India’s New Labour Codes: A Detailed Legal Overview

Read the Labour Codes compliance framework in detail

India has undertaken one of the most far-reaching labour law reforms since Independence by consolidating 29 central labour legislations into four Labour Codes. The reform seeks to simplify India’s complex labour law framework, reduce multiplicity of compliances, enhance ease of doing business, and simultaneously ensure better protection and social security for workers. These Codes are expected to significantly alter employer–employee relationships across sectors.

Objectives Behind the Labour Code Reforms

The primary objectives of the Labour Code reforms include rationalisation of existing labour laws, uniformity in definitions and compliance mechanisms, reduction in litigation arising out of overlapping provisions, and extension of statutory benefits to unorganised, gig, and platform workers. The reforms also aim to encourage formalisation of employment while maintaining industrial harmony.

1. Code on Wages, 2019

The Code on Wages, 2019 consolidates four wage-related legislations, namely the Payment of Wages Act, 1936, Minimum Wages Act, 1948, Payment of Bonus Act, 1965, and Equal Remuneration Act, 1976. One of the most significant changes introduced is a uniform definition of the term ‘wages’ applicable across labour Laws.

The Code empowers the Central Government to fix a national floor wage, taking into account minimum living standards. State Governments must ensure that minimum wages fixed by them are not lower than the floor wage. The Code also strengthens provisions relating to timely payment of wages and prohibits gender-based discrimination in matters of remuneration.

2. Industrial Relations Code, 2020

The Industrial Relations Code, 2020 consolidates the Industrial Disputes Act, 1947, the Trade Unions Act, 1926, and the Industrial Employment (Standing Orders) Act, 1946. The Code seeks to balance the need for flexibility for employers with safeguards for workers’ rights. A notable feature is the introduction of the concept of a negotiating union or negotiating council to streamline

collective bargaining. The threshold for prior government approval for layoffs, retrenchment, and closure has been increased from 100 to 300 workers, providing operational flexibility to establishments.

3. Code on Social Security, 2020

The Code on Social Security, 2020 is one of the most progressive aspects of the labour reforms. It consolidates key social welfare legislations such as the Employees’ Provident Funds Act, Employees’ State Insurance Act, Payment of Gratuity Act, and the Maternity Benefit Act.

For the first time, the Code recognises gig workers, platform workers, and unorganised workers and enables the formulation of social security schemes for them. It also provides for a national social security database and simplified digital registration processes.

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

The Occupational Safety, Health and Working Conditions Code consolidates 13 labour laws relating to workplace safety, health, and welfare. It aims to provide a uniform regulatory framework across factories, mines, construction sites, and other establishments.

The Code introduces common registration and licensing mechanisms, prescribes standard working conditions, and includes specific provisions for employment of women during night shifts subject to safety measures.

Implementation Status and Way Forward

Although all four Labour Codes have received Presidential assent, their enforcement depends upon notification of rules by the Central Government and adoption by State Governments. As labour is a subject under the Concurrent List, employers must closely monitor state-specific developments. Businesses are advised to proactively review employment contracts, wage structures, HR policies, and compliance frameworks to ensure readiness once the Codes are fully implemented.

Conclusion

The new Labour Codes represent a paradigm shift in India’s labour law landscape. While they promise simplified compliance and broader social security coverage, their successful implementation will depend on clarity in rule-making and effective enforcement. Employers and professionals should seek timely legal advice to navigate this evolving regulatory environment.