Labour laws have traditionally aimed to protect the rights of workers, provide better working conditions for the workforce, and ensure that exploitation by factory and farm owners doesn’t occur.
These laws mandated safety protocols, limited working hours and prevented the mistreatment of the needy, women, and children. But some of these provisions, while suited to their time, may now be outdated and have outlived their utility.
Change is always good, especially when it’s for the better. Times change, people evolve, and therefore, laws must keep pace. The recent amendments to India’s labour laws have been a long time coming.
History of labour laws in India
The precursor to the Factory Act 1948 was the British-era Factories Act of 1883, introduced essentially to protect the British textile industry. It abolished child labour and mandated an 8-hour workday, introduced overtime, and forbade night shifts for women. Ostensibly to protect the interests of labour, the Act truly acted contrary to the stated objective.
The Trade Union Act 1923 and the Industrial Disputes Act 1929 later gave workers the right to form trade unions, enabling collective bargaining, participating in strikes and demonstrations.
The new code
As per the Press Information Bureau, labour is the driver of economic growth and development. Worker-welfare schemes such as a statutory minimum wage, mandatory appointment letters and social security benefits for gig and platform workers are all covered under these new labour codes.
The government has simplified the rules and regulations by consolidating 29 different labour laws into four simplified codes: Code on Wages, 2019; the Industrial Relations Code, 2020; the Occupational Safety, Health and Working Conditions (OSH) Code, 2020; and the Social Security Code, 2020.
These reforms were proposed during my tenure as a Member of Parliament.In fact, the Code on Wages received the President’s assent in 2019, and the remaining three in 2020. Yet it has taken over five years for the implementation of these progressive reforms. With this, the colonial-era labour laws have now transitioned into reformist legislation suited for the millennial and Gen Z workforce.
Need for new labour legislation
A worker in 2025 has very different needs from a worker in 1923; the world has come full circle. Industries today are not like those in 1929. Legislation drafted in pre-Independence days is out of place in modern, IT and AI-driven workplaces, nor do they reflect modern economic realities or gig-based work.
The framework was also fragmented, with over 40 central laws and more than 100 state laws, making compliance quite cumbersome. Contract workers were left out of benefits, and the needs of women workers were barely addressed. Frequent disputes between workers and management created friction, and the ambiguity in interpretation caused compliance chaos. Reforms were needed, and how.
What has changed?
The Minimum Wages Act, Payment of Wages Act, Payment of Bonus Act and Equal Remuneration Act were consolidated into the Code on Wages 2019. It introduces a uniform, unambiguous definition of wages, ensures fair & timely remuneration for all workers and sets a standard minimum wage across all industries.
The Centre has been empowered to set up a national floor wage to prevent regional inequalities. The code guarantees equitable pay to all genders and promotes gender-neutral employment opportunities. Digital compliance ensures a speedy dispute resolution. The rights of workers remain protected while ease of doing business is expanded, which is what our labour-intensive industries want to remain competitive.
The Industrial Relations Code 2020 focuses on fostering industrial harmony while bringing employer-employee dispute resolution into the 21st century. The Industrial Disputes Act 1947, The Trade Unions Act 1926 and the Industrial Employment (Standing Orders ) Act 1946 are consolidated into this brand new code.
Some of the reforms include the introduction of fixed-term employment, faster dispute resolution through Industrial Tribunals, and a mandatory 14-day notice period before undertaking strikes and lockdowns. This applies to all sectors. Prior government permission for layoffs and closure is no longer required for establishments employing up to 300 people. Worker representation will be strengthened through negotiating unions—with the end goal of promoting harmony and ease of doing business.
Nine existing laws have been consolidated under the Social Security Code 2020, expanding the scope of social protection to a wider workforce. Provident fund, employee insurance, maternity benefits, gratuity, and unorganised worker benefits come under the gamut of this modernised code. For the first time, gig workers, platform workers, and fixed-tenure workers will be eligible for social service benefits. It is a huge leap since online platforms like Ola, Uber, Swiggy and Zomato did not exist when the previous laws came into force, and their service providers would slip through the social benefit system.
The new code also allows for the creation of a universal database for unorganised workers, wherein central and state governments both would frame welfare schemes funded via contributions. Compliance has also been streamlined and made more effective under this code.
The Occupational Safety, Health and Working Conditions Code 2020(OSH) seeks to ensure safer and more humane working conditions for workers across India and all industries. It standardises regulations or working hours, leave, health checks and welfare facilities above certain thresholds. The OSH also ensures that safety norms in high-risk areas, such as mining, docks and factories, are intensified, putting the onus for hazard-free workplaces, protective gear and critical safety equipment on the employer.
Women, interstate and contract workers will get equal facilities and portability of benefits, which means that they won’t lose their emoluments when they move from one factory to another, ensuring household stability and a more skilled workforce.
Thereby, we hope to have an improved workplace system in place that will take us into the future of Industrial relations.
Worth the wait
The new codes were not implemented so far because labour is on the concurrent list for the states and the centre, and therefore, the new laws cannot come into effect until the states draft their own set of rules. And only when 28 states and 8 Union Territories have their rules ready can the new code be implemented. Moreover, some trade unions seek to politicise the issue by stating that the workers’ rights are being diluted, which is not the case at all. There have also been strikes and demonstrations in some states against the new codes. There is a need for consultation and communication among all stakeholders before the code can be fully enacted.
Being competitive with global market
The new labour reforms will bring about sweeping changes that could help India’s business sector compete better with China’s. By consolidating 29 laws into four codes, compliance is streamlined and regulations are simplified, reducing administrative friction and improving “ease of doing business”. This is bound to improve investor confidence.
The reforms offer greater flexibility in hiring, fixed-term employment, and higher overtime benefits. This would benefit seasonal industries like food processing and garments. Worker welfare would improve through a universal minimum wage, timely payments and social security coverage to gig and platform workers.
Domestic consumption could improve due to these worker benefits, and economies of scale would make Indian products more competitive. A simplified and transparent system for both workers and businesses would benefit sustainable growth and create a stronger industrial base, creating a viable alternative to China’s manufacturing dominance.
Also read: New labour codes are a simplification that’s been long overdue. Its a strategic shift
Some cautionary thoughts
Some critics are concerned that the said reforms might prioritise flexibility over worker rights, leading to a “hire and fire” culture. The stricter conditions for strikes and the mobilisation of trade unions are also seen as a measure to weaken the rights of workers to bargain collectively. Raising the threshold of government permission for layoffs from 100 to 300 employees is also seen as detrimental to job security. Many also fear that increased digital compliance and centralised decision-making could make it inconvenient for the average worker. Finally, the new codes are seen as having a business owner bias rather than a worker bias.
Hire and fire culture existed before, as least protection was available to the workers. On the contrary, when recognition to gig workers and others similarly placed has been accorded, this criticism has no bearing on it. With expanded social security, stronger protections, safe workplaces, the codes place workers, specifically women, youth, unorganised, gig and migrant workers firmly at the centre of labour governance as described by the Labour ministry under the new rules of labour governance. The criticism is without merit; let’s roll these changes and remain committed to labour rights.
However, the new codes for labour in India are not only reformist but also balance the need for development while maintaining the existing rights of workers and bringing more workers into the ambit of free and fair legislation. The need to replace the colonial-era legislation with modern, technology-driven laws is the need of the hour. We have to build a new India, which is development-centric. This is the right step toward a Viksit and Surakshit Bharat.
Meenakashi Lekhi is a BJP leader, lawyer and social activist. Her X handle is @M_Lekhi. Views are personal.
(Edited by Ratan Priya)