The New Labour Code 2025 – What It Means for Employers and Employees

praveen
Dec 2, 2025
2 min read

The labour landscape in India is set for a historic transformation with the new Labour Code taking effect in November 2025. These reforms will impact employers, employees, and HR professionals alike. Understanding the updates is crucial for smooth workplace navigation and compliance.

This guide breaks down the most important changes and their practical implications.

⏱ Updated Working Hours & Other Rules

Working Hours: Capped at 8–12 hours per day and 48 hours per week.
Basic Pay Rule: Must form at least 50% of total salary, affecting PF, gratuity, and other benefits.
Overtime: Consent-based, paid at double the normal wage rate.
Appointment Letters: Mandatory for all workers.
Salary Payment: Must be made by the 7th of every month in case of in IT & ITES sectors.
Full and Final Settlement: All pending dues must be cleared within two working days of an employee's resignation, dismissal, or retrenchment.
Social Security: PF, ESIC, insurance, and other benefits extended to gig and platform workers.
Health Check-ups: Free annual check-up for workers above 40 years
Gratuity: Eligibility reduced to 1 year (earlier 5 years).
Layoff Thresholds: Companies with up to 300 workers can hire/fire without prior government approval (earlier limit was 100).

🛡 Stronger Protections Against Workplace Discrimination

Clear Definitions: Bullying, sexual harassment, and other prohibited behaviours explicitly defined.
Mandatory Training: Diversity and inclusion programs for all employees.
Confidential Reporting: Channels for victims of discrimination.

✅ These rules strengthen job security and transparency.

💻 Remote Work & Flexible Arrangements

Employer Responsibility: Provide equipment and cover expenses.
Flexible Hours: Encouraged within agreed limits.
Data Security: Remote work contracts must include confidentiality clauses.

🏢 Impact on Employers & HR Practices

Employers and HR teams must proactively adapt:

Revise contracts and handbooks.
Train managers on new overtime, leave, and termination rules.
Implement confidential reporting systems.
Ensure remote work agreements meet legal standards.

👩‍💼 What Employees Should Know

Employees should stay informed about their new rights:

Overtime limits and pay rates.
Expanded leave options.
Protections against discrimination.
Rules around contracts and termination.
Remote work entitlements.

⚖️ Final Takeaway

The 2025 Labour Codes mark the biggest labour reform in decades, aiming to balance worker protection with business flexibility. For employers, compliance is key; for employees, awareness is empowerment.