New Labour Codes: How Paid Leave, Double Overtime Wages and Stronger Protections Will Benefit MSME Workers

The Indian government has taken a major step toward reshaping the country’s labour landscape. On November 21, the Centre officially notified all four consolidated Labour Codes — the Code on Wages, Industrial Relations Code, Social Security Code, and the Occupational Safety, Health and Working Conditions (OSHWC) Code. These newly implemented codes replace 29 existing labour laws, many of which had been in place since the pre-independence era.

The reform aims to simplify compliance, improve work conditions for employees, and create a more transparent and organized labour environment across industries — especially in Micro, Small and Medium Enterprises (MSMEs), where the majority of India’s workforce is employed.

What Changes for MSME Workers?

Under the new Labour Codes, MSME workers are now entitled to a wider range of benefits that ensure fair wages, social protection, and safe working environments. Here are the key advantages:

✔ Universal Minimum Wage and Timely Salary

All MSME establishments must now provide statutory minimum wages to every employee, irrespective of sector or skill level. Employers are also required to ensure timely payment of salaries, preventing delays that previously created financial stress for workers.

✔ Paid Leave Rights

Standardised rules for paid leave aim to provide uniformity across different states and sectors. Whether an employee works in a small unit or a medium-scale industry, their right to rest and leaves is now protected.

✔ Double Wages for Overtime

Employees who work beyond the standard working hours will now receive double wages for overtime. This provision will help discourage excessive working hours and ensure workers are fairly compensated if extra work is necessary.

✔ Mandatory Appointment Letters

Every worker—whether permanent or contractual—must receive an official appointment letter. This creates a formal employment relationship and prevents exploitation in informal setups.

✔ Enhanced Social Security Coverage

For the first time, gig workers and short-term contract workers are included in the social security network. Eligibility for benefits will depend on workforce size and establishment category. Key features include:

• Wider coverage under ESIC across the country

• Streamlined single registration and licensing system

• Improved access to pension, insurance, and other welfare schemes

✔ Improved Workplace Facilities

Employers must now provide essential facilities like clean drinking water, rest areas, and canteens — ensuring workplace dignity and better hygiene standards.

✔ Stronger Rights for Women Workers

Women are now legally permitted to work night shifts with proper safeguards. Their protection and opportunities in the workplace have been significantly strengthened.

✔ Free Annual Health Checkups

Workers aged above 40 will be eligible for free annual health screenings, helping in early detection of health issues and promoting long-term workforce well-being.

A Step Toward Modern Labour Standards

According to the government, these changes prepare India’s labour system for a rapidly evolving economy — one where technology, startup culture, and flexible work models are expanding at a fast pace. The modern labour framework aims to boost productivity while ensuring workers feel secure, valued, and protected.

Although the codes have been notified, the government will now begin consultations to finalize detailed rules and schemes. Until implementation is complete, certain existing labour provisions may continue wherever necessary.

Why These Reforms Matter

For decades, labour laws in India were scattered, outdated, and difficult for businesses—especially small enterprises—to navigate. By consolidating 29 different legislations into four comprehensive codes, the government seeks to:

• Reduce compliance burden

• Encourage MSMEs to grow and create jobs

• Improve ease of doing business

• Align India with global labour standards

The new Labour Codes signal a major shift in India’s employment system — one that promises better financial security, improved dignity of work, and fair opportunities for millions of MSME workers across the nation.