From 21 November 2025, India’s labour regime underwent sweeping reforms as several older labour laws were consolidated into four comprehensive codes. These legislate fresh rules around wages, social security, work conditions, and employer-employee relations.

A key change is that basic salary must now form at least 50% of total CTC (cost-to-company). While this may reduce allowances and take-home pay in the short term, it can lead to larger long-term retirement benefits, enhanced provident fund (PF) contributions, and better gratuity offering greater financial security for workers.

For employers and HR divisions, the shift demands salary restructuring, compliance updates, and reworking employee contracts. Smaller companies may face initial pressure adjusting to the norms, but the expectation is that over time, the standardisation will lead to fairer working conditions nationwide.

Observers note the broader objective: to modernize labour laws for current economic realities, protect gig and contract workers, and align India’s workforce framework with global labour standards. If implemented transparently, this could improve job security and worker welfare across sectors.