INDIA: An introduction to Employment
2025 Vision: The Shifting Landscape of Employment Law and its Impact on Indian Businesses
The employment landscape in India is on the brink of a significant transformation, driven by legislative reforms, evolving workforce expectations and global trends reshaping workplace policies and practices. As of 2025, businesses must navigate a dynamic legal landscape characterised by an expected shift in the regulatory framework governing employment matters, the rise of gig and remote work, increasing employee activism, and heightened scrutiny of workplace practices. Understanding these developments is crucial for employers not only to remain legally compliant and mitigate risks associated with prolonged labour disputes, but also to foster a fair and flexible work environment that supports long-term business success.
The existing labour and employment laws have long been considered complex due to superfluous and archaic provisions, overlapping and inconsistent statutory definitions, intersecting regulatory authorities and filing requirements. While these laws have undergone certain changes from time to time, they were not holistically amended from a uniformity, multiplicity, and sufficiency perspective to enhance business governance. The introduction of the four new labour codes, viz., the Code on Wages, 2019, the Industrial Relations Code, 2020 (“IR Code”), the Code on Social Security, 2020, and the Occupational Safety, Health, and Working Conditions Code, 2020 (“OSH Code”), marks the beginning of this essential process. These new codes seek to consolidate 29 federal labour laws with the objective of reducing compliance burden and improving ease of doing business. Although the labour codes were passed by the Parliament between 2019 and 2020, their enforcement took a backseat due to the COVID-19 pandemic and political considerations. Further, the delay by state governments to finalise their state-specific rules also created roadblocks in their timely enforcement. Currently, there is significant progress as the majority of the states have published their respective draft rules and only a handful are yet to formulate them.
The new labour codes introduce several crucial changes, including a standardised definition of “wages”, which may affect payroll structures and employer contributions to social security schemes. The IR Code facilitates easier hiring and firing processes, allowing employers greater flexibility in workforce restructuring. Another major reform is the inclusion of gig and platform workers under the social security framework, marking a significant step in recognition of non-traditional work arrangements. The OSH Code emphasises enhanced safety standards and worker well-being, requiring employers to invest in better workplace conditions. Together, these changes compel employers to reassess their HR policies, compliance strategies and overall approach to workforce management. Further, this regulatory shift promises to create an investor-friendly business climate where India’s demographic dividend, and the government’s push for upskilling to foster employability can be gainfully capitalised.
Beyond legislative changes, India Inc. has also been witnessing a noticeable rise in employee activism. Employees are becoming more vocal about their rights, using digital platforms to demand fair wages, better working conditions, and corporate accountability. The rise in social media activism has further intensified public scrutiny of employment practices. Embracing this wave of activism by actively listening to employees and implementing meaningful changes has become imperative like never before to enhance employee satisfaction and retention, while positioning organisations as progressive employers in a highly competitive job market.
Despite the shift from an agrarian to a knowledge-based economy, workplace laws continue to follow industrial-era standards, failing to account for the changing nature of work. The evolution of remote and hybrid working models has prompted employers to rethink traditional workplace dynamics. With Gen-Z entering the workforce, mental health awareness and employee well-being has also become increasingly important. In this respect, India had also introduced the Right to Disconnect Bill, 2018 to facilitate a framework that allowed employees to disconnect outside of their regular work hours. This bill sought to address the growing concerns over work-life balance, mental health and employee burn-out, especially in a post-pandemic world where remote work has blurred the lines between personal and professional time. While the intent was to protect employee rights and promote a healthier work environment, the bill’s status currently remains uncertain as legislators weigh the potential impact that such law may have on businesses and operational flexibility.
The growth of the gig economy is another major factor redefining employment structures. With a large section of India’s workforce now engaged in freelance, contract, or platform-based jobs, legal uncertainties surrounding worker classification have become a pressing issue. The new labour codes address this by recognising gig and platform workers as a separate category of workers, but businesses will still need to navigate compliance complexities regarding benefits, taxation, and others.
Organisations have recognised that diverse teams drive innovation, enhance problem solving and improve employee satisfaction. Accordingly, companies have been implementing comprehensive DEI (Diversity, Equity and Inclusion) strategies to promote gender equality, disability inclusion, and LGBTQ+ rights, that go beyond mere compliance, by adopting global best practices and cultivating a workplace culture that allows its employees to thrive. While India is taking baby steps in terms of laws that mandate DEI initiatives, such as the Rights of Persons with Disabilities Act, 2016 and the Transgender Persons (Protection of Rights) Act, 2019, ensuring equal pay, adopting unbiased hiring processes and providing a harassment-free environment, have become top priorities for businesses aiming to attract and retain top talent.
Looking ahead, the future of employment law in India will likely witness further regulatory refinements and new policy initiatives. While one of the most anticipated developments continues to be the full-scale implementation of the labour codes, policymakers may also introduce separate regulations for gig and platform workers, thereby establishing a clearer distinction between employees and independent contractors besides minimising legal uncertainties for businesses. Another area of potential reform is data protection and employee privacy. With increasing reliance on digital HR tools, AI-driven recruitment, and remote work surveillance technologies, there is growing concern over how employee data is collected and used. Further, as remote and hybrid work models become entrenched, legislation addressing the same can also be expected.
In this evolving legal landscape, businesses that take a proactive approach to compliance and workforce management will be best positioned to thrive in an increasingly dynamic environment, turning potential regulatory hurdles into avenues for growth and innovation. Employers must stay informed about legislative changes, invest in HR and legal compliance expertise, and implement technology-driven solutions to streamline their regulatory compliance. Regular audits, employee training programmes, and transparent communication on workplace policies will help mitigate legal risks and foster a positive work environment. Additionally, companies should prioritise employee engagement and well-being as a satisfied and legally protected workforce contributes to long-term business sustainability and plays a significant role in India’s GDP growth.
It is evident that employment law in India is entering a period of rapid transformation. Businesses that thrive in this environment will be those that embrace legal compliance not as a burden but as an opportunity to build resilient, and future-ready workplaces. By aligning with new regulations, anticipating workplace trends, and fostering fair and ethical employment practices, employers can navigate the complexities of workforce management and beyond with confidence and agility. Overall, the future of employment law in India promises to be dynamic with a strong emphasis on balancing the interests of employees/workers, while accommodating the needs of a rapidly changing economy.