Budget 2025: FM Sitharaman may announce gradual rollout plan for labour codes

Budget 2025 expectations: Finance Minister Nirmala Sitharaman in her Union Budget 2025 speech may outline a strategy in the forthcoming budget for a gradual implementation of labour codes beginning next fiscal year, prioritising larger establishments.
Official sources informed ET that several implementation options are under consideration, including a three-phase deployment. Large organisations with 500+ employees would need to comply in the first year, followed by medium-sized firms (100-500 employees) in the second year, and smaller enterprises (up to 100 employees) in the third year.
This arrangement would provide small establishments, which constitute over 85% of India’s business landscape, a two-year period to achieve compliance with the Codes.
Also Read | Budget 2025 income tax: Raise 30% income tax slab; provide flat 30% deductions on gross income – here’s why
The labour ministry is currently engaged in discussions with West Bengal and Delhi administrations to finalise the draft regulations.

Budget Labour Code Rollout

Officials are reconsidering the introduction of the less contentious Code on Wages and Social Security Code, as the administration aims to proceed cautiously on labour-related matters, according to one source.
Another insider revealed that senior labour ministry officials have initiated discussions with chief secretaries of both states to expedite draft rules across all four Labour Codes.
“The ministry is hopeful that all states will be ready with draft rules across all four Codes by the end of the current fiscal year after which the Centre can roll-out the Codes,” the second person said on the condition of anonymity.
To enhance business operations efficiency and progress towards comprehensive social security, the administration has consolidated 29 central labour laws into four labour codes.