By Ms. Vidhya Soundararajan<\/p>\n
The Second National Commission on Labour (2002) had highlighted how India\u2019s maze of
\nlabour laws had become overly complex and fragmented. Acting on its recommendations, last
\nweek, the government notified four major labour codes on Wages (2019), Industrial Relations
\n(2020), Social Security (2020), and Occupational Safety, Health and Working Conditions
\n(OSHW) (2020), effectively merging 29 older laws into a more coherent framework. This is a
\nwelcome step: long overdue and among the most awaited reforms in recent years. By
\nsimplifying definitions, enabling digital compliance, and streamlining registration and
\ninspections, the new codes cut red tape, reduce legal uncertainty, and make it easier to do
\nbusiness, especially for the manufacturing and services sector.<\/p>\n
The code on Wages marks a major shift by introducing a statutory national floor wage.
\nEarlier, the wage floor served only as a guideline for states and was not legally binding. The
\ncode also extends minimum wage coverage to all sectors, replacing the earlier system that
\napplied only to a list of scheduled employments. Under the old framework, several
\noccupations such as private security, courier and care services were often left out of
\nindividual state schedules. By making coverage universal and establishing a binding floor
\nwage, the reform strengthens income security for workers while providing greater
\npredictability in labour costs for employers, supporting both fairer industrial relations and
\nmore informed business planning.<\/p>\n
The Social Security code brings together nine earlier laws and, for the first time, extends
\ncoverage to unorganised, gig, and platform workers. It also includes fixed-term employees,
\nwho are now entitled to pro-rata gratuity and benefits on par with permanent staff. By
\nrecognising non-traditional forms of work, like gig and platform work, the code reflects the<\/p>\n
changing realities of India\u2019s labour market. These changes are especially significant, since
\nresearch consistently finds that access to social security improves worker welfare while
\nsimultaneously increasing productivity, reducing absenteeism, and improving retention.
\nFirms that embrace these standards can also gain reputational advantages and align more
\neasily with global value chains that prioritise Environmental, Social, and Governance (ESG)
\ngoals.<\/p>\n
The OSHW Code significantly expands the scope of workplace welfare and protection. It
\nmandates annual health check-ups (for employees above 40 years of age) and welfare
\nfacilities such as canteens, restrooms, first-aid centres, and cr\u00e8ches, extending these
\nrequirements to a wider range of establishments. These provisions mark a clear improvement
\nover earlier laws like the Factories Act, which were unevenly enforced and applied mainly to
\nfactories. In parallel, the code introduces greater flexibility for employers. Draft provisions
\nallow state governments to set limits on permissible overtime hours, subject to worker
\nconsent. Several states have since raised the quarterly overtime cap from 75 hours to as high
\nas 125 or 144 hours, while requiring double wages for overtime work. Admittedly, effective
\nenforcement and ensuring that consent remains voluntary are crucial for these provisions to
\nbe meaningful in practice. Still, when implemented alongside strong labour protections, such
\nmeasures can create a win\u2013win: offering higher income potential for workers and greater
\noperational flexibility for firms.
\nThe Industrial Relations code brings greater<\/p>\n
flexibility to workforce management by raising
\nthe threshold for prior government approval for retrenchment and closure from 100 to 300
\nworkers. This allows firms to adapt more easily to changing market conditions while
\nretaining essential worker protections. In the long run, such flexibility can encourage formal
\njob creation, as firms are less likely to avoid hiring or stay below legal limits. By lowering
\nthese barriers, as supported by many studies, the code supports a shift toward formal
\nemployment, giving workers better access to regulated working conditions, social security,
\nand job stability, while helping businesses grow more efficiently.<\/p>\n
The shift from the old \u201cinspector-raj\u201d system to an \u201cInspector-cum-Facilitator\u201d model marks
\na move toward cooperative, tech-driven compliance. Risk-based, digital inspections reduce
\narbitrariness and bring India\u2019s labour framework closer to global standards. Industry has
\nwelcomed the change, citing less paperwork, fewer overlaps, and reduced human interface.
\nWith unified portals like Shram Suvidha, compliance is now simpler and more transparent.<\/p>\n
While some worry about weaker enforcement, inspections haven\u2019t been abolished\u2014just
\nmade more targeted, less intrusive, and more transparent, improving both efficiency and
\naccountability.<\/p>\n
Finally, the formal recognition of non-standard forms of employment signals a forward-
\nlooking orientation. While gig and platform workers do not yet enjoy full employee status
\nand hence lack entitlements such as collective bargaining or minimum wage guarantees, their
\ninclusion in the social security framework represents an important first step toward more
\ninclusive labour regulation.<\/p>\n
All in all, the new labour codes mark a major step toward bringing India\u2019s workplace laws in
\ntune with today\u2019s economy. They aim to strike a balance: protecting workers while making it
\neasier for businesses to grow and hire formally. The real test, however, lies in how smoothly
\nand consistently these reforms are rolled out across states. If implemented well, they could
\nmake compliance simpler, improve working conditions, and boost India\u2019s competitiveness.
\nTaken together, these changes move India closer to its goal of building a more resilient, fair,
\nand inclusive economy.
\nThe author is affiliated with the Centre of Advanced Economics Research & Learning
\n(CAFRAL)<\/p>\n","protected":false},"excerpt":{"rendered":"