Introduction

Background: The Four New Labour Codes and Their Rationale

India’s labour law framework has undergone its most ambitious structural reform since Independence with the consolidation of 29 Central labour legislations into four comprehensive labour codes — the Code on Wages, 2019, Industrial Relations Code, 2020, Code on Social Security, 2020, and Occupational Safety, Health and Working Conditions (OSH) Code, 2020. The explicit rationale behind this consolidation, as highlighted in official policy communications and parliamentary debates, is to modernise India’s labour governance architecture, promote uniformity, reduce regulatory overlap, and create a business-friendly compliance ecosystem that encourages investment and economic growth.

Unlike the earlier fragmented framework that developed across decades of judicial and legislative evolution, the labour codes seek to provide a uniform, streamlined, and digitised compliance structure applicable across sectors. The stated intent is to reduce interpretational disputes, harmonise definitions, promote ease of doing business, and ensure that welfare and productivity evolve in tandem with changing market realities. The reforms must also be contextualised within India’s drive to position itself as a global manufacturing hub while addressing domestic challenges of informality, skill deficits and labour productivity.

Purpose of the Article: Examining Who Gains Most

Despite the stated neutrality of the reforms, the real-world implications of the labour codes have generated extensive debate in academic, economic and industrial circles. The codes undeniably reshape employer–employee relations, compliance mechanisms and collective bargaining structures—raising a central question: Do the new labour codes disproportionately benefit large corporations at the expense of workers and smaller businesses?

This article critically evaluates the impact of the labour codes through the lens of corporate interests. It analyses whether increased hiring and firing flexibility, simplified licensing and compliance regimes, and new contractual employment pathways translate into structural advantages for large corporates. At the same time, it acknowledges countervailing perspectives and identifies areas where workers or small and medium enterprises (SMEs) may face friction, uncertainty, or risk in the implementation phase. The objective is not to take normative positions but to present a balanced legal-economic assessment of winners and losers emerging from the new labour governance regime.

Overview of the New Labour Codes — Key Provisions

The structural architecture of the labour reforms rests on four central codes, each redefining a specific regulatory domain. While the codes share overarching principles of simplification and digitisation, each of them introduces far-reaching changes that affect workers and employers differently.

Code on Wages — Minimum Wages, Timely Payment, Wage Structure

The Code on Wages extends the concept of minimum and timely wages to all employees, formal and informal alike, replacing earlier distinctions across scheduled employments. It standardises the definition of “wages” across labour laws, which significantly affects salary structuring, gratuity, provident fund contributions and calculation of statutory dues.

Key highlights include:

• Universal application of minimum wages and floor wages fixed by the Central Government.
• Time-bound payment of wages with enhanced penalties for non-compliance.
• Uniform wage definition with limitations on allowances (not exceeding 50% of total remuneration).

While these measures promote standardisation and reduce litigation, they also compel organisations to revisit compensation structures — sometimes increasing statutory cost outflows.

Industrial Relations Code — Layoffs, Retrenchment, Fixed-term Employment, Union/Strike Provisions

The Industrial Relations Code (IRC) represents the most consequential shift in employer–employee dynamics. It raises the threshold for prior government approval for retrenchment, layoffs and closure for factories from 100 to 300 workers, a change that, in practice, increases managerial flexibility.

The Code institutionalises fixed-term employment, granting employers the ability to hire workers for defined durations without triggering permanent employee protections. At the same time, the IRC introduces stricter procedures governing strikes and trade union recognition, making collective bargaining more regulated and compliance-intensive for workers’ organisations.

Code on Social Security — Social Protection for Employees, Contract Labour, Gig and Platform Workers

The Code on Social Security expands the ambit of social welfare beyond the traditional factory workforce. It lays the foundation for inclusion of gig workers, platform workers, fixed-term employees and unorganised workers under centralised welfare schemes — a significant doctrinal shift.

Key instruments include:

• Extension of PF, ESI, gratuity and maternity provisions to broader employment categories.
• Framework for social security funds for gig and platform workers.
• Portability of social security benefits through Aadhaar-linked digitisation.

Although the inclusion is progressive in principle, the operational modalities—including funding models, employer contribution obligations and administrative design—remain areas requiring deeper scrutiny.

Occupational Safety, Health & Working Conditions (OSH) Code — Safety, Working Hours, Compliance Simplification

The OSH Code consolidates 13 earlier laws relating to workplace safety and working conditions. It standardises norms on working hours, welfare facilities, health and safety requirements, and registration/licensing procedures through a unified digital framework.

