India’s New Labour Codes explained with detailed facts and information. A must read for APSC/ UPSC prelims and mains( GS paper 2 and GS paper 3).
India has announced the implementation of the four Labour Codes (the Code on Wages, 2019; Industrial Relations Code, 2020;Code on Social Security, 2020; Occupational Safety, Health and Working Conditions (OSH) Code, 2020) replacing 29 earlier labour laws.
• The reform aims to modernise labour regulation, strengthen worker protections and create a simpler, future-ready framework supportinga resilient workforce and Aatmanirbhar Bharat.
• The four labour codes were enacted based on the 2nd National Commission on Labour (2002), which recommended merging multiple labour laws into four functional codes.
What is the Need to Reform India’s Labour Laws
1. Fragmented Legal Framework: India had 29 separate labour laws with overlapping provisions, making compliance complex and time-consuming for workers and employers.
2.Provisons Unsuitable for Contemporary Governance: Many laws were created during the pre-Independence and early post- Independence era, and no longer suited modern industry practices, technology, or new forms of employment.
3.High Compliance Burden: Multiple licences, registrations and returns increased paperwork and made it difficult for businesses especially for Micro, Small, and Medium Enterprises (MSME) to operate smoothly.
4.Limited Worker Coverage: Several protections applied only to specific categories or sectors, leaving large numbers of informal and unorganised workers uncovered.
5.Global Competitiveness: Most major economies like Singapore have modernised and consolidated labour rules, and India needed similar reforms to attract investment and support growth.
6.Improving Worker Welfare: The earlier system lacked uniform standards for wages, safety and social security, leading to gaps in labour protection.
7.Boosting Employment and Formalisation: Simplified rules support industries, improve job creation and help shift workers from informal to formal employment.
What is a Labour Code?
A labour code is a consolidated set of laws that regulate employer–employee relations, covering areas such as wages, social security, industrial relations and workplace safety. India has merged 29 central labour laws into four comprehensive labour codes to simplify compliance and modernise labour governance.
1. The Code of Wages, 2019
Merges Four Laws
• Payment of Wages Act, 1936
• Minimum Wages Act, 1948
• Payment of Bonus Act, 1965
• Equal Remuneration Act, 1976
Key Features
• Establishes a uniform wage framework across sectors.
• Ensures fair and timely payment of wages.
• Promotes gender equality in remuneration.
• Simplifies compliance and strengthens workers’ rights
2. The Industrial Relations Code, 2020
Combines Provisions From
• Trade Unions Act, 1926
• Industrial Employment (Standing Orders) Act, 1946
• Industrial Disputes Act, 1947
Key Features
• Streamlines rules on trade unions and recognition.
• Simplifies procedures on employment terms, layoffs and retrenchment.
• Strengthens dispute resolution mechanisms.
• Aims to balance worker rights with industrial harmony and stability.
3. The Code on Social Security, 2020
Merges Nine Laws Including
• Employees’ Compensation Act, 1923
• Employees’ State Insurance Act, 1948
• Employees’ Provident Funds Act, 1952
Key Features
• Extends social security to gig, platform and unorganised sector workers.
• Covers maternity benefits, health insurance, life insurance and PF.
• Promotes digital processes for easier enrolment and compliance.
• Creates a unified and inclusive social protection framework.
4. The Occupational Safety, Health and Working Conditions Code, 2020
Consolidates Thirteen Laws Such As
• Factories Act, 1948
• Plantations Labour Act, 1951
• Mines Act, 1952
Key Features
• Ensures safer and healthier working environments.
• Standardises safety norms across sectors like mines, construction and factories.
• Simplifies compliance for businesses while protecting workers.
• Builds a more efficient, transparent and future- ready labour ecosystem.
Constitution and Labour Legislation in India
Fundamental Rights and Labour Laws (Part III: Articles 14–35)
Right to Equality (Articles 14–18)
• Ensures fair wages and equal treatment for all workers.
• Prohibits discrimination in employment on grounds of caste, gender, religion or status.
Right to Freedom (Articles 19–22)
• Guarantees freedom of association, enabling workers to form and join trade unions.
• Protects peaceful assembly and collective bargaining.
Right Against Exploitation (Articles 23–24)
• Strictly prohibits forced labour, bonded labour and trafficking.
• Bans child labour in hazardous industries.
• Forms the constitutional basis for labour protection laws like the Bonded Labour Act and Child Labour Act.
Right to Life and Personal Liberty (Article 21)
• Interpreted to include the right to dignified working conditions.
• Ensures workplace safety, health, humane hours of work and protection from occupational hazards.
Key Judgments:
• Bandhua Mukti Morcha(1984): Right to live with dignity includes labour rights.
• People’s Union for Democratic Rights (1983): Less than minimum wage amounts to forced labour under Article 23.
Key Concerns Regarding India’s New Labour Codes
• Higher compliance burden for small businesses and MSMEs due to expanded ESIC, PF and safety requirements.
• Centre–state rule alignment issues because labour is a Concurrent List subject, leading to uneven implementation.
• Stricter strike regulations may heighten tensions if workers perceive them as restrictive.
• Low awareness among informal, migrant and contractual workers about new entitlements and protections.
Way Forward
• Harmonise rules across states and accelerate implementation.
• Strengthen digital compliance platforms.
• Build strong social security systems for gig workers.
• Improve employer–worker dialogue and dispute redressal.
• Continuously monitor impact on jobs and formalisation.
Conclusion
Labour codes mark a shift from rigid, fragmented laws to a modern and inclusive labour governance system. Effective implementation by states will determine gains in employment, productivity and competitiveness.
| Lucent IAS APSC/UPSC mains practice question: Q. Critically analyse whether the new labour codes strike an appropriate balance between labour flexibility for employers and protection for workers. 15marks Q.Write a brief note on the historical evolution of labour laws in India and how it necessitated consolidation into four labour codes. |
| FAQ’s APSC / UPSC Prelims Q.Labour is placed in which list of the Indian Constitution? a) Union List b) State List c) Concurrent List d) Residuary List Correct Answer: (c) Q.Which of the following worker groups newly receive social security coverage under the Code on Social Security, 2020? 1.Gig workers 2.Platform workers 3.Organised sector workers only 4.Unorganised workers Select the correct answer: a) 1 and 2 only b) 1, 2 and 4 c) 3 only d) 1 and 4 only Correct Answer: (b) |
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