States will now have to adapt and align their own labour regulations with the codes provided by the union government – a potentially complex process that could shape the real-world impact of the changes.

India has come into force with four new labour codes, described by the government as a major reform to update and streamline worker regulations.

The new laws have triggered fierce backlash from trade unions. The codes, covering wages, industrial relations, social security and occupational safety, were approved years ago by Parliament but officially implemented on 21 November 2025.

The government argues the overhaul will modernise outdated labour laws, many dating to the colonial era. The government says that this will make it easier for businesses to manage workforces, while also extending protections to gig and platform workers.

The government has positioned the new structure as a modern, simplified framework aimed at strengthening India’s competitiveness, boosting job creation, and extending social protection to millions of informal workers. But trade unions warn that the reforms tilt the balance of power heavily in favour of employers, dilute job security guarantees, and erode rights won through decades of collective bargaining.

Ten of India’s largest trade unions have denounced the reform as a “deceptive fraud” that undermines workers’ rights.

Opposition Triggered – Unions Call for Mass Protests

Trade unions aligned with opposition parties say they will launch “nationwide protests” starting 26 November, calling on workers across the country to reject the newly minted labour regime.

On 22 November, the Centre of Indian Trade Unions (CITU) and other unions held rallies in Bhubaneswar, where protestors even burned copies of the labour codes.

Unions argue that the changes make it too easy for companies to hire and fire workers, reduce job security, and weaken collective bargaining power. They warn that small and mid-sized enterprises may be especially vulnerable, calling for transitional support from the government.

Workers’ groups say their primary objections centre on weaker protections against layoffs, increased flexibility for employers to modify working conditions, and restricted avenues for workers to raise disputes. The Industrial Relations Code, in particular, has sparked criticism for raising the threshold of prior government approval for layoffs from 100 to300 workers, giving medium-sized companies significantly more freedom to retrench staff.

According to unions, industrial establishments will now be able to “hire and fire at will,” fundamentally altering the balance between capital and labour. They also argue that the new framework could discourage unionisation, as the rules around the recognition of trade unions, strike notices, and conflict resolution have become more restrictive. Protest organisers warn that without rollback, the reforms could trigger widespread industrial unrest in the coming months.

What the Government Says on the New Labour Codes

Officials say the reforms streamline 29 older labour laws, replacing them with four comprehensive codes intended to reflect modern work realities.

Key provisions include:

• Raising the approval threshold for mass layoffs: firms now need permission only if laying off 300 or more workers, up from 100.
• Formal recognition and social security benefits (like provident fund, insurance) for gig and platform workers.
• Expanded rights for women: consenting women can now work night shifts, receive equal pay, and be included in grievance committees.
• Enhanced safety and welfare measures, including mandatory representation in grievance redressal bodies.

Women’s rights groups have cautiously welcomed the decision to allow women to work night shifts subject to safety measures, grant equal wages for similar work, and mandate participation of women in workplace grievance committees. Analysts say that, if implemented well, these provisions could support women’s labour force participation, which has historically been among the lowest in major economies.

The government has also stressed that the reforms support the broader vision of building a “future-ready workforce” in line with the goals of Aatmanirbhar Bharat. Officials say the new structure will attract investments by reducing compliance costs, standardising rules across states, and making India a more predictable labour market for global manufacturing.

Broader Labour Landscape Under Scrutiny

The reform comes at a time when India’s labour market has seen notable shifts. According to the ministry of labour, India’s unemployment rate fell to 3.2 per cent by 2024, down from 6 per cent in 2017.

Registered coverage of social protection has also increased significantly: over 300 million unorganised workers are now on the e-Shram portal, and the share of the population under social protection rose from 24.4 per cent in 2019 to 64.3 per cent in 2025, according to government data.

Critics argue that while the promises of worker protection are real, practical concerns remain – especially for low-income and contract workers who may lack means to challenge new powers being given to employers.

With protests scheduled for 26 November, the next week could be a flashpoint in India’s labour history. Unions have vowed sustained action until the government rolls back the reforms.

States will now have to adapt and align their own labour regulations with the codes provided by the union government – a potentially complex process that could shape the real-world impact of the changes.

Legal experts also warn of confusion during the transition period, as legacy laws get repealed and administrative mechanisms are updated.

Labour economists caution against reading the headline numbers uncritically. They note that a large portion of India’s workforce remains informal, underpaid, and without stable contracts. Critics also fear that easing retrenchment norms could encourage companies to rely more heavily on fixed-term employment, leading to frequent turnover and weaker job continuity.

Small and medium enterprises (SMEs) – which account for close to 30 per cent of India’s GDP and are among the biggest employers – have expressed mixed reactions. Some SME associations say the simplified compliance norms will reduce administrative burdens, but others warn that they may struggle to meet new safety and welfare standards without financial support or transition time.