Centre to Enforce Four Labour Codes

Context

The Government of India has indicated that the four Labour Codes will be put into effect on 21 st November 2025 to rationalize 29 current labour laws.

Key Highlights

• Four Labour Codes refer to the Code on Wages, 2019, Industrial Relations Code, 2020, Code on Social Security, 2020 and Occupational Safety, Health and Working Conditions Code, 2020.
• The major causes of this reform are:
  • Streamlining compliance: The existence of multiplicity of laws makes compliance challenging.
  • Streamlining of enforcement: Diversity of authorities in various labour laws created confusion and challenge in implementing the various laws.
  • Updating former legislation: The majority of the labour laws were designed in the pre-Independence period, which has to be updated according to the current economic conditions and technological development.

Four Labour Codes

• Code 1: Code of Wages, 2019:

• • • Subsumed Laws- Payment of Wages Act, 1936; Minimum Wages Act, 1948; Payment of Bonus Act, 1965; Equal Remuneration Act, 1976.
    • Universal Minimum Wages: The Code provides a legal right to minimum wages to all workers in both the organized and non-organized business divisions. 
    • Introduction of Floor Wage: A Government floor wage will be established, which is calculated on minimum living standards, but allowed to vary by region.
    • Minimum wages below this level cannot be fixed by any state and this will guarantee uniformity and adequacy in terms of minimum wages across the nation.
    • Wage Payment Universal Covers: Covers on payment of salaries and against unauthorized deductions will be made to all workers regardless of the wage limit.
    • Comprehensive overtime Compensation: Employers are supposed to pay overtime remunerations to all the employees that are engaged in any activity that is over the usual working hours at least twice the standard rate.

• Code 2: Code of Industrial Relations, 2020:

• • • Subsumed Laws: Trade Union Act, 1926; Industrial Employment (Standing Orders) Act, 1946; Industry Disputes Act, 1947.
    • Fixed Term Employment (FTE): Provides the possibility of direct, time-limited employment with full pay and benefits parity; eligibility to gratuity after a period of one year.   
    • Permission During Layoff: Increases the government cut off point when it comes to approving layoffs, retrenchment and closure to 100 to 300 workers and states are given the freedom to raise it even more.     

• Code 3: Code on Social Security, 2020:

• • • Subsumed Laws: Nine laws such as Employees Compensation Act, 1923; maternity benefit act, 1961.
    • Increased ESIC (Employees State Insurance) Coverage: ESIC has become pan-Indian, and the criteria of the areas notified no longer exists. 
    • Time-bound EPF (Employees Provident fund) Inquiries: EPF inquiries and recovery proceedings have a five year limit which is to be completed within two years (which can be extended to one). 
    • Addition of Gig and Platform Workers: New categories are provided- “aggregator,” “gig worker,” and “platform worker” so that they could be covered by social security. 
    • Social security Fund: A special fund to cover the program of unorganised, gig, and platform workers.
    • Accidents during commuting: Accidents that occur on the way to work place or home to work place are now considered to be employment related and are liable to compensation.

• Code 4: Occupational Safety, health and the working condition code 2020:

• • Subsumed Laws: 13 such as Factories Act, 1948; Plantation Labour Act, 1951; Mines Act, 1952.
  • Health Checkup: All employees over the age of 40 years should have a free annual health check-up by their employers.
  • Expansion Provision: The expansion of provisions may be made to structures that have one worker involved in dangerous or life-threatening operations.

Source: The DD News

Mains PYQ

1. “Success of ‘Make in India’ programme depends on the success of ‘Skill India’ programme and radical labour reforms.” Discuss with logical arguments. (2015)

• The Government of India has indicated that the four Labour Codes will be put into effect on 21 st November 2025 to rationalize 29 current labour laws.
• Four Labour Codes refer to the Code on Wages, 2019, Industrial Relations Code, 2020, Code on Social Security, 2020 and Occupational Safety, Health and Working Conditions Code, 2020.
• The major causes of this reform are:
  • Streamlining compliance: The existence of multiplicity of laws makes compliance challenging.
  • Streamlining of enforcement: Diversity of authorities in various labour laws created confusion and challenge in implementing the various laws.

Updating former legislation: The majority of the labour laws were designed in the pre-Independence period, which has to be updated according to the current economic conditions and technological development.

Download as PDF