Notable features include:

• Single license/registration for factories, contract labour and other establishments.
• Standardisation of working hours, overtime thresholds and workplace safety rules.
• Mandatory welfare committees and appointment of safety officers in enterprises above prescribed thresholds.

While the Code enhances safety responsibilities in principle, it also significantly reduces recurring licensing hurdles for large industrial operations.

Arguments in Favor of Big Corporates — Structural Advantages under the New Labour Codes

The new labour codes introduce a regulatory paradigm that, in many respects, aligns with the operational expectations of large corporations. From a policy design perspective, the codes prioritise flexibility, scalability, digitisation and uniformity — values that resonate strongly with corporate efficiency models. While the stated legislative intent is neutrality, several provisions undeniably enhance the strategic position of big corporates in the labour market.

Easier Hiring & Firing / Flexibility in Workforce Management

One of the most significant advantages for corporates lies in the increased autonomy in workforce rationalisation and deployment. By raising the statutory threshold for government approval for layoffs, retrenchment and closures from 100 to 300 workers, the Industrial Relations Code reshapes industrial relations in favour of managerial discretion. This change substantially reduces procedural bottlenecks associated with workforce restructuring.

Moreover, the institutionalisation of fixed-term employment allows large companies to maintain productive capacity without long-term employment liabilities. It further enables companies to synchronise workforce size with business cycles, seasonal demand or project requirements — a flexibility that global corporations have long advocated.

Lower Compliance Burden and Streamlined Regulations

The labour codes significantly simplify the compliance environment, especially for multi-state and multinational corporations. Earlier, compliance entailed separate registrations, multiple returns, physical inspections and state-specific regulatory requirements. The new framework introduces single registration, single licence and single digital reporting mechanisms, which reduce administrative overheads and potential compliance disputes.

A major policy shift also lies in the redesign of the inspection mechanism. The earlier regime of unpredictable visits and procedural opacity — popularly criticised as "Inspector-Raj" — has been replaced by technology-enabled, risk-based, and randomly generated inspection systems. For corporates, this means fewer chances of arbitrary enforcement and greater predictability, allowing compliance to be treated as a structured managerial function rather than a negotiation-based engagement.

Cost-saving via Fixed-Term & Contractual Employment While Avoiding Earlier Rigidities

The formal recognition of fixed-term employment and the ability to engage labour without triggering full permanent-employee entitlements substantially alter the cost dynamics of large corporations. Temporary staffing, project-based manpower and contractual workers can now be deployed without extensive severance obligations.

Some key cost efficiencies flow from:

• Reduced long-term liabilities associated with permanent employment.
• Ability to redesign labour deployment in sync with technological upgrades and automation.
• Greater freedom to subcontract or outsource specialised work without statutory complications.

Although fixed-term employees are statutorily entitled to benefits on par with permanent employees, the absence of long-term employment guarantees continues to create fiscal predictability and exit flexibility for corporates — particularly in capital-intensive and workforce-intensive sectors.

Attracting Investment and Ease of Doing Business

The labour codes are expressly positioned as a mechanism to strengthen India’s competitiveness in global supply chains. Their focus on operational freedom, lower compliance friction, and workforce flexibility aligns closely with investor expectations. With the removal of regulatory frictions previously perceived as deterrents, large corporations operating in manufacturing, logistics, retail, technology, and infrastructure stand to gain.

From an investment perspective, the codes promise:

• Scale economies by easing multi-state workforce and compliance management.
• Operational flexibility for rapid business expansion and restructuring.
• Improved risk exposure due to reduced litigation and regulatory unpredictability.

In sum, the collective impact of these changes is the creation of an ecosystem where size, capital and managerial sophistication convert directly into competitive advantages, positioning big corporates as primary beneficiaries of the new labour governance regime.

Counterarguments: What Workers & Critics Say — Are Corporates Really the Only Winners?

Despite the pronounced advantages afforded to large corporations, labour organisations, worker advocacy groups, and independent researchers argue that the reforms may tilt the balance disproportionately in favour of business interests. The central concern is whether efficiency gains are being pursued at the expense of worker protection, bargaining power and employment security.

Concerns about Job Security, Collective Bargaining, Union Strength & Worker Rights

The increased freedom to downsize up to 300 workers without prior government approval is perceived by critics as weakening worker security. Moreover, procedural restrictions on strikes — including mandatory notice periods and expanded prohibitions — are interpreted as curtailing collective bargaining power. While such mechanisms reduce industrial unrest, they also raise concerns that labour voice may be diluted in corporate decision-making.

