual terms.


• Revisiting Salary Structures: Analyse the impact of the revised and broad ‘wages’ definition, which includes basic pay, dearness allowance and Retaining Allowance on overall salary frameworks, benefits, and statutory contributions such as PF, gratuity, and bonuses.


• Financial Impact Assessment: Anticipate increased costs from expanded statutory benefits, including gratuity eligibility after one year, mandatory social security coverage extended to gig, platform, fixed-term and contract workers, plus new requirements like annual health check-ups.


• Rethinking Hiring Models: Examine contract labour and fixed-term employment usage in light of new equal-benefit mandates and stricter compliance, potentially pivoting towards direct hiring or integrated workforce planning.


• Updating HR and Payroll Policies: Ensure all policies, employment agreements, payroll systems and compliance processes align with both the central labour codes and varying state-level adaptations and notifications.


• Establishing Robust Compliance Mechanisms: Set up strong internal controls, governance structures, and periodic diagnostic reviews to monitor adherence, mitigate risks of penalties and enable timely interventions.

The evolving nature of state-level implementation, coupled with the critical need for workforce awareness and streamlined compliance monitoring, will largely determine how effectively these labour laws translate from paper to practice.

Organisations that proactively invest in these areas will not only avoid costly legal pitfalls but also position themselves as responsible employers, fostering a safer, more equitable and engaged workforce crucial for long-term sustainable growth.

OBOX IS COMMITTED TO PARTNERING WITH YOU THROUGH THIS TRANSFORMATION.

Leveraging our deep expertise, we assist businesses in mapping change requirements, redesigning compliance and people processes, and ensuring smooth payroll and operational execution. Together, we can turn regulatory complexity into a strategic advantage.