The new labour codes retain all existing worker welfare provisions, including layoff compensation, labour secretary Vandana Gurnani said in an interview to Moneycontrol, almost 10 days after the norms, one of the biggest overhaul of recent times, came into effect.
Some labour unions have said the new norms encourage hire and fire, as only businesses with more than 300 workers will now be required to obtain government approval before layoffs or shutting down operations. Earlier, the threshold was 100.
Gurnani said the raised threshold doesn’t change the compensation that establishments will have to pay to sacked workers.
"For an individual worker, the provisions that were there before remain the same. If an individual has to be laid off, a notice has to be given and 15 days of compensation for every completed year of service has to be provided. That has (been) continued," she said.
In fact, the “re-skilling fund”, which the new codes offer, will improve employment opportunities. The fund, which will have contributions from the employer, will help re-skill and re-train workers for new job opportunities, the labour secretary said.
The fund has been introduced in the Industrial Relations Code, 2020. Its primary purpose is to provide immediate, dedicated financial support to workers who have been retrenched (laid off) due to restructuring, economic changes, or automation, helping them acquire new skills and find new employment.
Basic safety norms intact
On the tweaks made to obtain a factory licence, which invites greater scrutiny from government officials, Gurnani said the intent is to enhance ease of doing business without compromising workers’ safety.
The Occupational Safety, Health and Working Conditions (OSH) Code, 2020 has revised the threshold for obtaining a factory licence based on the number of workers and the use of power.
For units using electricity in their operations, the threshold has been increased to 20 workers from 10 and for units without power, it has been raised to 40 from 20.
While basic safety is mandatory for all units, the factory classification triggers a new set of provisions focused on the structure, machinery, and complex welfare facilities required for larger operations.
For instance, factories involved in hazardous processes will require Site Appraisal Committee approval for initial location or expansion after obtaining their licence to ensure environmental and public safety.
For the welfare of workers, it is mandatory to provide a creche for children under six years of age if 50 or more workers are employed.
The new thresholds don’t mean data of workers will not have to be submitted with the government, Gurnani said.
"The registration of the unit will be done, and if there is any labour law violation, or basic safety measures are absent, it will be acted upon," she said.
'Right to strike not taken away'
The right to strike has not been taken away, the official said as she sought to address another concern raised by labour unions. "The only new addition is that a 14-day notice has to be given before a strike. The purpose is to ensure that there is no sudden disruption of activities, and a period of conciliation is given so that things move smoothly," she said.
"As far as recognition of unions is concerned, all provisions are the same. In fact, it has become more transparent. And very clear timelines and standard procedures have been given so that there are no delays in recognising the union. The unions will now be given a statutory recognition. This strengthens their bargaining power," she added.
Some labour unions have described the new recognition mechanism as "arbitrary, undemocratic, and anti-worker".
While the old law required a minimum of seven members to form a labour union, the
The Industrial Relations Code, 2020, raises the trade union formation threshold from seven members to 10 percent of the workers or 100 members (whichever is lower.
It also adds that the recognised union must have the support of at least 51 percent of the workers for negotiations with the establishment or a “negotiating council”, comprising representatives of all registered trade unions that have the support of at least 20 percent of the workers, should be set up.
The new codes
India's new labour codes, consolidated under the Code on Wages, 2019, Industrial Relations Code, 2020, Code on Social Security, 2020 and Occupational Safety, Health and Working Conditions Code, came into effect on November 21, 2025. These replace 29 laws and affect more than 65 crore workers.
These norms aim to make doing business easy, offer flexibility and create more jobs while protecting millions of gig workers.
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