Issues in Implementation: State-wise Variation and Vulnerability of Informal, Contract and Gig Workers

The effectiveness of the labour codes will depend heavily on their state-level implementation, as labour remains a concurrent subject. Variations across states may lead to unequal protection standards for workers and create competition among states to lower regulatory safeguards to attract investment.

Furthermore, while gig and platform workers are now conceptually recognised under the social security framework, the operational architecture of funding and enforcement remains uncertain. This creates a gap between legislative promise and practical welfare outcomes for some of the most vulnerable sections of the workforce.

Hidden Costs for Corporates

Although corporates benefit structurally from the codes, they also face secondary obligations that may elevate payroll cost and compliance expenditure. Recalibrated wage definitions that cap allowances at 50% increase contributions to PF, gratuity and other statutory benefits — especially for high-salary roles. Companies may also incur costs arising from:

• Social security inclusion of wider workforce segments.
• Restructuring of compensation to remain compliant with the new wage definition.
• Higher administrative oversight for digitised compliance and audit trails.

Thus, the savings obtained from flexible workforce policies can be partially offset by new fiscal and compliance liabilities.

Long-term Risks: Worker Dissatisfaction and Institutional Exposure

Labour scholars caution that while corporates may gain in the short term, an over-reliance on flexible, short-term and non-unionised workforce structures may diminish loyalty, morale and productivity in the long run. Diminished worker security can manifest in:

• Higher attrition rates.
• Lower skill development incentives.
• Increased risk of collective resistance outside formal union channels.

Furthermore, reputational risks associated with perceived erosion of labour rights may influence investor perception, ESG scoring, and stakeholder relations — especially for corporations operating across jurisdictions.

Balance Sheet: Who Really Benefits?

Evaluating the labour codes requires an assessment of both the distribution and sustainability of benefits across stakeholders. While corporates gain evident advantages in the short term, the overall equilibrium will depend on workforce behaviour, economic cycles, and regulatory vigilance over time.

Short-Term Gains for Corporates vs Long-Term Equilibrium

In the short term, the labour codes undeniably shift the compliance and industrial-relations environment in favour of large employers. They reduce procedural friction, unlock flexibility in manpower planning and moderate the leverage of trade unions. These factors together increase ease of business operations and strategic room for management decisions.

However, the long-term picture is more complex. Workforce insecurity, high attrition and deterrence to skill investment may dilute the efficiency gains that corporates expect. An employment ecosystem characterised by precarity, turnover and weakened labour voice may gradually lead to productivity stagnation, morale decline and reputational liabilities, thereby balancing the earlier corporate advantage. Thus, the benefit profile may evolve from a sharp short-term corporate gain to a moderated long-term equilibrium.

Which Types of Corporates Benefit Most

The labour codes do not create uniform advantages across enterprise classes. Their implications vary according to size, structure, sectoral characteristics, and labour intensity.

• Large Corporations (Big Enterprises): Greatest beneficiaries — due to economies of scale in compliance, sophistication in HR/legal systems, and requirements for dynamic workforce deployment.
• MSMEs (Micro, Small & Medium Enterprises): Mixed impact — reduced compliance burden helps, but increased wage definition obligations and limited managerial capacity may create cost pressure.
• Labour-intensive Sectors (manufacturing, textiles, logistics, construction): Higher gains — flexibility in hiring/firing and fixed-term employment directly optimise labour deployment.
• Capital-intensive Industries: Moderate advantage — labour flexibility helps, but automation-driven sectors do not depend heavily on workforce volume.
• Formal vs Informal Sector: Formal enterprises benefit most, while informal units face new compliance expectations that may raise costs.

Thus, the net gains are most pronounced for formal, large, labour-intensive corporates with established compliance infrastructure.

Impact on Employment Patterns, Wage Costs, Labour Relations & Worker Well-being

The labour codes are positioned as pro-labour in terms of universal wage standards and expanded social security, yet pro-employer in terms of retrenchment flexibility and fixed-term employment. In practice, this duality may lead to notable shifts in employment patterns.

Expected trends include:

• Rise of fixed-term, contract and outsourced labour over permanent jobs.
• Workforce segmentation — a smaller permanent core workforce surrounded by a larger temporary workforce.
• Increased compliance-linked wage outflows for employers under the new wage definition.
• Reduction in the bargaining strength of unions may alter the climate of industrial relations.

Worker well-being, therefore, becomes contingent not merely on regulatory mandates but on corporate policy choices, enforcement quality and macro-economic conditions.

