INTRODUCTION:
India’s labour regulatory framework has historically been characterized by its complexity, with a multitude of laws regulating different aspects of employment. The recent introduction of four new labour codes represents a paradigm shift, aimed at streamlining these laws into a more unified and accessible system. These codes are designed to reduce compliance burdens on employers, promote ease of doing business, and simultaneously safeguard the rights and welfare of workers. As India aspires to become a global manufacturing hub, aligning its labour laws with contemporary economic realities has become imperative. This blog offers a comprehensive analysis of these transformative reforms, their historical context, key provisions, legal implications, and the road ahead.
The labour reforms mark a significant step toward addressing longstanding challenges in India’s employment sector. For decades, Indian employers and workers alike have navigated a patchwork of archaic and sector-specific laws, which often hindered both economic productivity and labour welfare. The multiplicity of laws, often with conflicting definitions and procedural requirements, led to high compliance costs, legal uncertainties, and a significant gap in protection for informal workers.
Furthermore, rapid changes in the nature of employment—driven by globalization, digitization, and the gig economy—demanded a more adaptive and future-ready legal framework. The COVID-19 pandemic further highlighted the vulnerabilities of unorganized and gig workers, bringing the need for an inclusive and simplified labour law regime into sharp focus.
By consolidating 29 central labour laws into four thematic codes—wages, social security, industrial relations, and occupational safety—the government aims to promote fairness, transparency, and efficiency. These codes represent a unified vision of a labour market that is both business-friendly and worker-centric. This blog seeks to explain the origin, structure, significance, and future trajectory of the Indian labour code reforms, equipping readers with the knowledge to understand and engage with this critical legal transformation.
HISTORICAL BACKGROUND:
Before the codification initiative, India had over 40 central labour laws and more than 100 state-specific laws. These laws were enacted during different periods and for diverse purposes, often leading to overlaps, contradictions, and administrative burdens. For example, the definitions of ‘wages’ and ‘workman’ varied across statutes, resulting in legal ambiguity and litigation.
The Second National Commission on Labour, established in 1999, submitted its report in 2002, strongly recommending the simplification and consolidation of labour laws into broader functional codes. The aim was to make them more coherent, transparent, and easier to administer. Successive governments continued consultations with stakeholders, and finally, the move to codify the laws gained traction under the current regime, which emphasized improving the ‘Ease of Doing Business’ and fostering formal employment.
TIMELINE OF INTRODUCTION:
• 2002 – The Second National Commission on Labour submits its report recommending consolidation into five codes.
• 2017–2018 – Draft labour codes are introduced and referred to Parliamentary Standing Committees for review.
• August 2019 – Parliament passes the Code on Wages, 2019, the first of the four.
• September 2020 – Parliament passes the remaining three codes:
i. Industrial Relations Code, 2020
ii. Occupational Safety, Health and Working Conditions Code, 22020
iii. Code on Social Security, 2020
• 2021–2025 – State governments begin drafting rules; full implementation is pending as states must finalize their rules under these codes.
ROLE OF JUDICIARY IN SHAPING LABOUR LAW JURISPRUDENCE:
The Indian judiciary has played a pivotal role in interpreting labour laws and safeguarding the rights of both employers and workers. Through its landmark rulings, the judiciary has provided clarity on key definitions, ensured procedural fairness, and upheld the constitutional rights of workers.
Key Landmark Judgments:
- Bandhua Mukti Morcha v. Union of India (1984)
• The Supreme Court emphasized the right to livelihood as a fundamental right under Article 21 of the Constitution and mandated state action to eradicate bonded labour.
- Bangalore Water Supply and Sewerage Board v. A. Rajappa(1978)
• A landmark case defining the term ‘industry’. The Court gave an expansive interpretation, thereby bringing a wide range of establishments under the purview of industrial laws.
- Dharangadhra Chemical Works Ltd. V. State of Saurashtra (1957)
• Established criteria for determining the existence of an employer-employee relationship.
- Management of Safdarjung Hospital v. Kuldip Singh (1970)
• Clarified the definition of ‘workman’ and laid down that temporary workers could claim protection under labour laws.
- Zee Telefilms Ltd. V. Union of India (2005)
• Though primarily a case on public authorities, it reinforced the principle that employment rights should not be compromised by contractual classifications.
- Indian Express Newspapers v. Union of India (1985)
• Upheld the workers’ right to form unions and engage in collective bargaining, asserting that freedom of association is part of Article 19(1)©.
These judgments have laid a robust foundation for the interpretation and enforcement of labour rights, many of which have now been absorbed into the spirit and letter of the new labour codes.
OVERVIEW OF THE FOUR LABOUR CODES:
- Code on Wages, 2019
(i) Replaces four laws: The Minimum Wages Act (1948), Payment of Wages Act (1936), Payment of Bonus Act (1965), and Equal Remuneration Act (1976).
