Labour Codes

The Indian government has undertaken a historic overhaul of its labor landscape by consolidating 29 central labor laws into four comprehensive Labor Codes. This reform aims to balance the “Ease of Doing Business” for employers with “Universal Social Security” and rights for workers. These codes fall under the Concurrent List (List III) of the Seventh Schedule, allowing both the Union and State governments to legislate and implement rules.

I. The Code on Wages, 2019

This was the first code to be passed by Parliament, replacing four major acts: The Minimum Wages Act (1948), The Payment of Wages Act (1936), The Payment of Bonus Act (1965), and The Equal Remuneration Act (1976).

• Universal Applicability: Unlike previous laws that applied only to “scheduled” employments, this code extends minimum wage protection to all employees in both the organized and unorganized sectors.
• Floor Wage: The Central Government will set a “Floor Wage” based on minimum living standards. State governments must ensure their minimum wages are not lower than this national floor.
• Definition of Wages: A uniform definition of “wages” has been introduced to reduce litigation and ensure that allowances do not exceed 50% of the total remuneration.
• Gender Neutrality: It strictly prohibits gender-based discrimination in recruitment and wages for the same or similar work.

II. The Code on Industrial Relations, 2020

This code amalgamates three laws: The Trade Unions Act (1926), The Industrial Employment (Standing Orders) Act (1946), and The Industrial Disputes Act (1947).

• Standing Orders Threshold: The threshold for establishments required to have standing orders (rules of conduct) has been increased from 100 workers to 300 workers.
• Lay-off and Retrenchment: Establishments with at least 300 workers must seek prior government permission before lay-offs, retrenchments, or closures, up from the previous limit of 100.
• Fixed-Term Employment: It introduces a category of “Fixed-Term Employment,” allowing employers to hire workers for a specific duration with the same statutory benefits as permanent employees.
• Strike Notice: No worker in any industrial establishment can go on strike without giving a 14-day notice, extending a rule previously reserved only for public utility services.
• Worker Reskilling Fund: Mandates the creation of a fund where employers contribute 15 days’ wages for every retrenched worker to aid their vocational training.

III. The Code on Social Security, 2020

This code consolidates nine laws, including the Employees’ Provident Fund Act (1952), Maternity Benefit Act (1961), and the Unorganised Workers’ Social Security Act (2008).

• Inclusion of Gig and Platform Workers: For the first time, “Gig workers” (freelancers) and “Platform workers” (app-based service providers like delivery partners) are brought under the ambit of social security schemes.
• Social Security Fund: Empowers the Central Government to set up a dedicated fund for unorganized workers, gig workers, and platform workers to provide death, disability, and maternity benefits.
• Gratuity for Fixed-Term Workers: The five-year continuous service requirement for gratuity has been removed for fixed-term employees; they are now eligible on a pro-rata basis.
• National Social Security Board: A body to be constituted to recommend and monitor schemes for the welfare of various categories of informal workers.

IV. The Code on Occupational Safety, Health and Working Conditions (OSH), 2020

This code replaces 13 laws, including the Factories Act (1948), the Mines Act (1952), and the Contract Labour (Regulation and Abolition) Act (1970).

• One Registration, One License: Replaces multiple registration requirements with a single centralized electronic registration system.
• Inter-State Migrant Workers: Broadens the definition to include workers who move to another state independently, not just through contractors. They are entitled to benefits like the “One Nation One Ration Card” and journey allowances.
• Women’s Employment: Women are entitled to work in all establishments for all types of work. If they are required to work at night (between 7 PM and 6 AM), it must be with their consent and subject to safety and transport conditions.
• Annual Health Checks: Mandates employers to provide free annual health examinations for employees above a certain age in specified classes of establishments.

Summary Table: Evolution of Labour Laws

V. Institutional and Digital Support Systems

• e-Shram Portal: A national database of unorganized workers seeded with Aadhaar to facilitate the delivery of social security benefits.
• Shram Suvidha Portal: A single-window interface for reporting and compliance, reducing the interface between the employer and the “Inspector.”
• Universal Account Number (UAN): Facilitates the portability of Provident Fund (PF) accounts when a worker changes jobs or locations.

Key Facts and Trivia for UPSC Prelims

• Ravindra Varma Committee: The Second National Commission on Labour (2002) recommended the umbrella legislation that eventually led to these four codes.
• Ratified ILO Conventions: India has ratified 6 out of the 8 “Core” conventions of the International Labour Organization (ILO), including those on Forced Labour, Equal Remuneration, and Child Labour.
• Unratified Conventions: India has not ratified ILO Convention No. 87 (Freedom of Association) and No. 98 (Right to Organise and Collective Bargaining) due to technicalities related to government servants.
• Floor Wage vs. Minimum Wage: While the Centre sets the Floor Wage, States are the “appropriate authority” to fix Minimum Wages, provided they are higher than the Floor.
• Employment Liability: Under the OSH Code, the “Principal Employer” is responsible for providing welfare facilities even if workers are hired through a contractor.