New Labour Codes

India undertook a major overhaul of its labour regulatory framework by consolidating 29 outdated and fragmented labour laws into four comprehensive Labour Codes. 

Background

• Fragmented Earlier Framework: Post-independence, India had 29 separate labour laws, creating administrative complexity; factory owners had to maintain multiple registers, and workers often did not fully understand their rights.
• Reform Recommendation: The Second National Commission on Labour (2002) recommended consolidation of these scattered laws to remove confusion and improve implementation.
• Final Outcome: After extensive discussions between 2015 and 2019, the government merged the 29 laws into four streamlined Labour Codes, which were officially notified on 21 November 2025.

The Four Labour Codes

• Code on Wages, 2019:
  • Universal Minimum Wage: The Code ensures every worker, irrespective of sector, is legally entitled to a minimum wage.
  • National Floor Wage: The Centre sets a national floor wage (e.g., ₹180/day) below which States cannot reduce their minimum wages.
  • Time-Bound Salary Payment: The Code mandates timely and compulsory wage payments, reflecting Amartya Sen’s view that development expands workers’ freedoms.
• Social Security Code, 2020: 
  • Inclusion of Gig and Platform Workers: For the first time in Indian law, gig and platform workers are formally recognised as a distinct category deserving social protection.
  • Creation of a National Fund: A dedicated National Fund will be established to support gig and platform workers’ welfare.
  • Expanded Social Security Coverage: ESIC coverage has been expanded to 566 districts and extended to unorganised sector workers, enhancing the safety net.
•  Industrial Relations Code, 2020:
  • Higher Layoff Threshold: The threshold for companies laying off workers without prior government approval has been raised from 100 to 300 workers to reduce “Inspector Raj” and encourage employment.
  • Equal Benefits for Fixed-Term Workers: Workers hired on fixed-term contracts must receive the same benefits as permanent workers.
  • Mandatory Strike Notice: A compulsory 14-day notice period before strikes aims to prevent sudden disruptions in industrial operations.
• Occupational Safety, Health and Working Conditions (OSH) Code:
• • Women’s Night Shift Flexibility: Women can now work night shifts with their consent, marking a progressive step toward gender equality in the workforce.
  • Enhanced Employer Responsibility: Employers must ensure workplace safety, provide holidays, and arrange transportation for workers.
  • Mandatory Health Checkups: Free annual health checkups for workers above a certain age are required, promoting preventive healthcare.

Benefits of the New Labour Codes

• Ease of Doing Business: The introduction of Single Registration, Single License, and Single Return reduces compliance burden and makes operations more business-friendly.
• Digital and Transparent Inspections: Algorithm-based and random inspections curb corruption and reduce inspector discretion.
• Decriminalization to Reduce Fear: Minor violations now attract only monetary penalties, reducing punitive pressure on employers.
• Boost to Job Creation: The Labour Codes are expected to strengthen job creation momentum.
  • 16.83 crore jobs were added between 2017-18 and 2023-24, with unemployment falling from 6% to 3.2%.
• Formalization of Workforce: The Codes aim to bring India’s large informal workforce (643 million people) into the formal sector.
• Higher Productivity and Investment: Greater worker security and simplified rules attract global investors and improve overall productivity.

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Challenges with respect to New Labour Codes

• Delays in Implementation: Labour is a Concurrent List subject; without State notifications, the Codes cannot be implemented effectively.
• Worker Insecurity and Union Concerns: Trade unions fear that the increased layoff threshold may lead to easier “Hire and Fire,” affecting job security.

Conclusion

The new labour codes can usher in a transformative era if implemented effectively, that protects workers while enabling business growth for a confident, productive workforce.

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