(ii) Introduces a universal definition of ‘wages’, ensuring consistency in calculations for PF, gratuity, and bonuses.
(iii) The code applies to all employees across organized and unorganized sectors, unlike earlier laws which were sector-specific.
(iv) Empowers the central government to fix a national floor wage, below which no state can set minimum wages.
(v) Mandates timely and full payment of wages, ensuring greater financial security for workers.
(vi) Promotes gender equality by prohibiting discrimination in wages.
- Industrial Relations Code, 2020
(i) Consolidates the Trade Unions Act (1926), Industrial Employment (Standing Orders) Act (1946), and Industrial Disputes Act (1947).
(ii) Introduces a more structured process for dispute resolution, including conciliation, arbitration, and tribunal adjudication.
(iii) Increases threshold for standing orders from 100 to 300 workers, giving flexibility to small and medium enterprises.
(iv) Introduces fixed-term employment with parity in benefits with permanent employees.
(v) It mandates a 60-day notice period before a strike or lockout in essential services, seeking to balance industrial peace with the right to protest.
(vi) Sets stricter norms for strikes, including notice period requirements, thus aiming to reduce industrial unrest.
- Occupational Safety, Health and Working Conditions Code, 2020
i. This code consolidates 13 different legislations relating to health, safety, and working conditions, covering a wide range of sectors, including the Factories Act and Mines Act.
ii. It sets out duties for employers to ensure workplace safety, such as proper ventilation, waste disposal, and preventive health measures.
iii. The code mandates registration of establishments and prescribes licenses for employing contract labour, inter-state migrant workers, and for ffactories.
iv. Applies to establishments employing 10 or more workers, extendingcoverage to more workplaces.
v. Mandates annual health check-ups for workers in hazardous occupations.
vi. Provides specific protections for women workers, including night shift permissions with safety safeguards.
v. Requires employers to provide basic facilities such as clean drinking water, latrines, and canteens in applicable establishments.
- Code on Social Security, 2020
i. Consolidates nine social security laws, including the Employees’ Provident Funds and Miscellaneous Provisions Act and the Employees’ State Insurance Act.
ii. Extends benefits to gig workers, platform workers, and unorganized sector employees, a major step toward inclusivity.
iii. Provides for the creation of a national social security board for unorganized workers.
iv. Encourages use of technology through a digital portal for registration, benefits distribution, and compliance.
v. Introduces universal account numbers to facilitate seamless transfer of benefits across jobs.
SUGGESTIONS:
• Capacity Building: Conduct training programs and workshops for HR professionals, trade union leaders, and government inspectors.
• Awareness Campaigns: Use media, NGOs, and local bodies to spread awareness among workers.
• Strengthen State Capacities: Provide financial and logistical support to states for rule formulation and IT infrastructure.
• Pilot Implementation: Roll out the codes in phases or through pilot projects to identify and address initial challenges.
• Feedback Mechanisms: Establish a helpline or feedback platform for continuous improvement.
CONCLUSION:
The Indian Labour Code Reforms represent a monumental step in redefining the landscape of employment laws in the country. By merging decades-old legislations into four streamlined codes, the government has attempted to strike a balance between the needs of a growing economy and the welfare of its workforce. These reforms have the potential to improve transparency, reduce litigation, and increase inclusiveness by bringing millions of informal and gig workers under the legal safety net.
However, the success of these reforms lies not just in legislation but in robust and inclusive implementation. State governments must actively participate in framing rules and ensuring awareness and capacity at the grassroots level. Trade unions, civil society organizations, and industry bodies should work in synergy to protect worker interests while promoting industrial harmony.
Additionally, digital infrastructure must be scaled up to support real-time compliance and benefit distribution. Skill development initiatives, especially in the informal sector, must accompany these legal reforms to build a productive and secure workforce.
In essence, the labour code reforms offer an opportunity to build a future-ready, fair, and competitive labour market. If implemented thoughtfully, they can become a cornerstone for inclusive growth and sustainable development in India’s journey towards becoming a global economic leader.
REFERANCES:
➢ Ministry of Labour and Employment, Government of India, https://labour.gov.in, last viewed on 21st April 2025.
➢ Byjus, https://byjus.com/free-ias-prep/labour-reforms/ , last viewed on 21st April 2025.
➢ ClearIAS, https://www.clearias.com/labour-codes/ , last viewed on 21stApril 2025.
➢ Economic Times, https://economictimes.indiatimes.com/small-biz/sme-sector/analysing-the-new-labour-codes/articleshow/117138406.cms?from=mdr , last viewed on 21stApril 2025.
➢ Drishti Judiciary, https://www.drishtijudiciary.com/editorial/implementation-of-4-labour-codes-stalled , last viewed on 21st April 2025.
By…
Akash Chaurasiya
BBA.LLB 4th Year StudentLovely Professional University
