Many Labour Laws in India have their roots in the British colonial era. However, over time, several of these provisions have become outdated, ineffective, or irrelevant. 

As a result, the old 29 Labour Laws have been consolidated into four Labour Codes, streamlining the legal framework for better efficiency and effectiveness

The new labour codes aim to simplify doing business in India by replacing 29 outdated laws. 

The primary objective is to protect the rights of over 500 million workers, including those in the informal sector, by providing:

•       Wage security

•        Social security

•        Health security

•        Gender equality in pay

•       A minimum floor wage

These codes also seek to improve the lives of inter-state migrant workers, ensuring they receive fair treatment and protection under the law.

List of Labour Acts Consolidated into Four Labour Codes

Consolidated Labour Codes and Acts

Code on wages - 2019

Applicability

•   Applies to all establishments and employees in both organized and unorganized sectors

Key Provisions

•     Uniform applicability of timely payment of wages and minimum wages

•       Introduction of a floor wage, determined by the Centre, considering minimum living standards

•       State governments cannot fix minimum wage rates lower than the floor rate

•       Minimum wages decided by central or state governments must be above the floor wages

Determining Minimum Wages

•   Governments must consider difficulty level of work and workers' skill levels

•     Cannot reduce existing minimum wages if they are higher than the floor wages 

Prohibition of Gender Discrimination

•     Prohibits gender discrimination in wages and recruitment for same or similar work 

Definition of Wages

•     Includes salary, allowance, or any other monetary component

•       Excludes bonuses and travelling allowances

Working Hours and Overtime

•       Working hours to be fixed by central or state governments

•       Overtime compensation must be at least twice the standard wages

Wage Period and Payment

•   Employer can fix wage period as daily, weekly, fortnightly, or monthly

Advisory Boards

• Constituted to advise governments on minimum wage fixing and increasing employment opportunities for women

Penalties

•       Specifies penalties for offences committed by employers, including imprisonment and fines up to Rs. 1 lakh.

Code on Industrial Relation - 2020

Definition of Worker

•       Expanded to include persons employed in skilled/unskilled, manual/technical, operational/clerical capacities

•     Includes persons employed in supervisory capacity earning < Rs. 18,000/month

  Fixed-Term Employment

•         New provision for fixed-term employment with written contract

•         Fixed-term employees to receive same benefits as permanent employees

Standing Orders and Employment Threshold

•          Minimum number of workers for standing orders increased to 300

•       Increased threshold makes it easier to hire and fire, promoting employment

 Ease of Doing Business

•       Firms with up to 300 workers can lay off, retrench, or close without government permission

Re-skilling Fund 

•     Employers contribute 15 days' last drawn wages for training retrenched workers, regardless of the size of the industrial establishment (i.e., it is not explicitly limited to companies with 300 or more workers).

Dispute Resolution and Worker Welfare

•       Compulsory helpline for migrant workers

•       National database of migrant workers

•         Accumulation of leave for every 20 days worked

•       Equality for women in every sphere, including night shifts with security provisions

•     Penalty for workplace accidents/injuries, with 50% share to worker/family

Social Security 

•         Provision of Social Security Fund for 40 crore unorganized workers, GIG, and platform workers for Universal Social Security coverage.

Code on social security ,2020

Expanded Definition of Employees

•   Includes inter-state migrant workers, construction workers, film industry workers, and platform workers/gig workers

Subsumption of Laws and Schemes

•     Subsumes nine laws

•       Empowers Centre to notify social security schemes like EPF, EPS, and ESI for all sectors

Extension of ESIC Facility

•     ESIC hospitals and dispensaries, as well as affiliated private hospitals to be provided in all 740 districts (currently available in 566 districts)

Empowerment of Centre

•     To frame schemes for self-employed, unorganized workers, gig workers, and platform workers

•     To cover members of their families

EPFO Coverage

•       Applicable to all establishments with 20 workers (currently applicable to scheduled establishments)

Mandatory Online Reporting

•    Firms with >20 workers must report vacancies online

 Social Security Fund

•        Provision for creation of fund for unorganized sector workers

National Social Security Board

•   To be established for recommending schemes for unorganized, gig, and platform workers

Gratuity Provisions

•     Fixed-term employees eligible for gratuity without minimum service period

•       Gratuity period for working journalists reduced from 5 to 3 years

National Database for Unorganized Sector Workers

•     Online registration through self-certification and simple procedure.

Code on Occupational Safety, Health and Working Condition ,2020

Applicability and Definition

•   Amalgamates 13 existing labor laws

•     Applies to factories with ≥20 workers (with power) or ≥40 workers (without power)

Employer Responsibilities

•        Ensure workplace is hazard-free·       

• Provide free annual health examinations/tests to certain employees.

Inter-state Migrant Workers

•       Defined as those earning ≤Rs. 18,000/month, migrating from one state to another

•       Eligible for portability benefits (ration, building/construction worker cess)

•       Entitled to Journey Allowance (lump sum fare for travel from native state to workplace)

Formalizations of Employment

•     Legal right to Appointment Letter for workers

•       Encourages formal employment

Expanded Coverage

•       Cine Workers (associated with cinema) re-designated as Audio Visual workers for broader coverage

•       Removes manpower limit on hazardous working conditions

•       Applies to contractors recruiting ≥50 workers (previously ≥20)

Working Conditions

•       Daily work hour limit: maximum 8 hours

•       Empowers women to work in all establishments, including night shifts (7 PM-6 AM), subject to consent and safety.

Key Takeaways:

•       The Labour Code amalgamates 29 existing labour laws into four codes: Code on Wages, Industrial Relations Code, Code on Social Security, and Occupational Safety, Health and Working Conditions Code.

•       The codes aim to simplify and streamline labour laws, promoting ease of doing business and protecting workers' rights.

•       Key provisions include universal minimum wage, fixed-term employment, social security benefits, and occupational safety and health standards.

Impact:

•       The Labour Code is expected to transform the labour landscape in India, promoting formalization of employment, improving working conditions, and enhancing social security benefits for workers.

•     It aims to strike a balance between the interests of employers and employees, promoting a more equitable and harmonious workplace.

Way Forward

•  Effective implementation of the Labour Code will require coordination between central and state governments, employers, and workers

• Training and awareness programs will be crucial in ensuring that stakeholders understand and comply with the new provisions.

•   Continuous monitoring and evaluation will be necessary to assess the impact of the Labour Code and make necessary amendments.