Gradual Implementation of Labor Codes

Finance Minister Nirmala Sitharaman is set to outline a strategic plan for the gradual implementation of labor codes in the Union Budget 2025 speech. This initiative aims to prioritize larger establishments, offering a phased approach to compliance.

Official sources have revealed that the rollout could be executed in three phases, starting with large organizations employing over 500 people, followed by medium-sized firms with 100-500 employees, and finally, smaller enterprises with up to 100 employees. This approach will provide small businesses, which make up more than 85% of India's business landscape, a two-year window to align with the new codes.

Engagement with State Administrations

The labor ministry is currently in talks with the West Bengal and Delhi administrations to finalize the draft regulations. There is a reconsideration of introducing the less contentious Code on Wages and Social Security Code, as the administration aims to proceed cautiously on labor-related matters.

Senior labor ministry officials have initiated discussions with chief secretaries of both states to expedite the draft rules across all four Labour Codes. The ministry is optimistic that all states will be ready with draft rules by the end of the current fiscal year, paving the way for the Centre to roll out the Codes.

Consolidation of Labor Laws

In a move to enhance business operations efficiency and progress towards comprehensive social security, the administration has consolidated 29 central labor laws into four labor codes. This consolidation is expected to streamline compliance and improve the ease of doing business in India.