India's four new labour codes, implemented on 21 November 2025, are now entering their fifth month of operation and are being categorized as a living reform rather than a static policy shift. According to Mint, these codes have replaced 29 fragmented statutes with a unified framework aimed at balancing worker welfare with efficient economic management. The reforms are best viewed as an evolving system, with outcomes depending on effective coordination, compliance, and alignment across industries and states. Early trends indicate increased formalisation, broader wage security, and expanding social protection coverage, though comprehensive evaluation requires more time.
Under the labour codes, earned leave accrues at a standard rate of one day for every twenty days of work, subject to eligibility conditions. As reported by The Times of India, this creates a common reference point across the country. However, State Shops and Establishments laws follow different approaches, with some granting fixed numbers of leave days annually while others link leave closely to days worked. The new codes also introduce clearer carry-forward limits for unused earned leave, preventing unlimited accumulation while protecting employee interests. These reforms aim to consolidate and simplify dozens of older labour laws into a more modern and streamlined framework that addresses the needs of platform workers.
The labour codes significantly expand leave encashment opportunities during employment. According to The Times of India, employees may now be entitled to encash leave exceeding permissible carry forward limits even while remaining in service. Under the new provisions, workers are entitled to encash leave at the end of each calendar year, with entitlements available where total leave exceeds 30 days. This represents a departure from earlier practices where leave was typically encashed only upon resignation, retirement, or termination. The codes also recognize the rise of remote and hybrid working models, accelerated by the COVID-19 pandemic, which require new frameworks to address the legal and regulatory aspects of distributed workforces.
The new labour codes establish comprehensive overtime regulations requiring employers to pay double the standard rate for any work beyond normal hours. As reported by Mint, normal working hours are set at 8 hours per day and 48 hours per week for most factories and establishments, with any additional work treated as overtime requiring worker consent. Managerial and administrative employees are typically excluded from overtime pay provisions, while supervisory employees may lose entitlement if their work is primarily managerial or if their pay exceeds government-set limits. The codes also mandate universal coverage ensuring basic wage protections apply to all employees regardless of wage limits or designation, including protection against discrimination based on gender including transgender identity.
Unused earned leave settlement remains consistent across Indian labour laws, with clear procedures for employment termination scenarios. As reported by The Times of India, unused earned leave is expected to be settled when employment ends, whether through resignation, retirement, retrenchment, or termination. The calculation method varies by applicable law, with State S&E laws referring to specific wage definitions while labour codes require calculation using the Code's wages definition, which may differ from earlier practices. The codes also address the growth of the gig economy, where millions of Indians now earn income through digital platforms such as ride-hailing services, delivery apps, and freelance marketplaces, requiring effective regulation to ensure worker protections while encouraging entrepreneurship.
The transition to new labour codes presents significant implementation challenges for both employers and employees, as highlighted by Bharat Samachar. Employers must align internal policies with both Central and State laws while ensuring smooth implementation. The dual legal framework creates complexity, as different State laws and leave rules may still apply depending on employment location. Clear communication and regular policy reviews remain crucial during this transition period. Recognizing the evolving nature of work, policymakers are focusing on skill development initiatives under Skill India and the National Skill Development Mission to prepare the workforce for emerging industries. As noted by Bharat Samachar, investing in education and training will be essential to ensure that technological disruption leads to opportunity rather than unemployment, with digital literacy, data analysis, AI knowledge, and software development becoming increasingly important skills for the future workforce.
