The Central government has notified the four Labour Codes, but since labour is a concurrent subject, both the Centre and the states will have a say in their implementation. The successful rollout of the new laws, therefore, depends on how effectively states adopt them. According to Labour Ministry sources, while states are free to draft their own rules, those rules must align with the Labour Codes.
The good news is that most states and Union Territories have already pre-published draft rules. Labour law experts say the Centre engaged meaningfully with states, resulting in 32 states and UTs releasing draft rules under the Codes.
“As many as 18–25 states have already incorporated many provisions of the Labour Codes even before they were notified,” said a Labour Ministry official, expressing hope that states would act proactively in implementing the Codes.
Some states, however, have made slower progress. According to Akhil Chandna, Partner and Global People Solutions Leader at Grant Thornton Bharat, West Bengal and Lakshadweep have not pre-published any draft rules; Delhi has released only the rules under the Code on Wages, 2019; and Tamil Nadu has yet to issue rules under the Code on Social Security, 2020. “This underscores the need for sustained coordination and capacity building to ensure consistent, timely implementation,” Chandna said.
Under the new labour laws, more than 29 central legislations have been consolidated into four modern codes to simplify compliance, bring clarity, and create a more contemporary framework for industrial relations. However, while two of the codes—the Industrial Relations Code and the Occupational Safety, Health and Working Conditions Code—have been made fully effective, the Codes on Wages and Social Security have not yet been fully notified.
“In the absence of state-specific rules for all of the Codes, implementation will likely occur in a phased manner, with procedural elements such as registrations, forms, and return formats being notified over time,” said Vinay Joy, Partner at Khaitan & Co.
According to Atul Gupta, Partner in the labour and employment practice at Trilegal, more clarity will emerge in the coming weeks as state governments work to align the new laws with their own strategies to retain and incentivise businesses. “We anticipate rules and/or state-level amendments will be issued in the foreseeable future, since labour laws remain a concurrent subject under the Constitution,” Gupta said.
Experts have also pointed out that state-specific Shops and Establishments Acts are not subsumed under the new Labour Codes, which means the new framework will operate in parallel with these Acts. The Shops and Establishments Acts regulate working conditions, wages, and leave for employees in shops, commercial establishments, restaurants, and entertainment venues.