The New Labour Code 2025 aims to modernize Indian labour laws by introducing a 4-day workweek, enhanced social security, and simplified regulations. It balances employee welfare and employer flexibility, ensuring economic growth while promoting better workplace conditions and ease of doing business.The Modi government plans on making significant reforms to Indian labour laws with its proposed New Labour Code 2025. These reforms aim at simplifying and modernizing labour laws while increasing employee social security protections while decreasing business hassles for employers.

Some of the more well-known features of the new labour code involve its 4-day workweek structure, where employees receive three days off per month but have longer hours on remaining four days. On one hand, this may reduce salary structure modifications caused by increased PF deductions; but on the flip side may lead to better post-retirement benefits.

How Will Labour Code Be Implemented Stepwise?

In order to ensure an effortless transition, the government will implement the new labour codes in three stages:

• Phase 1: Involves companies employing 500 or more workers.
• Phase 2: Covers medium-sized businesses between 100 and 500 workers.
• Phase 3: Businesses employing less than 100 people will have up to two years for compliance with this phase.

This staggered approach ensures that India's micro, small, and medium enterprises (MSMEs), which make up over 85% of companies in the country, have enough time to adapt without incurring undue financial hardship.

Key Features of New Labour Codes

The government consolidated 29 central labour laws into four acts, as follows:

• The Code on Wages: Ensures minimum wages and timely payment to employees across industries.
• The Social Security Code: Strengthens provisions related to PF, gratuity, maternity benefits, and insurance.
• The Industrial Relations Code: Streamlines dispute resolution mechanisms while improving labor relations.
• The Occupational Safety, Health, and Working Conditions Code: Emphasizes workplace safety, employee welfare, and creating an optimal working environment.

Objective of the New Labour Code

These reforms aim to balance employee welfare with employer flexibility in order to safeguard India's workforce while giving businesses freedom in pursuit of economic development.

Will Employees Only Work Four Days Each Week?

The proposal to introduce a four-day workweek has generated immense attention.

• Longer Shifts: Employees must now work 12-hour shifts instead of the standard 8-9 hours to meet the 45-hour weekly work requirement.
• Higher PF Deductions: With higher basic pay structures, contributions to the Provident Fund will increase, serving as long-term investments but reducing immediate cash receipts.
• Improved Work-Life Balance: Employees will have three consecutive days off, allowing more time for personal well-being and relaxation.

However, this system remains voluntary, allowing companies to choose between four-day, five-day, or six-day workweeks based on industry needs.

How Will Small Businesses Be Affected?

Small enterprises, which form the backbone of India's economy, will have two years to adjust to the new labor codes. This extended timeline ensures:

• MSMEs will not face serious financial burdens due to increased compliance costs.
• Small firms will have sufficient time to plan and implement necessary workforce and salary adjustments.
• Businesses will have time for training and awareness programs regarding the new labor laws and their implementation.

Collaboration of Central and State Governments

For proper adoption, collaboration between the Central and State Governments will be essential. The Labour Ministry is currently discussing proposed regulations with state governments. In the first phase, efforts will focus on developing the Code on Wages and Social Security Codes for all states, with draft rules expected by March 2025.

What Are the Impacts of New Labour Codes?

The new labor codes will bring significant transformation to India's workforce and business environment.

• For Employees: Improved social security measures, increased PF contributions, and better gratuity plans.
• Work-Life Balance: A four-day workweek could provide better work-life balance and improved workplace safety.
• For Employers: Reduced regulatory hurdles, increased flexibility in workforce management, and simplified compliance.
• Faster Dispute Resolution: Legal disputes will be resolved more efficiently, reducing challenges for businesses.

For the Economy:
International competitiveness for labour has seen significant improvements, with labor codes now closely aligned to international standards. Reforms designed to facilitate doing business would instil trust with foreign investors.

Enhance formal employment through creating more conducive working environments.
The New Labour Code 2025 signals an important shift in India's employment landscape. By offering four-day workweeks, enhanced social security benefits and updates to regulations, the government aims to usher in an era of equal opportunity for employees and businesses alike.

How this change of perception could translate to meaningful effects will depend on its implementation and how industries respond; accordingly, labour markets in India with state and central cooperation will likely continue on this progressive path towards safeguarding economic growth while simultaneously protecting worker welfare for many years to come.

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