Labour Laws in India: Four Labour Codes, Key Provisions and UPSC Relevance

India’s labour-law framework historically consisted of numerous central and state laws covering wages, industrial relations, social security, occupational safety and working conditions. To simplify this fragmented framework, Parliament enacted four Labour Codes between 2019 and 2020, consolidating 29 central labour laws.

Major update: The four Labour Codes were brought into effect from 21 November 2025, replacing the earlier fragmented central-law framework.

Labour Laws in India: Constitutional Framework

Labour is a subject in the Concurrent List (List III) of the Seventh Schedule, allowing both the Union and State Governments to legislate on labour matters.

Important Constitutional Provisions

Articles 39, 39A, 41, 42, 43 and 43A are particularly important for understanding the constitutional vision of labour welfare.

Why Were Labour Codes Introduced?

The Second National Commission on Labour (2002) recommended rationalisation and consolidation of central labour laws into broader groups.

The four Codes aim to:

• Reduce multiplicity of labour laws.
• Simplify definitions and compliance.
• Extend minimum-wage and social-security protection.
• Improve occupational safety.
• Recognise new forms of employment such as gig and platform work.
• Facilitate ease of doing business.
• Promote formalisation of employment.
• Improve transparency through digital compliance mechanisms.

Four Labour Codes

Code on Wages, 2019

The Code consolidates:

1. Payment of Wages Act, 1936
2. Minimum Wages Act, 1948
3. Payment of Bonus Act, 1965
4. Equal Remuneration Act, 1976

Key Provisions

• Universalises minimum-wage protection by removing the earlier concept of scheduled employment.
• Central Government can prescribe a floor wage.
• State/appropriate governments cannot fix minimum wages below the floor wage.
• Minimum wages are to be reviewed/revised within the prescribed period, not exceeding five years.
• Overtime must generally be paid at at least twice the normal rate.
• Prohibits discrimination on grounds of gender in wages and recruitment for the same or similar work.
• Deductions from wages are generally capped at 50% of wages.
• The definition of “wages” has been standardised, with specified allowances above the prescribed proportion being added back for wage calculations.

Industrial Relations Code, 2020

It consolidates:

• Trade Unions Act, 1926
• Industrial Employment (Standing Orders) Act, 1946
• Industrial Disputes Act, 1947

Key Provisions

Standing Orders

• Threshold increased from 100 to 300 workers for establishments covered by the standing-order provisions.

Strike & Lockout

• 14 days’ prior notice is required before a strike or lockout.
• Restrictions apply during specified conciliation, tribunal and arbitration proceedings.

Lay-off, Retrenchment & Closure

• Establishments with 300 or more workers covered by the relevant provisions require prior government permission for lay-off, retrenchment or closure.

Negotiating Union

• A trade union with 51% or more worker support can be recognised as the sole negotiating union.
• Where no union has 51% support, a negotiating council can be constituted.

Worker Re-skilling Fund

• Employer contribution equivalent to 15 days’ last-drawn wages of a retrenched worker.
• The amount is intended to support the worker’s transition to new employment.

Occupational Safety, Health and Working Conditions Code, 2020

The OSHWC Code consolidates 13 central labour laws relating to workplace safety, health and working conditions.

Major Features

• Consolidates regulations relating to factories, mines, plantations, contract labour, migrant workers and other sectors.
• Appointment letters become an important statutory requirement.
• Provides a framework for occupational safety and health.
• Provides for annual health examinations in prescribed circumstances.
• Women may work in all types of establishments and night shifts, subject to prescribed safeguards and consent requirements.
• Provides greater regulatory coverage for inter-State migrant workers.
• The definition of inter-State migrant worker includes certain workers who migrate on their own, subject to the statutory wage ceiling of ₹18,000 per month or a higher amount as notified.
• Employers are required to provide a journey allowance to eligible inter-State migrant workers for travel to their native place, subject to prescribed conditions.
• The Code seeks to rationalise registration, licensing and compliance through a more unified framework.

Important Correction

The ₹18,000 figure is not a general wage limit for all migrant workers. It is part of the statutory definition of an inter-State migrant worker under the Code and may be revised through notification.

Code on Social Security, 2020

The Code consolidates 9 social-security laws.

Major Features

It covers areas such as:

• EPF
• ESI
• Gratuity
• Maternity benefits
• Employee compensation
• Social security for unorganised workers

Gig & Platform Workers

One of the most important innovations is the formal recognition of:

• Gig workers
• Platform workers

The Code provides for social-security schemes relating to:

• Life and disability cover
• Accident insurance
• Health and maternity benefits
• Old-age protection

It also provides for a Social Security Fund.

Aggregator Contribution

Aggregators may be required to contribute 1–2% of annual turnover, subject to a ceiling of 5% of the amount paid/payable to gig and platform workers, as provided under the Code.

Major Benefits of the Four Labour Codes

For Workers

• Universal minimum-wage framework.
• Greater wage-payment protection.
• Wider social-security architecture.
• Recognition of gig and platform workers.
• Improved occupational safety.
• Formal appointment letters.
• Worker re-skilling mechanism.
• Greater portability and digitalisation of labour records.

For Industry

• Consolidation of 29 central labour laws.
• Fewer definitions and regulatory authorities.
• Simplified registration/licensing/compliance.
• Greater flexibility in workforce management.
• Digitised compliance mechanisms.
• Potential reduction in regulatory uncertainty.

The government argues that the Codes can improve both worker protection and the ease of doing business.

Major Concerns & Criticism

The Codes have also generated debate over the balance between labour protection and employer flexibility.

Key Concerns

• Higher threshold for standing orders may reduce formal protections in smaller establishments.
• 14-day strike-notice requirement may constrain collective bargaining.
• 300-worker threshold for prior government permission for lay-off/retrenchment/closure has raised concerns regarding job security.
• Effective social-security coverage of gig and informal workers depends heavily on implementation and funding.
• State-level implementation can produce variations because labour is in the Concurrent List.
• Increased flexibility for employers must be balanced with adequate worker protection.

Labour Codes: Old vs New

Significance for the Indian Economy

India faces the challenge of converting economic growth into productive and decent employment.

The Labour Codes are therefore significant because they attempt to balance:

Worker Protection + Social Security + Industrial Flexibility + Ease of Doing Business + Employment Generation

The ultimate success of the reform will depend not merely on legislation but on effective implementation, state-level rules, enforcement capacity, formalisation of employment and expansion of social-security coverage.

Read Also: UPSC Daily Current Affairs 2026

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