Implications for Indian Economy, Labour Market & Future

The new labour codes mark a watershed moment in India’s labour governance. Their macro-level implications extend beyond the corporate–worker binary, influencing productivity, investment flows, labour market structure and social equity.

Formalisation vs Precarity: Will Gig/Contract Labour Become the Norm?

The codes extend social security to gig workers and fixed-term employees in principle, signalling a move toward formalisation. However, the operational design may unintentionally encourage employment models that prioritise flexibility over permanence. The risk is the emergence of a labour ecosystem where:

• Workers are covered by statutory obligations on paper but lack long-term employment security in practice.
• Temporary and gig formats become standard rather than supplementary.

Thus, India may witness formalisation of documentation but informalisation of job security — a duality that requires careful policy calibration.

Investment, Growth & Competitiveness vs Worker Rights & Social Security

The reforms are undeniably aligned with India’s macroeconomic pursuit of higher investment and global value-chain integration. Corporates—especially in export-oriented and manufacturing segments—gain operational capacity to scale rapidly and restructure efficiently.

However, sustainable economic growth requires that productivity gains translate into shared prosperity rather than labour polarisation. If flexibility is not matched with meaningful social protection, consumption demand may contract, social inequalities may deepen, and the legitimacy of the reform agenda may weaken.

Role of States, Enforcement, Judicial Oversight and Worker Organizations

Implementation is the critical variable. The real effect of the labour codes will depend on:

• State-level rules and enforcement consistency
• Judicial interpretation of ambiguous provisions
• Capacity of worker organisations to exercise constructive representation
• Corporate willingness to adopt ethical labour standards beyond minimum compliance

A high-trust, rule-based industrial ecosystem requires not only liberalisation for investors but safeguards for workers and proactive oversight architecture. The long-term success of the labour codes depends on whether India can build this equilibrium — without allowing either bureaucratic excess or corporate dominance to distort the system.

Conclusion

The debate around the New Labour Codes remains sharply divided, and this article has attempted to evaluate the winners and losers beyond surface-level assumptions. While the Codes represent a move toward a more modern and efficiency-driven labour framework, the distribution of benefits is neither uniform nor free from risks.

Summary of Findings

The New Labour Codes undeniably restructure India’s labour governance toward flexibility, digitisation and simplification. In the short run, corporates — especially large, formal-sector organisations — appear to benefit the most through:

• Greater freedom in hiring, retrenchment and fixed-term contracts
• Reduced friction in compliance due to single licences, common returns and a unified regulatory system
• Ability to align workforce size with market cycles and business targets

However, the picture is not one-directional. Workers stand to gain in areas such as wage standardisation, portability of benefits and legally mandated social security for gig and platform workers. Yet, the extent of these protections depends heavily on implementation, state-level rulemaking and employer compliance capacities.

At the same time, smaller enterprises may face heavier financial and administrative burdens than the larger ones, undermining the assumption that all businesses benefit equally.

Answer to the Title Question — Are Big Corporates the Real Winners? (A Nuanced View)

If the question is posed strictly in terms of immediate advantages, the answer is yes — large corporates emerge as the most prominent beneficiaries. The Codes grant them the flexibility, legal clarity and cost optimisation required to scale operations nationally and compete globally.

However, when viewed from a long-term labour–industrial relations perspective, the advantage is more conditional:

• If worker protections weaken, dissatisfaction and attrition may pose operational and reputational challenges
• If courts interpret the Codes strictly in favour of workers, the present flexibility may tighten over time
• If state governments diverge significantly in their rules, uniform efficiency may remain elusive

The real winners, therefore, will be entities — corporate or otherwise — that balance productivity and efficiency with a continued investment in worker dignity, safety and well-being.

What to Watch in the Coming Months / Years

The future impact of the Codes will depend not on legislation alone, but on how stakeholders shape the ecosystem around it. Key developments to monitor include:

• State-wise implementation and rule-making patterns — Will compliance become simpler or fragmented once again?
• Litigation trends and judicial interpretation — The judiciary will play a pivotal role in defining the boundaries of employer flexibility and worker rights.
• Collective worker action and union strategies — Traditional and digital forms of labour organising will influence employer practices.
• Corporate HR and labour management responses — Companies that integrate flexibility with workforce well-being may outperform those relying solely on cost cutting.

In conclusion, the New Labour Codes are not inherently skewed toward any one group — but the initial beneficiaries are, without doubt, large corporates, while workers’ gains depend on enforcement and good-faith compliance. The Codes offer an opportunity to build a labour market that is both competitive and humane — but whether India seizes that opportunity will define the true legacy of this landmark labour reforms.