Enabling a Modern and Future-Ready Labour Ecosystem

Context

• On November 21, 2025, the Government of India notified and implemented the Four Labour Codes:

  1. Code on Wages, 2019

  2. Industrial Relations Code (IR Code), 2020

  3. Code on Social Security, 2020

  4. Occupational Safety, Health and Working Conditions (OSH) Code, 2020

• Represents one of India’s biggest structural reforms after GST.

• Objective: Build a modern, simplified, fair and future-ready labour ecosystem.

Why Labour Reform Was Needed?

Fragmentation of Laws

• Over 40+ central labour laws enacted over decades.

• Overlaps, outdated provisions, inconsistency.

Recommendations

• Second National Commission on Labour (2002): Consolidate into functional codes.

Labour Market Realities

• Large, young workforce:

  • India has 643 million workers, one of world’s youngest.

• High informal sector share → Need for universal protections.

• Job creation improving (16.83 crore jobs added from 2017–18 to 2023–24).

• Unemployment rate dropped from 6% → 3.2%.

Objectives of the Four Labour Codes

1. Simplification and consolidation of laws.

2. Promote ease of doing business.

3. Protect workers with universal, consistent rights.

4. Formalisation of workforce.

5. Prepare for future of work (gig, platform, digital economy).

Key Features of Each Code

1. Code on Wages, 2019

• Universal minimum wage across organised + unorganised sectors.

• Provision for National Floor Wage.

• Mandatory appointment letters.

• Timely wage payment → Enhances worker security.

• Unified definition of ‘wages’ across all Codes → Reduces disputes.

2. Industrial Relations (IR) Code, 2020

• Clear norms for:

  • Strikes

  • Layoffs

  • Retrenchment

  • Dispute resolution

• Faster dispute settlement (conciliation mechanisms strengthened).

• Balances workers’ rights and business competitiveness.

3. Code on Social Security, 2020

• Universal ESIC and EPF coverage, without geographic restrictions.

• Social protection extended to:

  • Unorganised workers

  • Gig workers

  • Platform workers

• National Social Security Fund created.

• Simplified cess system for construction sector.

4. Occupational Safety, Health & Working Conditions (OSH) Code, 2020

• 48-hour weekly limit for working hours.

• Safety committees mandated in establishments.

• Free annual health check-ups.

• Better workplace standards.

• Women allowed to work at night (with consent + safety measures).

Major Benefits of Labour Codes

A. For Workers

• Universal social security.

• Fair wages and timely payments.

• Better workplace safety and well-being.

• Protection for gig & platform workers (first-ever legal framework).

• Formalisation of informal workforce.

• Stronger maternity & women safety provisions.

B. For Employers / Industry

• Single registration, licence, and return.

• Decriminalisation of minor offences.

• Algorithm-based inspections → Transparency.

• Predictability due to uniform wage definition.

• Reduced compliance burden → Boost to MSMEs.

Future of Work: Gig & Platform Economy

• Gig/platform workforce expected to rise:

  • 1 crore (2024–25) → 2.35 crore (2029–30).

• Social Security Code includes:

  • Insurance, benefits

  • Registration systems

  • Dedicated funds

• Aligns with the shift to digital & flexible work models.

Impact on Women Workforce

• India’s female labour force participation: 32.8% (ILO 2024).

• Codes promote gender-inclusion through:

  • Equal remuneration safeguards

  • Extended maternity benefits

  • Night-shift permissions with safeguards

  • Social security for gig/unorganised women workers

• Expected to enhance access, safety & continuity of employment.

Significance of Labour Codes

• Aligns India’s labour market with global best practices.

• Encourages formalisation → Higher productivity, better wages.

• Improves Ease of Doing Business.

• Crucial for India’s target of Viksit Bharat 2047.

Challenges Ahead

1. State-level implementation crucial — must align with central Codes.

2. Transition for MSMEs may require support.

3. Outreach needed to register unorganised & gig workers.

4. Ensuring actual enforcement of safety and social security provisions.

Way Forward

• Speedy and uniform adoption by States.

• Strengthen digital labour platforms (e-Shram, UAN, EPFO systems).

• Awareness and capacity-building for small enterprises.

• Strong monitoring of working hour norms and wage rules.

• Incentivise formalisation of the informal sector.

• Enhance portability of benefits across States and employers.

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