New Labour Codes: Industry organizations argue that the public sector should provide ESI coverage to workers in smaller businesses rather than shifting the cost burden to them, while officials view the new labor codes announced by the Center as a positive step because they provide better health protections for workers.
What Has Changed Under the New Labour Codes?
Employers are required by the codes gazetted on Friday to provide free annual health examinations to all employees over 40. However, ESIC coverage will be required for companies with even one employee involved in hazardous processes and optional for companies with fewer than ten employees.
According to DP Danappa, president of the Peenya Industries Association (PIA), 40% of the cluster’s 13 lakh workers make more than the current ESI wage cap of Rs 21,000, making them ineligible.
“To help workers in small and medium-sized businesses, we suggested that the government raise the coverage limit to Rs 30,000,” he stated. Approximately five lakh garment workers and workers in micro-industries, which are the most susceptible to closures, are currently covered by ESI, he said.
“Health checks should be covered under ESI,” he stated. “Of the 4%, we contribute roughly 3.2% to ESI. When more workers are covered, the plan gets stronger.
Now that the minimum wage has been increased to Rs 23,000, this is particularly crucial.
The suggestion to expand ESI coverage was also brought up during the regional committee meeting, according to PC Rao, director of the Federation of Karnataka Chambers of Commerce and Industry (FKCCI) and honorary president of the Bangalore Hotels Association.
Over half of the small and medium-sized business’s workforce will profit. “A significant portion of workers in the micro-industry will also be included,” he stated.
“The Center has released the codes, but we must see what amendments the state brings in,” stated Subramanya Holla, president of the Bangalore Hotels Association. Women’s 24-hour employment is a step in the right direction; previously, there were limitations. However, employer expenses will rise due to the gratuity provision, which now takes effect after a year rather than five.
Danappa concurred that MSMEs might be impacted by the updated gratuity standards and wage-linked expenses. It is difficult for MSMEs to receive gratuities after a year. Additionally, even a single worker can now become a member of a trade union in order to resolve disputes,” he stated.
The Karnataka Employers’ Association president, BC Prabhakar, informed members that the codes, which have already been approved by the president and published in a gazette, will now go into effect on November 21. “There will be complete clarity for establishments once the Center and state frame and notify rules under each code,” he stated.
In the meantime, a state committee on Karnataka’s labor policy noted in its report from October 2025 that the four labor codes give informal workers—who comprise nearly 90% of India’s workforce of over 500 million—very little substantive regulation on wages, industrial relations, or occupational safety.
Ten central trade unions have denounced the Union government’s new labor laws as “unilateral, anti-worker, and pro-employer” in a platform. On November 26, the unions and independent industrial federations will stage a protest in which they will demand that the codes be abandoned and that the draft Shram Shakti Niti 2025 be withdrawn.
During pre-budget consultations on November 20, they claim to have urged the Union finance ministry to abandon the codes and call an Indian Labour Conference (ILC). The most recent ILC took place in 2015. They contended that codes “snatch rights and entitlement of workers” in order to satisfy the demands of the government’s fringe supporters and employers’ representatives.
In its October 2025 report, the state’s committee on Karnataka labor policy stated that the four codes provide little in the way of regulating working conditions for informal workers and increase precarity among formal-sector workers.