How New Labour Law Codes Affect Inheritance, Wills, and Succession Planning in India
In November 2025, India implemented comprehensive reforms in labour laws by consolidating numerous existing labour statutes into four unified Labour Codes: the Code on Wages, Industrial Relations Code, Social Security Code, and Occupational Safety, Health and Working Conditions Code. These reforms aim to provide clarity, improve transparency, and expand social security coverage for workers across sectors. For individuals and families involved in inheritance, wills, and succession planning, understanding these new labour law codes is crucial because they directly influence the employee benefits that form part of an estate. This blog explores the key reforms and their correlation with inheritance and estate planning in India.
Overview of the New Labour Law Codes
Code on Wages: Regulates minimum wages, timely payment, and equal remuneration across all sectors.
Industrial Relations Code: Streamlines dispute resolution, trade union recognition, and lays down stricter rules for layoffs and closures.
Social Security Code: Consolidates laws on provident fund, gratuity, employee pension, insurance, and coverage of gig and platform workers.
Occupational Safety, Health, and Working Conditions Code: Sets standards for workplace safety and welfare.
These codes replace over 40 previous labour laws, establishing a simplified and uniform regulatory framework.
Correlation with Inheritance and Wills
Labour Benefits as Part of the Employee’s Estate
Under the Social Security Code and related rules, several statutory benefits—such as provident fund (PF), gratuity, pension, and life insurance—are treated as employee entitlements. When an employee passes away, these benefits become part of their estate and can be inherited by nominees or legal heirs, either through the nomination system or according to inheritance laws.
Digitalization and Transparency
The reforms mandate digital records for employment contracts, wages, benefits contributions, and nominations. For estate executors and legal heirs, this enhances transparency, making it easier to identify and claim benefits during succession.
Nomination Overrides and Succession Planning
Labour laws often allow employees to nominate beneficiaries for provident fund, gratuity, and insurance benefits. Importantly, nomination under labour laws can sometimes override general succession claims, emphasizing the need for will creators to coordinate their will provisions with the nominee designations to ensure intended disposition.
Extended Coverage and Asset Inclusion
The codes extend social security benefits to gig, platform, and fixed-term workers through enforceable labour rights. As these benefits broaden, they increase the assets that must be considered during succession planning and will drafting to avoid disputes.
Employer Accountability Enhances Estate Security
The labour codes impose stricter compliance requirements on employers to ensure timely payment of benefits. This helps protect the financial interests of the heirs by reducing the risk of delayed or withheld entitlements.
Practical Implications for Will Creation and Succession Planning
Explicit Inclusion of Labour Benefits: Wills should expressly mention the disposition of labour-related benefits to avoid conflicts with nominees or legal heirs.
Alignment with Nominee Designations: Employees should regularly update nominations with their employers and align them with their wills to prevent disputes.
Verification of Benefits: Executors should verify employment benefits through digital records mandated by labour codes.
Legal Advice: Estate planners should consult legal experts conversant with labour and inheritance laws to draft clear and compliant wills.
Conclusion
The new Indian labour law codes mark a milestone in employee rights and social security, with direct consequences for inheritance and succession planning. By integrating these labour entitlements into estate considerations, individuals can secure smoother asset transfer and reduce legal complications. Understanding and adapting to these reforms is essential for comprehensive and reliable will creation in India.