Key Labour Reforms: National Minimum Wage, 1-Year Gratuity Now Effective
India’s four new labour codes came into force on Friday, bringing transformative changes including a national minimum wage for all workers and reduced gratuity eligibility to just one year for fixed-term employees.
Key Changes at a Glance
- Gratuity after 1 year instead of 5 for fixed-term employees
- National minimum wage covers all workers
- Free annual health checkups for workers above 40
- Written appointment letters mandatory for all hires
- Women permitted in night shifts and hazardous jobs
Union Labour Minister Mansukh Mandaviya announced the notification of the four codes and operational rules on Friday. The reforms replace 29 outdated labour laws with four comprehensive codes passed by Parliament during 2019-2020.
Major Benefits for Workers
Fixed-term employees will now receive the same benefits as permanent staff, including leave, regulated working hours, and medical benefits. All companies must pay salaries on time, with IT firms specifically required to release salaries by the 7th of every month.
The codes formally define gig and platform workers for the first time. A gig worker is defined as “a person who participates in a work arrangement and earns from such activities outside of a traditional employer-employee relationship.”
Women Workforce Empowerment
In a significant move, women can now work night shifts and enter hazardous sectors like mining, subject to their consent and necessary safety measures. This aligns with the government’s goal to enhance female labour force participation.
“The labour codes promote employment opportunities for women and are gender neutral,” said Union Labour Minister Mansukh Mandaviya.
Expanded Social Security
ESIC coverage has been made compulsory for establishments with even one employee engaged in hazardous processes, with nationwide availability instead of limited to select regions.
The reforms provide companies greater flexibility in hiring while establishing new safety standards and expanding social security benefits across all sectors.
