The establishment of the new Labour Codes marks a transformative step in India's labour landscape -- one that balances the welfare of workers with the efficiency of enterprises, the government data showed on Friday.
The employment in India has shown remarkable growth -- rising from 47.5 crore in 2017-18 to 64.33 crore in 2023-24, a net addition of 16.83 crore jobs in just six years.
During the same period, the unemployment rate declined sharply from 6.0 per cent to 3.2 per cent, and 1.56 crore women entered the formal workforce, underscoring the Government's emphasis on inclusive and sustained labour empowerment.
"These provisions simplify compliance, promote safety, and ensure fairness in wages. Moreover, these reforms lay the foundation for a more equitable, transparent, and growth-oriented economy. They reaffirm India's commitment to fostering a modern labour ecosystem that empowers both workers and industry, paving the way for inclusive and sustainable progress," the official statement showed.
The four Labour Codes include the Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020 and the Occupational Safety, Health and Working Conditions Code, 2020.
The historic reform streamlines compliance, modernises outdated provisions, and creates a simplified, efficient framework that promotes ease of doing business while safeguarding workers' rights and welfare.
The empowerment of labour forms the cornerstone of an empowered, prosperous, and Aatmanirbhar India.
Reforms in labour laws are an ongoing process. The Government continuously works to modernise and streamline the legislative framework in line with the evolving economic and industrial landscape of the country.
The codification of 29 existing labour laws into four Labour Codes was undertaken to address long-standing challenges and make the system more efficient and contemporary. The codification aims to enhance ease of doing business, promote employment generation, ensure safety, health, social and wage security for every worker.
The key reasons behind this reform include simplifying compliance, streamlining enforcement and modernising outdated laws.
According to the official statement, an important reason for rationalising labour laws via codification was to simplify the registration, licensing framework by introducing the concept of a Single Registration, Single Licence, and Single Return, thereby reducing the overall compliance burden to spur employment.
The Code on Wages, 2019 seeks to simplify, consolidate, and rationalise the provisions of four existing laws- The Payment of Wages Act, 1936; The Minimum Wages Act, 1948; The Payment of Bonus Act, 1965; and The Equal Remuneration Act, 1976. It aims to strengthen workers' rights while promoting simplicity and uniformity in wage-related compliance for employers.
The Code establishes a statutory right to minimum wages for all employees across both organised and unorganised sectors. Earlier, the Minimum Wages Act applied only to scheduled employments covering 30 per cent of workers.
A statutory floor wage shall be set by the Government based on minimum living standards, with scope for regional variation. No state can fix minimum wages below this level, ensuring uniformity and adequacy nationwide.
"Appropriate governments will determine minimum wages considering workers' skill levels (unskilled, skilled, semi-skilled and highly skilled), geographic areas, and job conditions such as temperature, humidity, or hazardous environments," the statement noted.
Employers shall not discriminate on the basis of gender, including transgender identity, in recruitment, wages, and employment conditions for similar work. Provisions ensuring timely payment and preventing unauthorised deductions will apply to all employees, irrespective of wage limits (currently applicable only to employees earning up to Rs 24,000/month).
Moreover, employers must pay all employees overtime wages at least twice the normal rate for any work done beyond the regular working hours. Employers, including companies, firms, or associations, shall pay wages to employees employed by them. Failure to do so makes the proprietor/entity liable for unpaid wages.
According to the new code, the traditional role of "Inspector" is replaced with "Inspector-cum-Facilitator," emphasising guidance, awareness, and advisory roles alongside enforcement to improve compliance. First-time, non-imprisonable offences can be compounded by paying a penalty. Repeat offences within five years, however, cannot be compounded.
The Code replaces imprisonment for certain first-time offences with monetary fines (up to 50 per cent of the maximum fine), making the framework less punitive and more compliance-oriented.
The Industrial Relations Code (IR Code) allows direct, time-bound contracts with full parity in wages and benefits; gratuity eligibility after one year. The provision reduces excessive contractualization and offers cost efficiency to employers.
The Re-skilling Fund has been set up from the contribution to be made by an industrial establishment for an amount equal to 15 days' wages for every worker retrenched. This is in addition to retrenchment compensation. The amount will be credited to the worker's account within 45 days of retrenchment.
It covers sales promotion staff, journalists, and supervisory employees earning up to Rs 18,000 per month and ensures proportional representation of women in grievance committees for gender-sensitive redressal.
The Code on Social Security, 2020, offers Expanded ESIC (Employees' State Insurance) coverage. ESIC now applies pan-India, eliminating the criteria of "notified areas." Establishments with fewer than 10 employees may voluntarily opt in with the mutual consent of employers and employees. Coverage would be mandated for hazardous occupations and extended to plantation workers.
A five-year limit has been set for initiating EPF inquiries and recovery proceedings, to be completed within two years (extendable by one). Suo-moto reopening of cases has been abolished, ensuring timely resolution.
Employers appealing EPFO orders now need to deposit only 25 per cent of the assessed amount (down from 40-70 per cent), reducing financial burden and ensuring ease of business and access to justice.
New definitions are included- "aggregator," "gig worker," and "platform worker" to enable social security coverage.
"Wages" now include basic pay, dearness allowance, and retaining allowance; 50 per cent of the total remuneration (or such percentage as may be notified) shall be added back to compute wages, ensuring consistency in calculating gratuity, pension, and social security benefits.
The fourth code, the Occupational Safety, Health and Working Conditions Code 2020, balances the twin objectives of safeguarding worker rights and safe working conditions, and creating a business-friendly regulatory environment. This will spur economic growth and employment, thereby making India's labour market more efficient, fair, and future-ready.
A uniform threshold of 10 employees is set for electronic registration. One registration for an establishment has been envisaged in place of six registrations in the Acts. This will create a centralised database and promote ease of doing business. The government can extend the Code's provisions to any establishment, even with one employee, engaged in hazardous or life-threatening occupations.
Women can work in all types of establishments and during night hours (before 6 AM, beyond 7 PM) with consent and safety measures, fostering equality and inclusion. "Working journalists" and "cine workers" now include employees in electronic media and all forms of audio-visual production.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
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