India’s four new labour codes came into effect on 21 November 2025, replacing 29 older labour laws and creating one of the biggest overhauls of the country’s labour system. The reforms aim to simplify rules, increase transparency, and make it easier for businesses to operate. However, for many workers, especially fixed term employees, these changes raise concerns about reduced job security even as they introduce new benefits.
Under the new codes, a fixed term employee is someone hired for a specific period or project. Earlier, these workers had limited protections and fewer benefits when compared to permanent staff. The new labour codes now give them many of the same rights as permanent workers. They are eligible for paid leave, social security benefits, and medical coverage. This is meant to create fairness and encourage more formal employment. But while the benefits have improved, the nature of fixed term work still means that employment can end the moment the contract expires. This makes workers feel uncertain about long term stability.
One of the biggest changes is related to gratuity. In the older laws, a worker needed to complete five years of continuous service to qualify. The new codes allow fixed term workers to receive gratuity after just one year of service. This is a major advantage for people who often work on short project cycles. At the same time, many labour groups argue that easier access to gratuity may push companies to rely even more on contract-based hiring instead of giving permanent jobs. For employers, fixed term contracts reduce long-term commitments and make workforce planning more flexible. For workers, this may mean fewer opportunities for secure, permanent employment.
Another major shift is the rise in the threshold for layoffs. Companies with up to 300 workers can now hire and remove employees without seeking government approval. This change is intended to help businesses respond quickly to market demands. However, unions worry that it will make job protections weaker and increase the risk of sudden job losses, especially for contract workers who already face unstable employment conditions.
The new codes also make it mandatory for every worker to receive a written appointment letter. This improves transparency and ensures that workers clearly understand their role, wages, and benefits. This step helps reduce exploitation and supports formal work practices. Still, even with written contracts and basic protections, the fundamental challenge for fixed term workers remains unchanged. Their employment depends entirely on contract renewals, project needs, and employer decisions.
In many ways, the new labour codes try to strike a balance between protecting workers and supporting business growth. Employers gain flexibility to manage their workforce more efficiently. Workers receive more benefits than before. Yet, this balance creates a trade-off. The protections may improve, but the stability of long-term employment becomes uncertain. As India moves into this new labour era, the real test will be whether these reforms can deliver both growth and security without pushing workers into a cycle of continuous short-term employment.
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