Union Negotiations, Employee Welfare Laws

The Changing Legal Landscape

India’s four consolidated Labour Codes — the Code on Wages, the Industrial Relations Code, the Occupational Safety, Health and Working Conditions Code, and the Code on Social Security — came into force on November 21, 2025, replacing 29 older central labour statutes. Central rules under all four codes were notified in May 2026, but full enforcement remains uneven: it depends on each state separately notifying its own rules, and as of mid-2026, only a handful of states have completed this process for all four codes, while major industrial states are still finalising theirs.

For employers, this means operating in a transitional environment — the codes are law, but the compliance framework in any given state depends on how far that state’s rulemaking has progressed. Legal advice must therefore be jurisdiction-specific, not generic.

Union Negotiations: Key Considerations

The Industrial Relations Code brings notable changes to collective bargaining, including a requirement that a union secure support from at least 75% of workers to call a legal strike — a threshold that has drawn criticism from trade unions as raising the bar for lawful industrial action. Employers negotiating with unions should keep several principles in mind:

• Document everything. Minutes of settlement, charters of demand, and conciliation proceedings must be meticulously recorded to withstand scrutiny.
• Understand standing orders obligations. Model standing orders under the new framework affect disciplinary procedures, and non-compliance can undermine an employer’s position in disputes.
• Engage early and in good faith. Courts and labour tribunals consistently favour employers who can demonstrate genuine engagement over those who negotiate defensively.

Employee Welfare: Expanding Obligations

The Code on Social Security and the OSH Code widen the safety net considerably. Fixed-term employees, for instance, now qualify for gratuity after just one year of continuous service instead of the earlier five-year requirement, and are entitled to wage parity with permanent staff on core benefits like provident fund, insurance, and leave. Establishments should also prepare for upcoming rules on gig and platform worker social security contributions, expected later in 2026.

Employers should treat this not merely as a compliance exercise but as an opportunity to strengthen retention and reduce disputes — welfare obligations, when implemented proactively, often pre-empt the very grievances that escalate into union action.

Our Recommendation

Given the patchwork nature of state-level implementation, we recommend that businesses:

1. Map their compliance obligations state-by-state rather than assuming uniform national rules.
2. Audit existing employment contracts and standing orders against the new codes.
3. Build a structured, documented process for union engagement well before disputes arise.