Four Labour Codes Implemented – A Transformative Shift in India’s Labour Landscape

Four Labour Codes Latest News

• The Government of India notified all Four Labour Codes, consolidating 29 Central labour laws into a simplified, modern regulatory framework. 
• This marks one of the most significant labour reforms since Independence, aimed at improving labour welfare, social security, workplace safety, and ease of doing business.

Background

• Four labour codes: Code on Wages, 2019; Industrial Relations (IR) Code, 2020; Code on Social Security, 2020; and the Occupational Safety, Health and Working Conditions (OSHWC) Code, 2020.
• Pending implementation: These codes were pending implementation due to protests by Central Trade Unions (CTUs). Despite resistance, the Centre has now operationalised them.
• Systemic reforms introduced:
  • Gender-neutral work policies
  • Uniform safety standards
  • Streamlined contract labour regulation
  • India-wide ESIC and EPFO coverage
  • National floor wages
  • Move towards formalisation of labour market

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Key Features of the Four Labour Codes

• Universal social security and expanded coverage:
  • First-time statutory recognition of gig workers, platform workers, and aggregators.
  • ESIC expanded to all districts, including hazardous units.
  • Aadhaar-linked Universal Account Number (UAN) – fully portable benefits for migrant workers.
  • Accident compensation extended to commuting accidents.
  • Social security contributions – aggregators to contribute 1–2% of annual turnover (capped at 5%).
• Wages, minimum pay and timely payment:
  • National Floor Wage introduced.
  • Mandatory timely wage payments across establishments.
  • Wage structure redefined to increase basic pay component, enhancing provident fund and gratuity provisioning.
• Women workers’ rights and safety:
  • Women allowed to work night shifts, underground mines, heavy machinery operations—with consent and safety conditions.
  • Equal pay for equal work mandated.
  • Free annual health check-up for workers aged over 40.
• Fixed term employment (FTE):
  • Workers can be hired for a fixed duration without compromising benefits.
  • FTE employees get – same wages as permanent workers; medical, leave, and social security benefits; and gratuity eligibility after one year (earlier 5 years).
• Simplifying compliance and improving Ease of Doing Business:
  • Single registration, licence and return system.
  • Inspector-cum-facilitator model for supportive compliance.
  • Two-member tribunals for faster dispute resolution.
  • National OSH Board to harmonise safety standards.

Stakeholder Responses

• Government:
  • Most comprehensive labour-oriented reform since Independence.
  • Codes will formalise employment, ensure global alignment, and improve worker protections.
• Industry: CII welcomed the Codes as a “historic milestone,” aiding a predictable labour regime and boosting economic growth.
• Trade unions (CTUs):
  • Termed the Codes: “Anti-worker, pro-employer”, “Declaration of war on working masses”
  • Concern areas – FTE misuse, restrictions on the right to strike, retrenchment norms.
  • Nationwide protests planned for 26 November.
• Bharatiya Mazdoor Sangh (BMS): Partially supportive – backs Codes on Wages & Social Security but wants changes in OSHWC and IR Codes.

Challenges and Concerns

• CTUs: Oppose curtailment of strike rights, retrenchment rules, and fear dilution of worker protections.
• Implementation capacity: Labour is a Concurrent Subject—requires State cooperation. Many States are still finalising rules; implementation asymmetry is likely.
• Risk of FTE misuse: Fear that employers may replace permanent jobs with fixed-term contracts.
• Gig worker social security: Turning provisions into effective schemes remains a challenge. Past initiatives like e-Shram saw poor follow-through.
• Clarity on wage floor: National Floor Wage requires new methodology and agreements across States.

Way Forward

• Strengthening consultation mechanisms: Revive the Indian Labour Conference (ILC) for consensus-building. Continuous dialogue with unions, employers and States.
• Capacity building for States: Technical and financial support to implement new digital compliance systems.
• Clear scheme design for gig workers: Transparent rules for aggregator contribution. Seamless portability using UAN.
• Monitoring and preventing misuse of FTE: Strong checks to avoid replacing permanent jobs with FTE roles.
• Awareness campaigns: Workers, especially in informal sectors, need awareness of new rights.

Conclusion

• The implementation of the Four Labour Codes represents a historic restructuring of India’s labour governance framework. 
• By consolidating 29 outdated laws, the Codes aim to create a future-ready labour ecosystem that promotes worker welfare, social security, gender equality, and ease of doing business.
• However, implementation challenges, trade union resistance, and risks of misapplication remain significant. 
• Effective stakeholder engagement and transparent rule-making will be crucial for the Codes to fulfil their objective of creating an inclusive, formalised, and equitable labour market in India.

Source: TH | IE