Equal pay, social security, night shift protection: what the new labor codes mean for India’s IT workforce
In the most sweeping labor reforms India has seen in decades, the Center on Friday notified the implementation of four new labor codes, restructuring 29 existing laws under a unified framework. The government says the overhaul aims to simplify compliance, ensure on-time wages and significantly strengthen worker protections – with the IT and IT services (ITES) sector among the largest to see immediate impact.
The four codes – Wages Code (2019), Industrial Relations Code (2020), Social Security Code (2020) and Safety, Health and Working Conditions Code (2020) – are now in force across the country.
A major change is the requirement for IT and ITES companies to extend full social security benefits to fixed-term employees, thereby bringing them on par with permanent workers. This includes provident fund, ESIC, insurance cover, gratuity and other entitlements – a long-standing demand in a sector heavily dependent on contract workers, vendor staff and project-based deployments.
The Ministry of Labor and Employment said that previously, employers were not required to meet specific deadlines for payment of wages. Under the new rules, companies must now pay salaries by the 7th of each month, a move that is expected to improve cash flow stability for millions of workers and build greater trust in employer-employee relationships.
The codes also mandate “equal pay for equal work,” putting pressure on IT companies to eliminate pay disparities between positions with similar skill levels. At the same time, the new laws aim to boost women’s participation in the workforce by requiring companies to facilitate safe working conditions for women working night shifts – including transportation, security and grievance mechanisms.
Additionally, the codes require companies to expedite resolution of complaints related to harassment, pay disputes and discrimination, while making appointment letters mandatory for all categories of employees.
For the IT sector, which employs thousands of contract and fixed-term workers, the reforms introduce much-needed uniformity in employment conditions. Industry body Nasscom called the reform “a step towards greater predictability and transparency”, adding that its full implementation must ensure alignment between central codes and state-level labor and shops and establishments laws.
“As the rules are finalized, Nasscom will focus on supporting a smooth and practical transition for the industry,” he said, noting that avoiding compliance overlap must be a top priority.
The government says the consolidated framework modernizes India’s labor governance system, strengthening protections once scattered across 29 laws and preparing the workforce for more dynamic and flexible employment models.
