The Four New Labour Codes: Breakthrough or New Risks for Workers?

India’s four new Labour Codes promise to simplify complex regulations and expand protections, but from a worker’s perspective they raise as many questions as they answer. The reform will simplify the process of compliance and draw in investment by consolidating dozens of aging laws into larger codes on wages, industrial relations, social security and safety. Meanwhile, employees are concerned with the watered-down protection of job security, collective bargaining, and enforcement, particularly to informal, gig, and contract labour. The question of whether these codes will be a breakthrough or a new risk is dependent on the manner in which they are framed at the state level and on the ground. For more labour rights insights and workplace updates, visit our Labour Rights page.

What the Four Labour Codes Change

The Codes codify the existing laws in to four pillars:

• Code on Wages: harmonises minimum wages, payment of wages, and other provisions in the various sectors.
• Industrial Relations code: regulates trade unions, retrenchment, layoffs, and dispute resolution.
• Social Security Code: schemes such as provident fund, insurance and gratuity.
• Occupational Safety, Health and Working Conditions Code: deals with safety, working conditions and some welfare.

This structure is on paper less complex and would theoretically be able to extend formal protection to a proportion of more workers, some of whom may be in the unorganised and gig economy.

Worker Concerns: Job Security and Union Rights

On the part of the worker, a significant concern is that an increase in the standards of regulations on layoffs and closure can cause greater adjustment of the number of workers in large facilities without obtaining governmental approval in advance. That can undermine the job security and decrease the bargaining power of unions in the process of restructuring. Union recognition and strike procedures can also be complicated, and there is a possibility that employers will put off or avoid actual collective bargaining. When formal rights are relatively non-practical in alleviating disputes, formal dispute-resolution mechanisms can provide partial relief.

Informal, Gig, and Contract Workers: Inclusion or Ambiguity?

The Codes refer to unorganised and platform workers more clearly than older laws, which has become an indicator of a move towards inclusion in social-security systems. Nonetheless, crucial information such as who is an employee, payment terms and schemes access are all left to state-dependent rules and schemes. Another grey area is the contract and outsourced workers: when the duties are not fixed on the main employers, they may be shifted down the chain, and it becomes more difficult to enforce, leaving the workers without protection against wage theft or workplace safety.

Implementation, State Rules, and the Road Ahead

The actual effect of the Labour Codes will be in the way states will formulate their own rules, the manner in which the inspectors and the grievance systems are carried out and the extent to which the workers organisations will be effectively consulted. Among the important demands of workers are clear specifications that reduce loopholes, easy procedures in the registration of workers as well as in the filing of complaints, openness in inspection and the protection of workers against retaliation in case they exercise their rights. When these conditions are satisfied, the Codes may provide a modernisation of the protections of the labour; otherwise, they may end up making the law books simpler and the life of the workers more complicated.