Understanding India’s Labour Codes: Future for Work

India’s labour market has recently changed dramatically. The central government produced four new labour codes consolidating 29 older central labour laws to improve the system’s efficiency and make it friendlier for workers. These reforms are meant to simplify India’s labour laws, making them clearer and easier to follow for workers and employers alike.

Let’s find out these new labour laws in India and what they are trying to do, and how they might impact the future of work in India. 

What Are Labour Codes?

Previously, Labour laws in India were fragmented and contained in several acts and policies, which caused issues with understanding, delays in compliance, and compliance issues for companies and made it difficult for workers to comprehend their rights fully.

To remedy this issue, the Indian government enacted four new labour codes:

• Code on Wages (2019)
• Industrial Relations Code (2020)
• Code on Social Security (2020)
• Occupational Safety, Health and Working Conditions Code(2020)

These codes brought together existing laws under simplified categories to facilitate compliance with and enforce the code provisions.

1. Code on Wages, 2019

The Code on Wages replaces older laws such as the Minimum Wages Act, Payment of Wages Act, Payment of Bonus Act, and Equal Remuneration Act. The goal is to ensure all workers are paid fairly and on time.

Key features:

• Ensures a minimum wage for all workers across industries.
• Equal pay for equal work, regardless of gender.
• Standard guidelines for bonuses.
• Timely payment of salaries and wages.

These Labour Codes benefit salaried and daily wage workers and aim to close the pay gap across different sectors.

2. Industrial Relations Code, 2020

The Code enhances employer-employee relations and resolves disputes efficiently. It consolidates laws related to trade unions, employment terms, and industrial disputes.

Key features: 

• It eases the creation of trade unions.  
• Under this Code, employers’ advocates are encouraged or incentivised to resolve disputes within a company via negotiation or arbitration. 
• In bigger companies, it sets new limits on layoffs and retrenchments, thus allowing companies to create jobs to grow while still protecting employees. 

The Industrial Relations Code’s goal is to settle business interests with those of employees and one of the most important  Labour codes in India.

3. Code on Social Security, 2020

Social security is critical for the long-term safety and health of workers. This Code seeks to bring more workers under formal coverage, including those in the informal sector and the gig economy.

Major measures:

• Extends employee benefits such as a provident fund, pension plan, and maternity leave for gig and platform work.
• Allows employers to voluntarily contribute to workers’ social security, even for non-traditional employment.
• Seeks to facilitate registration and compliance for employers.

As the gig economy expands, this Code represents a meaningful step towards inclusion and fair treatment of workers.

4. Occupational Safety, Health and Working Conditions Code, 2020

This law ensures workers’ safety, health, and dignity in the workplace. It combines many earlier acts on working hours, holidays, and health and safety standards.

Important points:

• Sets up conditions of work, rest, and annual leave.
• It requires clean drinking water, toilets, and first aid.
• It covers traditional industries like factories and modern forms like IT parks.
• Emphasises contact workers, migrant labour and women employees.

This Code reflects the growing priority of employee well-being and modern workplace standards.

Some other notable Labour Codes include: 

• Factories Act, 1948
• The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
• Contract Labour Amendment Bill 2017
• The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979
• The Payment of Gratuity Act, 1972
• Employees’ Compensation Act, 1923
• Equal Remuneration Act
• Maternity Benefit (Amendment) Act, 2017
• The Motor Transport Workers Act, 1961

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Why These Labour Codes Matter?

Introducing four labour laws under the labour codes is a monumental reform for India’s economy. 

These new labour laws in India seek to:

• Simplify compliance for employers.
• Provide better protection and clarity for workers.
• Improve India’s rank in ease of doing business.
• Facilitate flexible and inclusive employment across sectors.
• Reduce the number of overlapping laws and provide clarity.

Are labour codes the next evolution?

Although these labour codes have been enacted, they have not yet been implemented in full across India. If state governments notify these codes, they will establish a better and more transparent labour system. 

For industry stakeholders, these codes are an invitation to improve standards and promote responsible practices. For workers, they promise a fairer, safer, and more secure future of work.

As India’s workforce continues to evolve with the introduction of startup companies, new gig economy platforms, and the globalisation of outsourcing, these new codes align our laws with the changing world of work, where flexibility, rights and respect coexist.