Discuss the significance and challenges associated with new labour codes in India.

GOI has recently Codified various labour laws under four major heads, in order to simplify the laws associated with the sector. Under the new scheme, rights of the labour and duties of the employer have been clearly demarcated, with an aim to increase the ease of doing business in India.

The four major heads under which laws have been codified are wages, social security, industrial relations and occupational safety & working conditions.

Significance of the new labour laws:

  • Labour has been defined as any person who earns less than Rs. 15000 per month.
  • It has defined types of employment such as permanent employment, temporary employment, fixed-term employment, etc.
  • In order to reduce the compliance burden on the firms, size-based thresholds are set.
  • Establishments hiring more than 300 employees need prior government permission for closure and laying off, etc.
  • Labour laws will be enforced properly, which till the present day have been suffering from issues like proper enforcement, inadequate penalties, etc.
  • The industrial relations code provides conditions for forming a trade union for negotiation purposes.
  • Provision for a social security fund under codes for social security for the safety and security of labourers.

Associated Challenges:

  • No uniformity in social security provisions among firms.
  • Prior government approval for retrenchment may create a barrier for firms to exit.
  • Some critics argue that it may promote the informal economy.
  • It does not address the concerns related to contractual employment and minimum wages, etc.
  • Lack of clarity of definitions makes it easier for loopholes.

Immediate, adequate, and effective implementation of the laws is the key to ensuring the establishment of labour rights, employer’s responsibilities and duties.


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