New Labour Codes to boost employee welfare, ease of doing business in IT sector

New Delhi, Dec 2 India’s new Labour Codes will transform the Information Technology (IT) sector's working culture by strengthening both employer capabilities and employee welfare, the government said on Tuesday.

For IT sector, these reforms are particularly significant as they provide clarity on wages, fixed-term employment, work-from-home arrangements, and workplace safety standards.

By streamlining regulatory processes, enhancing gender inclusivity, and encouraging digital record-keeping, the codes help IT companies to safeguard employee welfare, ultimately contributing to sustainable growth and global competitiveness.

The codes introduced single registration, single return filing, and a single licence valid across India, replacing multiple registrations under different Acts. For IT companies operating across multiple states or campuses, this reduces compliance duplication, administrative costs, and bureaucratic delays.

Employers can hire employees for a fixed term with the same wages, benefits, and social security as permanent workers. This allows companies to staff according to project timelines without long‑term contracts.

The codes provide for monetary penalties instead of criminal prosecution for minor procedural violations. Employers have 30 days to rectify non-compliance before penalties apply, encouraging a cooperative compliance environment.

The reforms also allowed wage fixation based on skill levels certified under the National Skill Qualification Framework (NSQF) to reward certified skills and skill advancement with higher pay and career progression.

The government had released new Labour Codes -- The Code on Wages 2019 (WC), The Industrial Relations Code, 2020 (IR), The Code on Social Security, 2020 (SS), The Occupational Safety, Health and Working Conditions Code, 2020 (OSH &WC), to simplify compliance, promote flexibility, and provide social security to all types of workers, including contract and gig employees.

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