Labour Laws in India

Indian labour laws are a set of legal provisions which regulate the relationship between the employers and the employees in India. These laws aim to protect the rights of the workers, ensure fair wages, provide social security, prevent exploitation, and maintain equality at the workplace. They also lay down guidelines for the resolution of disputes between the employers and the employees. 


The labour laws in India cover a wide range of areas, including minimum wages, minimum working hours, employment conditions, social security benefits, and industrial relations. Some of the key labours in India include the Industrial Disputes Act, the Minimum Wages Act, and the Employees’ Provident Funds. Few other such acts are the Miscellaneous Provisions Act, the Maternity Benefit Act, and the Sexual Harassment of Women at Workplace (Prevention, Prohibition, and Redressal) Act.


Over the years, there have been several labour law reforms in India in order to make them more inclusive. The aim of such amendments is to make the laws more responsive to the changing needs of the workforce. However, there is still a need to ensure effective implementation of these laws, especially in the informal sector where a large number of workers are employed.

What Prompted the Passing of the New Labour Codes?

29 Indian labour codes which haven’t undergone any changes since India’s independence have now been codified into some new labour laws. These are: Occupational Safety, Health, and Working Conditions Code, Social Security Code, Code on Wages, and Industrial Relations Code.


The Central Government of India has passed the above-mentioned new labour codes in order to bring about amendments to the labour codes which exist. Besides, their objective is to establish certain rules which will govern and facilitate the relationship between the employers and the employees.


The main motive as per the current Indian government is to govern workers’ empowerment, for a self-reliant, empowered, and prosperous India. These labour codes were initially introduced in the Indian parliament in the year 2020. However, they came into being only recently. All the Indian workers still do not have any access to several social security benefits and schemes in every sector. 


Besides, the majority of the workers fall under the unorganised sectors. This was one of the motivating factors for the introduction of the new labour law codes. Basically, the main objective of this ‘codification’ is to offer security, health, respect, and several welfare schemes for the ignored frontline workforce of India.


Even when the economic reforms were introduced in the year 1991, no labour law reforms were enforced. Hence, the execution of the new labour law codes came into existence to ensure the ease of carrying out the businesses by mitigating compliance. This will also aim at stopping the rigid and excessive regulations that the workforce may have to go through.

New Labour Codes

Following are the new labour codes as per 2023:

1.Minimum Wages Code

4 out of the 29 labour codes which exist have been blended under this code in order to provide the workforce the right to receive minimum wages. 


The highlights of the Minimum Wages Code are as follows:

  • Minimum wages must be reviewed after every five years

  • Wages must be paid to all the workers on time

  • Equal wages must be paid to the female and the male workers

  • Provisions of minimum wage abolishes the regional inequality in the minimum wage

  • Minimum wages to be decided on the basis of the geographical location and skill level

  • Payment of the Wages Act has raised the ceiling of the wages from ₹18,000 to a whopping ₹24,000

  • Wage, health, and social security to be provided to more than 50 Crore workforce in the organised and unorganised sectors

2.Occupational, Safety, Health and Working Conditions Code

The aim of the OSH Code is to offer the workers safe working conditions. It consolidates the 13 labour codes in order to ensure the occupational safety and health of the workers at the workplace.


Here are the highlights of the above-mentioned code:

  • The workers who migrate from one state to another can register on the online national portal and create a legal identity for themselves. This will enable them to avail of social benefits, schemes, and security.

  • Employers to sponsor free and mandatory annual health checkups for the employees.

  • Employers to sponsor the annual travelling allowances for workers who migrate from one state to another.

  • The construction and building workers who migrate from one state to another to receive an advantage from the cess funds of the workers.

  • The migrant labourers in a particular state as well as their dependents in another state receive the ration facilities as per the scheme ‘One Nation-One Ration Card’.

  • A dedicated helpline number or service for migrant workers to provide them a space to express their concerns or grievances.

  • Creation of a database for the national inter-state migrant labourers.

  • One-day leave to be given for every twenty working days.

  • Female workers must be allowed to work at every organisation.

  • Women workers are free to work at night. However, the employers must make the necessary safety arrangements, if required.

  • Organisations with more than 50 women have to set up a creche facility.

  • Maternity leave which is paid for female workers has been raised from 12 weeks to 26 weeks.

3.Industrial Relations Code

The IT Code of 2020 colligates the three labour codes and protects the interests of the trade workers and unions. It also makes sure that no issues arise between the industrial units and the workers in the future. 


