Context
India’s four major labour codes, aimed at overhauling labour regulation, are likely to become fully operational from April 1. These codes consolidate 29 central labour laws into four streamlined codes to modernise labour governance.
Key Highlights
The Four Labour Codes
- Code on Wages, 2019
- Industrial Relations Code, 2020
- Social Security Code, 2020
- Occupational Safety, Health and Working Conditions (OSHWC) Code, 2020
- All four were notified in November 2020, but implementation has been pending as States must frame corresponding rules.
- Current push indicates Centre and States are close to synchronising regulatory frameworks.
Objective of Labour Reforms
- Simplify compliance for industries.
- Improve worker protection and welfare.
- Promote formalisation of labour.
- Align labour regulation with modern economic conditions and global standards.
Significance of April 1 Rollout
- Would mark India’s biggest labour reform in decades.
- Allows uniformity across states, reducing regulatory fragmentation.
- Supports investment climate by increasing predictability for employers.
Relevant Prelims Points
Key Provisions to Remember
- Code on Wages:
- Universal minimum wage
- Floor wage principle
- Consolidates laws like Payment of Wages Act, Minimum Wages Act.
- Industrial Relations Code:
- Rules for strikes, layoffs, retrenchment
- Increased threshold for standing orders
- Promotes negotiation unions.
- Social Security Code:
- Expands ESIC, EPFO coverage
- Gig and platform workers included for first time.
- OSHWC Code:
- Workplace safety standards
- Health and welfare norms
- Applies to factories, mines, docks, and other establishments.
Why States Matter
- Labour is in the Concurrent List → Centre and States jointly legislate.
- Codes can only be enforced once both levels notify rules.
Relevant Mains Points
Reform Rationale
- Current labour laws were fragmented, outdated, and burdensome.
- Reform promotes:
- Ease of Doing Business
- Attracting investment
- Formal job creation
- Improved social security coverage
Concerns & Criticisms
- Fear of workers losing bargaining power.
- Higher layoff thresholds may weaken job security.
- Trade unions argue dilution of safeguards.
- Implementation challenges due to state-level capacity gaps.
Expected Benefits
- Transparent wage system
- Boost in manufacturing & MSMEs
- Greater mobility for gig and informal workers
- Enhanced workplace safety norms
Way Forward
- Ensure balanced implementation protecting both workers and industry.
- Promote digital compliance systems to reduce paperwork.
- Strengthen labour inspection systems with transparency tools.
- Increase awareness among workers and employers about new provisions.