Introduction

The four labour codes, Code on Wages, Code on Social Security, Industrial Relations Code, and Occupational Safety, Health and Working Conditions Code, aim to simplify compliance for industries, expand social security to workers, and improve ease of doing business. However, labour being a concurrent subject, implementation depends on states, and concerns have emerged about job security, worker rights, and the impact on collective bargaining.

Why in the News

The government has notified the implementation of four labour codes after over five years of deliberation and the consolidation of 29 central labour laws. This marks the first time India will operate under a uniform nationwide wage system and a consolidated social security architecture. While the reforms promise simplified compliance and a push for manufacturing efficiency, trade unions warn of reduced strike power, easier employee termination, and increased precarity for informal workers, making it one of the most debated labour reforms in recent times.

Labour Codes and the Changing Labour Landscape

1. Consolidation of 29 laws into four codes to create uniformity and remove overlapping provisions.
2. Target shift from penal to compliance-based enforcement, especially for small firms and first-time offences.
3. Push for economies of scale in manufacturing, signalling alignment with global production norms.

Code on Wages: What changes for employees and employers?

1. Uniform definition of wages: It ensures consistency in minimum wage calculation across states and sectors.
2. Mandated national floor wage: It enables states to set minimum wages only above the national baseline.
3. Time-bound wage payment: within 2 days of resignation/termination and 7 days of completion of the wage period.
4. Broader coverage for all employees irrespective of industry or wage threshold.
5. Overtime provisions strengthened: capped at 48 hours weekly, 12 hours daily shift duration permitted with breaks.

Code on Social Security: Is the social net expanding?

1. Unified ecosystem of social security: It covers unorganised, informal, gig, and platform workers for the first time.
2. National Social Security Board: For recommendations, registration, schemes, and funding decisions.
3. Corporate Co-contribution: Corporates may co-contribute to gig/platform worker benefits but funding split still unclear.
4. ESIC expansion: Applies to sectors previously exempt; plantation workers included voluntarily.
5. Formalisation incentive through maternity benefits, gratuity reforms, and inclusion of fixed-term employees.

Industrial Relations Code: Does it limit collective bargaining?

1. Stricter strike rules: 60-day notice before strike and prohibition of strike in the next 14 days of conciliation.
2. Increase in threshold: Threshold for prior permission for layoffs raised from 100 to 300 workers, enabling easier hiring-firing.
3. Negotiating Union provision: Only unions with 51% membership can negotiate; multi-union negotiation councils for fragmented memberships.
4. Push for stable industrial climate: It is criticised for shrinking bargaining space for workers.

OSH Code: Will workplace safety improve?

1. Standardised norms: Across industries norms for working hours, workplace safety, and facility obligations.
2. Mandatory free annual health check-ups: For workers in notified industries.
3. Women allowed in all sectors and night shifts: subject to safety conditions.
4. Increased accountability for establishments: In case of handling hazardous activities and migrant labour.

Conclusion

The labour codes aim to simplify compliance and strengthen India’s labour market to support manufacturing-led growth. However, concerns persist regarding job security, collective bargaining, and implementation across states. Successful outcomes depend on balancing economic flexibility with worker protection and ensuring that reforms lead to formalisation without vulnerability.

PYQ Relevance

[UPSC 2024] Discuss the merits and demerits of the four ‘Labour Codes’ in the context of labour market reforms in India. What has been the progress so far in this regard?

Linkage: Growth driven mainly by labour productivity has led to GDP rising without proportional job creation. This links to the four Labour Codes, which seek higher productivity and flexibility, but face concerns on whether they will create jobs while protecting workers.

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