What Do India’s Four New Labour Codes Mean for Workers and Businesses?
- Aditi Srivastava
- 3 days ago
- 4 min read
Labour is the backbone of any economy. In India, with a workforce exceeding 64 crore, the need for a modern, simplified, and fair labour law framework has long been recognized. For decades, businesses and workers struggled under the weight of 29 separate labour laws, many of which dated back to the pre-independence era. Compliance was complex, enforcement was inconsistent, and workers often lacked clarity on their rights.
In response, the Government of India undertook a historic reform: merging these 29 laws into four Labour Codes. This codification represents one of the most significant overhauls of India’s labour landscape, designed to empower workers while promoting investment and economic growth.
The reforms are not just about laws, they reflect India’s vision of an Aatmanirbhar Bharat (self-reliant India). Between 2017–18 and 2023–24, employment rose from 47.5 crore to 64.33 crore, adding 16.83 crore jobs in six years. The unemployment rate fell from 6% to 3.2%, and 1.56 crore women entered the formal workforce. These numbers highlight the government’s emphasis on inclusive labour empowerment.
Why Codification Was Needed
The codification of labour laws was driven by several challenges:
Multiplicity of laws: 29 different legislations created confusion and compliance difficulties.
Multiplicity of authorities: Different regulators for different laws made enforcement complex.
Outdated provisions: Many laws were framed decades ago, misaligned with modern work patterns and technology.
The Second National Commission on Labour had recommended grouping laws into four or five codes. After extensive consultations with trade unions, employers, and industry representatives, the government enacted four codes between 2019 and 2020.
The Four Labour Codes
1. Code on Wages, 2019
This code consolidates four earlier laws: Payment of Wages Act, Minimum Wages Act, Payment of Bonus Act, and Equal Remuneration Act.
Highlights:
Universal Minimum Wages: All employees, across organized and unorganized sectors, are entitled to minimum wages.
Floor Wage: A statutory floor wage ensures no state sets wages below a national minimum.
Gender Equality: Employers cannot discriminate based on gender, including transgender identity.
Overtime Compensation: Overtime must be paid at twice the normal rate.
Inspector-cum-Facilitator: Focus shifts from policing to guidance and compliance support.
Decriminalization: First-time offences attract fines instead of imprisonment.
This code ensures wage security and fairness across the workforce.
Industrial Relations Code, 2020
This code merges provisions from the Trade Unions Act, Industrial Employment (Standing Orders) Act, and Industrial Disputes Act.
Highlights:
Fixed Term Employment (FTE): Workers on fixed contracts enjoy parity in wages and benefits.
Re-skilling Fund: Retrenched workers receive training funded by employers.
Trade Union Recognition: Unions with 51% membership gain recognition; otherwise, a council is formed.
Expanded Worker Definition: Includes journalists, sales staff, and supervisors earning up to ₹18,000/month.
Work-from-Home Provision: Recognized formally for service sectors.
Industrial Tribunals: Two-member tribunals for faster dispute resolution.
Notice for Strikes: Mandatory 14-day notice to minimize disruptions.
This code balances worker rights with industrial flexibility.
Code on Social Security, 2020
This code integrates nine social security laws, including EPF, ESI, Maternity Benefit Act, and Unorganised Workers’ Social Security Act.
Highlights:
Expanded ESIC Coverage: Applies pan-India, including plantations and hazardous occupations.
Gig and Platform Workers: New definitions ensure coverage for workers in the digital economy.
Social Security Fund: Dedicated fund for unorganized, gig, and platform workers.
Gratuity for Fixed-Term Employees: Eligibility after one year instead of five.
Commuting Accidents Covered: Travel-related accidents qualify for compensation.
Digitization of Compliance: Records and returns maintained electronically.
This code extends social protection to millions of workers previously excluded.
Occupational Safety, Health and Working Conditions Code, 2020
This code consolidates 13 laws, including the Factories Act, Mines Act, and Contract Labour Act.
Highlights:
Unified Registration: One registration replaces multiple licenses.
Migrant Workers Benefits: Annual travel allowance, portability of benefits, and toll-free helplines.
Women’s Employment: Women can work in all establishments, including night shifts, with safety measures.
National Database for Unorganised Workers: Helps map skills and provide benefits.
Safety Committees: Mandatory in establishments with 500+ workers.
Working Hours: Capped at 8 hours/day, 48 hours/week.
Victim Compensation: At least 50% of fines directed to victims or families.
This code strengthens workplace safety and inclusivity.
Transformative Impact of Labour Codes
The four codes collectively aim to:
Simplify compliance: Single registration, single license, single return.
Promote ease of doing business: Reduced paperwork and uniform definitions.
Protect workers’ rights: Wage security, social security, and safe working conditions.
Encourage investment: A modern framework attracts domestic and foreign investors.
Use technology: Digital registration, licensing, and inspections improve transparency.
The consolidation of 29 labour laws into four Labour Codes marks a transformative step in India’s labour landscape. By simplifying compliance, modernizing outdated provisions, and extending protections to all categories of workers including gig and platform workers, the reforms balance the welfare of labour with the efficiency of enterprises.
These codes reaffirm India’s commitment to building a fair, future-ready labour ecosystem that empowers workers, supports businesses, and drives sustainable economic growth. For students, professionals, and policymakers, this reform is a landmark example of how law can evolve to meet the needs of a changing society.
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