India’s labour laws are undergoing a historic transformation with the introduction of the four new labour codes: the Code on Wages, the Industrial Relations Code, the Code on Social Security, and the Occupational Safety, Health and Working Conditions Code. These reforms aim to consolidate and streamline 29 existing labour laws into a more cohesive framework. However, these changes have sparked intense debate about how they will reshape the rights, responsibilities, and realities of Indian workers. For a deeper insight into how these changes affect compliance and risk mitigation, you can explore The impact of the new labour codes on Indian workers on Digiliance.
What Are the New Labour Codes?
The Government of India has introduced four key labour codes as part of its labour reform agenda:
Code on Wages, 2019: Merges four laws related to minimum wages, payment of wages, bonus, and equal remuneration.
Industrial Relations Code, 2020: Consolidates laws governing trade unions, conditions of employment, and dispute resolution.
Code on Social Security, 2020: Covers provisions for PF, ESI, gratuity, maternity benefits, and other social welfare measures.
Occupational Safety, Health and Working Conditions Code, 2020: Brings together 13 laws related to workplace safety, health, and welfare.
Together, these codes are expected to bring transparency, efficiency, and uniformity in labour governance across the country.
Positive Implications for Indian Workers
Enhanced Social Security
The Code on Social Security extends coverage to gig workers, platform workers, and the self-employed—categories traditionally excluded from formal social protection. This inclusion is a progressive move toward acknowledging India’s changing labour dynamics, especially with the rise of the gig economy.
Standardization of Wages
One of the most worker-centric reforms is the universal minimum wage structure introduced under the Code on Wages. Previously, wage definitions varied across sectors and regions, leading to inconsistencies. With the new code, both organized and unorganized sector workers are entitled to a minimum wage, and this could uplift wage standards, especially for low-income workers.
Focus on Occupational Safety
The Occupational Safety, Health and Working Conditions Code mandates better working conditions, hygiene standards, and health measures at workplaces. Employers are now required to ensure clean drinking water, adequate lighting, and ventilation. For workers in hazardous industries, this translates to significantly improved workplace safety.
Challenges and Concerns
Increased Employer Flexibility Could Mean Reduced Job Security
While the Industrial Relations Code simplifies processes for hiring and firing, it has raised concerns among trade unions. For example, the threshold for seeking government permission for layoffs has been increased from 100 to 300 workers. Critics argue this change could weaken job security, especially in the manufacturing and industrial sectors.
Potential for Longer Working Hours
The codes permit state governments to allow 12-hour work shifts, which could be seen as a rollback of labour protections. Although the cap remains at 48 hours a week, longer shifts may lead to worker fatigue and stress, especially in physically demanding jobs.
Lack of Clarity in Definitions
The new wage and social security codes redefine terms like “wages,” “employees,” and “workers.” While this is aimed at consistency, the lack of clarity around these definitions could lead to legal ambiguities and disputes, potentially disadvantaging workers in the long run.
Sector-wise Impact
Gig and Platform Workers
The inclusion of gig workers under the social security umbrella is a major leap. These workers, previously outside the purview of labour laws, can now benefit from schemes for life and disability cover, maternity benefits, and health insurance. However, the actual implementation mechanisms remain unclear, as contributions from aggregators like Zomato or Uber have yet to be standardized.
MSMEs (Micro, Small, and Medium Enterprises)
While the codes aim to reduce compliance burdens for MSMEs, the relaxed regulations in areas like retrenchment and contract labour could adversely affect workers employed in these enterprises. There’s also a risk that businesses might split operations into smaller units to circumvent stricter labour norms.
Construction and Migrant Workers
The Occupational Safety Code mandates the registration of all establishments and the maintenance of worker records, including for contract and migrant labourers. If implemented properly, this could bring more visibility and protections to these vulnerable groups. However, actual on-ground enforcement remains a concern.
What Workers Should Expect Going Forward
Greater Formalization: The government’s push toward a more organized workforce might result in more registrations, record-keeping, and formal contracts. This could improve transparency but might also create compliance challenges for smaller employers.
Digitization of Processes: Labour codes encourage the digitization of wage payments, documentation, and record-keeping. This can reduce exploitation but also calls for digital literacy among workers, particularly in rural and semi-urban areas.
Need for Awareness and Education: Workers must be made aware of their new rights and obligations under these laws. Without proper outreach, the intended benefits may not reach those who need them most.
Conclusion
The new labour codes signify a paradigm shift in India’s labour law framework, aiming to strike a balance between worker welfare and economic growth. While they promise increased coverage, better safety, and standardized wages, the success of these reforms hinges on effective implementation, transparent governance, and regular updates based on stakeholder feedback. For Indian workers, the codes could be transformative—but only if their voices are actively included in the journey ahead.
As the landscape evolves, staying informed and engaged is key—for both workers and employers—to ensure the new system leads to a more equitable and productive workforce in India.
