Labour, Jobs and Employment – Harmonization of labour laws, gender gap, unemployment, etc.

Labour code reforms address basic needs


From UPSC perspective, the following things are important :

Prelims level: Various provisions of labour code

Mains level: Paper 2- Labour code reforms

The article highlights the key provision of the labour code and how it will help in removing the various hurdles faced by the key stakeholders.

Increase in the threshold for closure/lay-off and its impact

  • The Industrial Relations Code 2020 increased the threshold for retrenchment/closure or lay-off without requiring government approval, from 100 to 300 workers.
  • This will help in addressing the matter of expansion of the firms.
  • In 2014, Rajasthan had increased the threshold of taking prior permission of the government before retrenchment.
  • The reform has helped firms to set up larger operations in Rajasthan, and the same amendment was followed by 15 states.

Fixed Term Employment(FTE): Ensuring flexibility and tackling exploitation

  • In many jobs employees are required for a few months such as infrastructure projects, textiles and garments, food and agro-processing, etc.
  • However, the contractual employment workforce is quite often exploited with respect to wages, social security, and working conditions as well as welfare facilities.
  • Fixed Term Employment is an intervention to enable the hiring of employees directly instead of hiring through contractors, which will ensure flexibility.
  • For employees, all statutory entitlements and service conditions equivalent to those of a regular employee have now been made applicable.
  • The Code on Industrial Relations also extends the benefit of gratuity even for an FTE contract of one year, which is five years in the case of regular employees.

Strengthening the formal economy

  • The inclusion of the gig and platform workers in the Social Security Code 2020 is a step towards strengthening the formal economy.
  • The provision for insurance coverage has been extended to plantation workers, and free annual health check-ups and a bipartite safety committee has been introduced for establishments such as factories, mines and plantation sectors in place of hazardous factories.
  • The ESIC and EPFO requirements will now apply to establishments employing less than 10 and 20 workers respectively on a volunteer basis.

Ensuring female labour force participation

  • Falling women’s workforce participation in India has been a matter of concern for a long time.
  • Female labour force participation is a driver of growth and, therefore, participation rates indicate the potential for a country to grow more rapidly.
  • The new Code ensures the employment of women in night shifts for all types of work.

Expansions of the provisions for migrant workers

  • The Occupational Health, Safety & Working Conditions Code expands the definition of a migrant worker.
  • The expanded definition includes workers who would be directly employed by the employer besides those employed through a contractor.
  • Also a migrant, who comes on his own to the destination state, can declare himself a migrant worker by registering on an electronic portal.
  • Registration on the portal has been simplified and there is no requirement of any other document except Aadhaar.
  • For de-licencing/de-registration, it is mandated to notify registering officers about the closure of their establishment and certify payment of dues to all employed workers.
  • This will ensure that workers will not be exploited even during the closure of the concerned establishment.

Other provisions

  • The introduction of a concept of conducting web-based inspections can be seen as an attempt of matching corporate needs in the digital world.
  • The provision for a 14-day notice period before strikes and lockdowns would allow both workers and employers to attempt resolving the issues.
  •  The codes also promote lifelong learning mechanism to match the evolving skill sets required for technology and process changes through the introduction of a reskilling fund.

Consider the question “What are the various provision added in the three labour code and how it will help revive the economy and tackle barriers in the expansion of firms?”


The reform measures address basic needs — to revive the economy and tackle barriers in the expansion of firms. Moreover, they promote the employment of women as well as reskilling of the workforce for the deployment of migrants.

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