New Delhi: The Centre announced Friday that the four labour codes, which have been under fire for almost six years, are now operational.
Nearly half a decade after the Parliament passed them, the codes are set to unshackle the restrictive labour market, facilitate employment generation, and provide social security cover to unorganised sector workers, including, for the first time, gig and platform workers.
The four include the Code on Wages, the Code on Industrial Relations, the Code on Occupational Safety, Health and Working Conditions, and the Code on Social Security. They consolidate 29 central labour laws that the Indian Parliament passed between 2019 and 2020. But the rules have not been operational because the Centre, under pressure from labour unions and due to pushback from some states, was unable to notify the codes.
Union Labour Minister Mansukh Mandaviya announced that the four codes are now effective. The rules are within the central ambit. However, the codes will be notified within the next 45 days, after which the states will inform the rules within their jurisdiction.
“By modernising labour regulations, enhancing workers’ welfare and aligning the labour ecosystem with the evolving world of work, this landmark move lays the foundation for a future-ready workforce and stronger, resilient industries driving labour reforms for Aatmanirbhar Bharat,” Mandaviya said in a press briefing.
Later, on social media platform X, Mandaviya said in a post, “For the first time, gig and platform workers are recognised in India’s labour framework. The new codes guarantee minimum wages, timely payments, social security and safer workplaces for all sections of workers.”
A majority of the states have so far carried out labour reforms or published draft rules aligning with the four labour codes, aiming to ensure workers’ welfare and promote ease of doing business. The delayed implementation of labour reforms at the central level, however, had left a large section of workers without social security. It had resulted in a fragmented approach, restricting uniform social security benefits to the nation’s workers. For employers, it had increased confusion over compliance.
The delay had led many states and UTs to amend several of their archaic laws to align them with the labour codes. For instance, 32 states and Union Territories, including Goa, Gujarat, Haryana, Odisha, Uttar Pradesh, Maharashtra, and Andhra Pradesh, among others, amended the Factories Act, 1948, allowing women to work night shifts. Among non-NDA states, Punjab, Jharkhand, Himachal Pradesh, Delhi, Jammu and Kashmir, Mizoram, Kerala, West Bengal, Tamil Nadu, Telangana, and Karnataka also eased their laws to allow women to work night shifts.
In the labour codes passed by the Centre, the Factories Act was subsumed in the Code on Occupational Safety, Health and Working Conditions.
‘Outdated’ provisions
India’s labour laws were archaic and a stumbling block in attracting industries and businesses to India. Many were framed during the pre-Independence and early post-Independence era (1930s–1950s), when the economy and the world of work were fundamentally different.
A labour ministry press statement said that while most major economies had updated and consolidated their labour regulations in recent decades, India continued to operate under fragmented, complex and, in several parts, outdated provisions spread across the 29 central labour laws.
The Narendra Modi government has been batting for labour reforms ever since it first came to power in 2014. Early in his first term, the government initiated the process to convert the existing 29 central labour laws into the current four codes.
Soon after Mandaviya’s announcement, Modi took to X, saying, “Today, our Government has given effect to the Four Labour Codes. It is one of the most comprehensive and progressive labour-oriented reforms since Independence. It greatly empowers our workers. It also significantly simplifies compliance and promotes Ease of Doing Business.”
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The four codes
Some provisions have run into trouble with the trade unions, though, the codes, after take-off, are, by and large, expected to usher in labour reforms and facilitate ease of doing business.
The Code on Wages, passed by Parliament in 2019, universalised minimum wage and timely wage payments for all employees, irrespective of the sector and wage ceiling. Currently, the provisions of both the Minimum Wages Act and the Payment of Wages Act apply to those working below a particular wage ceiling if they’re in Scheduled Employment.
Under the labour codes, the women workforce will get a significant leg up. Women will now be able to work at night and in all types of work across various establishments, subject to their consent and adherence to required safety measures.
The Industrial Relations (IR) Code will make it easier for companies to hire and fire workers. Companies employing up to 300 workers will not have to frame standing orders before hiring or firing. Presently, it is compulsory for firms employing up to 100 workers to frame standing orders. Standing orders are the rules of conduct for workmen employed in industrial establishments.
It will also be difficult for labour unions to go on strikes. The code mandates that factory workers notify employers if they want to go on strike at least 14 days in advance. Presently, only workers in public utility services are required to give notice for strikes.
The concept of fixed-term employment (FTE)—engagement of a worker based on a written contract of employment for a fixed period—has, for the first time, been introduced under the IR code. Any FTE will receive all benefits equal to permanent workers, such as leave, medical, and social security. They will also be eligible for gratuity after just one year, instead of the current five-year norm.
The FTEs will also get equal wages as permanent staff. This is expected to increase income and protection for the FTEs. It’s supposed to promote direct hirings and reduce excessive contractualisation of workers.
Similarly, the Code on Social Security will universalise social security coverage to those working in the unorganised sectors, such as migrant workers, gig workers and platform workers.
For the first time, it will bring freelancers, more commonly known as ‘gig workers’ and platform workers, who access other organisations using online platforms—delivery personnel working with food service aggregators, like Zomato and Swiggy, and cab drivers with aggregators Ola, Uber and others—under the social security net.
So far, most policies and schemes have only catered to the organised sector workers, whose numbers have ranged between 9 and 10 crore. The new labour laws will also cater to workers in the unorganised sector.
Among the labour unions, Bharatiya Mazdoor Sangh (BMS), the labour wing of the Rashtriya Swayamsevak Sangh, was the first to welcome the implementation of the new labour codes.
In a statement, BMS said that the reforms would bring long-pending social security benefits, streamline worker rights, and expand coverage to millions outside the formal net.
(Edited by Madhurita Goswami)
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