In a historic overhaul of India's labour regulations, the government has consolidated 29 existing laws into four comprehensive labour codes. This monumental reform, enacted on Friday, November 21, aims to strike a balance between promoting ease of business and robustly protecting the rights of workers, a move set to impact over 400 million individuals across the formal and informal sectors.
Key Highlights of the Four Labour Codes
The four new codes are the Code on Wages, the Industrial Relations Code, the Social Security Code, and the Occupational Safety Code. This consolidation simplifies a complex web of regulations, introducing several progressive provisions for the modern workforce.
Code on Wages, 2019: Ensuring Fair Pay
This code unifies laws concerning wages, making minimum wages a statutory right for all employees, a significant leap from the previous coverage of only about 30% of workers. It establishes a national floor wage based on minimum living standards, below which no state can set its minimum wage. The code mandates gender equality, prohibiting discrimination in recruitment and pay based on gender, including for transgender individuals. Furthermore, all employees are entitled to timely payment, and employers must pay double the standard rate for any overtime work.
Industrial Relations Code, 2020: Modernizing Work Relationships
This code introduces fixed-term employment with equal wages and benefits, making employees eligible for gratuity after just one year of service. It establishes a re-skilling fund for retrenched workers, financed by employers. The code also formally recognizes work-from-home arrangements in service sectors and increases the threshold for government approval of layoffs from 100 to 300 workers. To prevent sudden work stoppages, it mandates a 14-day notice before strikes.
Code on Social Security, 2020: Expanding the Safety Net
In a landmark move, this code extends social security coverage to gig workers and platform workers. It proposes a dedicated Social Security Fund to finance schemes for unorganised, gig, and platform workers. The code also expands the ESIC coverage pan-India and reduces the deposit required for employers appealing EPFO orders. Notably, fixed-term employees become eligible for gratuity after one year of continuous service.
Occupational Safety Code, 2020: Health and Working Conditions
This code empowers women to work in all establishments and during night shifts, provided their consent and safety measures are in place. It mandates free annual health check-ups for employees and sets normal working hours at 8 hours per day. The code also provides a wider definition of inter-state migrant workers and calls for the creation of a national database for unorganised workers to help them access benefits and employment.
A Progressive Step for India's Workforce
The introduction of these four labour codes represents the most significant update to India's labour laws in decades. By simplifying regulations and introducing forward-looking provisions like gender equality in pay, social security for gig economy workers, and universal minimum wages, the government aims to create a more equitable and business-friendly environment. The success of these codes will depend on their effective implementation, which has the potential to transform the working lives of hundreds of millions of Indians.