Here are a few highlights of this code:

  • Workers who get fired from their job to receive an allowance as per the Atal Bimit Vyakti Kalyan Yojna

  • Workers who belong to the organised sectors and have lost their jobs to receive the unemployment allowance as per the Atal Bimit Vyakti Kalyan Yojna

  • Retrenched workers to get the wages of their 15 days’ work credited to their bank accounts for working on their skills development

  • Speedy settlement of the disputes of the workers and justice to be carried out by a board

  • An industrial tribunal with two members to be appointed for the speedy disposal of cases and disputes

  • Trade unions who receive 51% votes should be the workers’ negotiation party

  • A trade union council to be formed in order to carry out the negotiations with the employers if every trade union achieves less than 51% votes

4.Social Security Code

Nine of the older labour laws have been blended in order to form the Social Security Code of 2020. This labour code shall offer access to several security schemes such as maternity benefit, pension, insurance, gratuity, and more.


Here are a few highlights of the Social Security Code:

  • Hospitals, branches, and ESIC dispensaries to be available for all the 740 Indian districts

  • Establishments which are engaged in dangerous work to mandatorily register under ESIC

  • Plantation workforce to receive the ESIC benefits

  • Employees’ Provident Fund Organisation (EPFO) scheme to be extended to workers and self-employed workers in both, unorganised as well as organised sectors.

  • Workers from every sector to receive access to the ESIC hospitals

  • Employers with more than 20 workers to report the vacancies on an online platform

  • Workers’ national databases to be created in the unorganised sector by registering on the online portal of e-shram

  • Workers of the unorganised sectors to receive the universal account number (UAN) based on their aadhar for PF and ESIC scheme benefits

  • Gig and platform workers in the tech industry must receive ESIC access

  • ESIC benefits to be provided to the workers who are engaged in work which can be hazardous

  • Free treatment must be provided at the hospitals and dispensaries, run by the Employees’ State Insurance Corporation (ESIC), through a minimal contribution

  • Minimum service clause to be removed for the gratuity’s payment to the employees who are hired on a contractual basis

Meaning of Labour Law Reform and Codification

For the employers, the coalescence of the older labour codes could provide a certain structure to the workforce belonging to the unorganised sector. One of the major reasons behind introducing the new labour codes is to remove multiplicity. This implies that the pre-existing laws, prior to this monumental change, were confusing and unorganised.


However, it is structured and in shape now. This can also take place for the front line workers, once they get implemented. This is quite a good starting point. 


The workers’ platform-based and centralised national databases where the employers must report the job-related vacancies online can remedy several complications in association with the workforce management.


Let’s take an example. Suppose the approach based on the platform and the centralised database can aid the employers tap into a talent pool of job-ready candidates.


For the employees, the benefits which are listed under every code as mentioned-above are available for everyone to go through. They are finally receiving access to benefits such as social security and more. 


Besides, by permitting insurance plan coverage for the workers, the Indian government has made sure that their economic well-being is enhanced.


By providing equal status to the gig workers and the full-time employees, the government has taken a step towards the rationalisation of the economy generated from the gig. This will eventually motivate other working professionals to get into the bandwagon of the gig industry in order to improvise on their potential to earn.


The new labour codes will bring about positive reforms in the current salary structure and other benefits. These codes will now focus on the frontline workforce, industries, sectors, and enterprises as well. The new codes promise unlimited potential and infinite possibilities. There are definitely a lot of changes that have taken place now and this does not mean that the employers are not finding it challenging. It is imperative that the organisations understand the reasons behind making these changes and handle them better, especially by planning the budgets properly. It is only a matter of time that will show how this major step impacts the employee-employer relationships.

Frequently Asked Questions

Why are labour law reforms necessary?

The labour law reforms will enhance the process of carrying out businesses for the enterprises, and mitigate the internal contradictions, modernise safety, and improve several other working conditions. This will enhance the employee-employer relationship to a great extent.

What are the four labour codes?

The four labour codes are Industrial Disputes Act, the Minimum Wages Act, and the Employees’ Provident Funds.

When were the labour reforms introduced in India?

The introduction of the new labour reforms in India took place in the Indian parliament in the year 2020.

What are the factors which affect the labour laws?

The prevailing socio-economic conditions influence the labour laws to a great extent. These regulate several aspects of the working conditions such as the social security system, wages, working hours, and more.

Is it necessary to follow the new labour codes?

Yes, it is mandatory for the organisations to ensure that the new labour laws are enforced.

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