India’s Labour Codes Reform – Key Changes and Challenges

India implemented four new labour codes on 21 November 2025. These codes, passed between 2019 and 2020, replace 29 older central labour laws. They cover wages, social security, industrial relations, and occupational safety and health. The reforms aim to simplify labour laws and extend benefits to more workers. However, resistance from trade unions and labour experts has been strong. The codes promise worker benefits but face challenges in enforcement and coverage.

Overview of Labour Codes

The four labour codes consolidate existing laws into a unified framework. They cover wages, social security (SS), industrial relations, and occupational safety and health (OSH). The government calls them worker-centric and designed to formalise the workforce. Key features include universal minimum wages, compulsory appointment letters, and social security coverage for all workers in principle. The codes seek to improve transparency and reduce legal complexity.

Wages and Social Security Provisions

A national floor wage is set at Rs 178 per day, which is low compared to many states. There is no fixed formula or timeline for wage revision, leaving it to government discretion. The SS code focuses mainly on the organised sector, neglecting the unorganised sector that employs 85% of workers. Although the e-Shram portal registers 40 crore unorganised workers, social security benefits remain limited and fragmented. Gig and platform workers gain legal recognition, a positive step, but benefits are not yet integrated or guaranteed.

Industrial Relations and Worker Rights

The industrial relations code increases the strike notice period from 14 to 60 days. Permission for layoff and retrenchment now applies only to firms with 300 or more workers, up from 100 earlier. This change weakens job security for workers in smaller firms. Many companies classify employees as contract or casual workers to bypass regulations. These changes reduce trade unions’ bargaining power and may affect workers’ rights negatively.

Occupational Safety and Health Code

The OSH code unifies fragmented safety laws but excludes very small establishments. Factories with fewer than 20 workers are exempt from mandatory safety rules. This leaves about 80% of India’s workforce, including home-based and micro-enterprise workers, outside safety coverage. The exclusion raises concerns about the safety and welfare of a large informal workforce.

State-Level Implementation and Political Dynamics

Labour is a concurrent subject in India, so states must notify their own rules under the new codes. BJP-ruled states like Haryana, Gujarat, and Uttar Pradesh have implemented the reforms quickly. Opposition-ruled states such as West Bengal, Tamil Nadu, Kerala, and Karnataka have delayed notifications. This uneven roll-out creates uncertainty in labour dispute resolution and enforcement. The reforms face political resistance similar to previous contentious laws.

Challenges in Enforcement and Formalisation

Effective enforcement remains a challenge due to weak inspection systems and varied digital infrastructure across states. Large informal employers may evade compliance. Separate boards for different worker categories create bureaucratic fragmentation. The promise of one nation, one wage depends on strong enforcement, which is currently lacking. Social security for informal workers remains inadequate despite registration efforts.

Questions for UPSC:

1. Critically discuss the impact of labour reforms on informal sector workers in India and analyse the challenges in implementing social security schemes for them.
2. Examine the role of state governments in labour law enforcement in India and point out the implications of uneven implementation of central labour codes.
3. Estimate the effects of increased strike notice periods and layoff thresholds on industrial relations and workers’ rights in India.
4. Analyse the significance of recognising gig and platform workers in labour legislation and discuss how this recognition could transform labour markets.

Answer Hints:

1. Critically discuss the impact of labour reforms on informal sector workers in India and analyse the challenges in implementing social security schemes for them.

1. Informal sector employs about 85% of Indian workforce but remains largely excluded from social security benefits under new codes.
2. Social Security (SS) code focuses mainly on organised sector; only minimal clauses address unorganised workers.
3. e-Shram portal registers 40 crore unorganised workers but does not ensure direct social security benefits or integration.
4. Separate boards for unorganised, gig, and construction workers create fragmented bureaucracies, complicating uniform benefit delivery.
5. Weak enforcement, lack of digital infrastructure, and employer evasion hinder effective implementation of SS schemes.
6. Overall, reforms formalise some aspects but fall short of comprehensive coverage or guaranteed social protection for informal workers.

2. Examine the role of state governments in labour law enforcement in India and point out the implications of uneven implementation of central labour codes.

1. Labour is a concurrent subject; states must notify their own rules under central labour codes for enforcement.
2. BJP-ruled states (Haryana, Gujarat, UP) have implemented reforms quickly; opposition-ruled states (West Bengal, Tamil Nadu, Kerala, Karnataka) have delayed notifications.
3. Uneven roll-out creates legal uncertainty, especially where old laws are repealed but new rules are not notified.
4. Divergent state-level enforcement weakens uniformity and may cause Centre vs state conflicts over labour governance.
5. Varied digital infrastructure and inspection capacity across states affect compliance and monitoring effectiveness.
6. Political resistance in some states slows reform benefits and complicates dispute resolution mechanisms.

3. Estimate the effects of increased strike notice periods and layoff thresholds on industrial relations and workers’ rights in India.

1. Strike advance notice increased from 14 to 60 days, potentially delaying workers’ ability to protest or bargain collectively.
2. Layoff/retrenchment permission threshold raised from 100 to 300 workers, reducing job security for employees in smaller firms.
3. These changes limit trade unions’ bargaining power and may weaken collective labour actions.
4. Employers may bypass laws by classifying workers as contract or casual, further undermining job security.
5. Overall, reforms tilt industrial relations towards employer flexibility at the cost of workers’ rights and protections.
6. Potential rise in labour unrest or informal workforce growth due to perceived erosion of workers’ rights.

4. Analyse the significance of recognising gig and platform workers in labour legislation and discuss how this recognition could transform labour markets.

1. Legal recognition of gig and platform workers formally includes them in the labour ecosystem for the first time.
2. This recognition acknowledges the growing size and economic importance of gig workers in India.
3. It opens avenues for extending social security benefits like provident fund, insurance, and maternity benefits to gig workers.
4. Single online registration and appointment letters could improve employment tracking and formalisation.
5. However, benefits remain fragmented and implementation challenges persist due to segmented boards and lack of integration.
6. Long-term, recognition may lead to better labour protections, increased bargaining power, and more regulated gig economy dynamics.