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India's New Labour Codes: A Transformative Reform for Workers and Businesses



Introduction


India has ushered in a historic labour reform by consolidating 29 complex labour laws into 4 simplified Labour Codes, marking the most significant overhaul since independence. These reforms aim to balance worker welfare with business growth while promoting "Ease of Doing Business." Here's what you need to know.


The Four Labour Codes: Key Highlights


1. Code on Wages (2019)


  • Universal Minimum Wage: Ensures minimum wages for 50 crore workers (organized + unorganized sectors).

  • Timely Payments: Mandates wage payment within 2 working days for contract workers.

  • Equal Pay: Guarantees equal remuneration for men and women.

  • Floor Wage: Introduced to reduce regional wage disparities.


2. Code on Social Security (2020)


  • Expanded Coverage: Includes gig workers, platform workers (Swiggy/Zomato), and self-employed under ESIC/EPFO.

  • Universal Account Number (UAN): Enables seamless portability of benefits.

  • Pension for Unorganized Workers: Schemes like Pradhan Mantri Shram Yogi Maandhan provide ₹3,000/month pension.

  • Fixed-Term Employees: Entitled to gratuity and social security, regardless of tenure.


3. Occupational Safety, Health & Working Conditions Code (2020)


  • Safer Workplaces: Mandates free annual health check-ups and appointment letters for all workers.

  • Migrant Worker Reforms:

    • One Nation, One Ration Card for access to food supplies.

    • Annual travel allowance to visit home.

    • National database for inter-state migrants.

  • Women Empowerment: Right to work night shifts with safety provisions.


4. Industrial Relations Code (2020)


  • Easier Hiring/Firing: Firms with up to 300 workers can lay off without government approval (earlier 100).

  • Faster Dispute Resolution: Tribunals must resolve cases within 1 year.

  • Trade Union Recognition: Unions with 51% worker support get sole negotiating rights.

  • Reskilling Fund: Retrenched workers receive 15 days’ wages for skill development.


Implementation Status (2025)


  • Pending Rollout: States are finalizing rules.

  • Digital Compliance: Shram Suvidha Portal to streamline registrations and filings.


Benefits for Workers & Employers


✅ For Workers:


  • Social security for 40 crore unorganized workers.

  • Maternity leave increased to 26 weeks.

  • EPF/ESI extended to all sectors, including hazardous industries.


✅ For Employers:


  • Single registration/license for compliance.

  • Reduced "Inspector Raj" with web-based inspections.

  • Flexible hiring through fixed-term employment.


Challenges & Concerns


⚠️ Potential Issues:


  • Informal workers may face job insecurity under flexible hiring norms.

  • States fear losing autonomy in labour regulation.

  • Delayed implementation due to state-level rule finalization.


The Way Forward


  • Focus on Awareness: Workers and employers need clarity on new provisions.

  • Strengthen Digital Systems: Ensure smooth rollout via portals like Shram Suvidha.

  • Monitor Impact: Assess how codes affect job creation and worker rights.


Conclusion


India’s Labour Codes represent a progressive shift—protecting workers while boosting business competitiveness. As implementation begins, collaboration between governments, employers, and workers will be key to success.



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