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Friday, November 21, 2025

Major Labour Reform in India: Centre Notifies All Four Labour Codes (2025)

 

Major Labour Reform in India: Centre Notifies All Four Labour Codes (2025)

In a landmark move, the Central Government notified all four Labour Codes on Friday, bringing into force one of the most comprehensive labour reforms since Independence. These Codes replace 29 old labour laws, many of them dating back to the 1930s–1950s, and consolidate them into a simplified, modern framework suitable for the emerging economy.

Prime Minister Narendra Modi termed this step as “one of the most progressive labour reforms since Independence.”

1. What Are the Four Labour Codes?

These Codes were passed between 2019–2020, but implementation was delayed due to protests and lack of readiness among States.

The Four Codes

  1. Code on Wages (2019)

  2. Industrial Relations Code (2020)

  3. Code on Social Security (2020)

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

1. Code on Wages, 2019

What it does:
The Code on Wages consolidates four wage-related laws into one single framework. It ensures fair and timely payment of wages to all workers and provides statutory backing for a national minimum wage.

Key purposes:

  • Universal minimum wages across all sectors

  • Timely wage payments

  • Prevention of gender-based wage discrimination

  • Simplifies wage definitions and compliance

Laws merged:

  1. Payment of Wages Act, 1936

  2. Minimum Wages Act, 1948

  3. Payment of Bonus Act, 1965

  4. Equal Remuneration Act, 1976

2. Industrial Relations Code, 2020

What it does:
This Code modernizes industrial relations by balancing employer flexibility and worker protection. It regulates trade unions, industrial disputes, layoffs, strikes, and closures.

Key purposes:

  • Streamlines rules for strikes and lockouts

  • Introduces two-member Industrial Tribunals for faster dispute resolution

  • Simplifies rules for lay-offs and retrenchment in larger industries

  • Recognizes fixed-term employment

  • Governs trade union recognition

Laws merged:

  1. Trade Unions Act, 1926

  2. Industrial Employment (Standing Orders) Act, 1946

  3. Industrial Disputes Act, 1947

3. Code on Social Security, 2020

What it does:
Creates a unified social security framework covering employees in both formal and informal sectors, including gig and platform workers.

Key purposes:

  • Extends ESIC, EPFO benefits to all eligible workers

  • First-time legal definition of gig workers, platform workers, and aggregators

  • Provides maternity benefits, health insurance, disability insurance, and pensions

  • Covers unorganized workers via national and state social security boards

Laws merged (9 total):

  1. Employees’ Provident Funds and Miscellaneous Provisions Act, 1952

  2. Employees’ State Insurance Act, 1948

  3. Maternity Benefit Act, 1961

  4. Payment of Gratuity Act, 1972

  5. Unorganised Workers’ Social Security Act, 2008

  6. Cine Workers Welfare Fund Act, 1981

  7. Building and Other Construction Workers Act, 1996

  8. Employees Compensation Act, 1923

  9. Employment Exchanges Act, 1959

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

What it does:
Ensures safety, health, and better working conditions for workers across industries and workplaces.

Key purposes:

  • Standardises safety norms across factories, mines, docks, and other establishments

  • Provides free annual health check-ups for workers above 40

  • Allows women to work in all sectors, including night shift,s with safety measures

  • Introduces a single registration and license for multiple operations

  • Establishes a National OSH Board to harmonise safety standards

Laws merged (13 total):
Includes major laws like:

    1. Factories Act, 1948

    2. Mines Act, 1952

    3. Dock Workers (Safety, Health and Welfare) Act, 1986

    4. Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996

    5. Contract Labour (Regulation and Abolition) Act, 1970

    6. Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979

    7. Plantation Labour Act, 1951

    8. Working Journalists and Other Newspaper Employees (Conditions of Service) and Miscellaneous Provisions Act, 1955

    9. Working Journalists (Fixation of Rates of Wages) Act, 1958

    10. Motor Transport Workers Act, 1961

    11. Sales Promotion Employees (Conditions of Service) Act, 1976

    12. Beedi and Cigar Workers (Conditions of Employment) Act, 1966

    13. Cine Workers and Cinema Theatre Workers (Regulation of Employment) Act, 1981

    ⭐ UPSC Tip

    Remember using this mnemonic:
    “F M D B C I P W W M S B C”
    → (Factories, Mines, Dock, Building workers, Contract labour, Inter-state migrants, Plantation, Working journalists, Wage fixation, Motor transport, Sales promotion, Beedi workers, Cine workers)

⭐ One-Line Summary for Memory

  • Code on Wages → wages, minimum wage, equal pay

  • Industrial Relations Code → strikes, disputes, layoffs, trade unions

  • Social Security Code → EPF, ESIC, maternity, gig workers, pensions

  • OSHWC Code → workplace safety, health, working conditions

Purpose of Consolidation

  • Simplify compliance

  • Reduce the multiplicity of laws

  • Strengthen worker protection

  • Promote ease of doing business

  • Align India with global labour standards

2. Major Reforms Introduced

A. Universal Social Security & Gig Worker Protection

For the first time, the labour laws formally recognise:

  • Gig workers

  • Platform workers

  • Aggregators

This creates a legal pathway for extending ESIC, EPFO, and other social security benefits to workers outside traditional employment.

B. Minimum Wage and Wage Protection

  • National floor wage introduced

  • Statutory backing for minimum wages

  • Ensures timely payment of wages

  • Ensures no wage discrimination

This strengthens the rights of 50 crore workers across sectors.

C. Expanded Rights for Women

  • Women can work in all sectors, including night shifts, with safety measures

  • Gender pay parity mandated

  • Gender-neutral work policy

This supports women’s workforce participation—important for India’s demographic dividend.

D. Stronger Workplace Safety & Health

  • Free annual health check-ups for workers above 40

  • Expanded ESIC coverage across India

  • Includes hazardous industries

  • Establishment of the National OSH Board to harmonise safety standards

E. Simplified Compliance for Employers

  • Single registration, single licence, and single return

  • Replaces multiple approvals and inspections

  • Introduction of inspector-cum-facilitator model for supportive compliance instead of punitive inspection

Supports MSMEs, startups, and formalisation.

F. Faster Dispute Resolution

  • Two-member Industrial Tribunals for quicker decisions

  • Promotes industrial peace and reduces backlog

G. Fixed-Term Employment

A major change for contract workers:

Fixed-term employees will now get the same benefits as permanent workers, including:

  • Leave

  • Wages

  • Social security

  • Medical benefits

This aims to reduce exploitation of contractual labour and provide stability to workers while giving flexibility to industries.

3. Why Were Trade Unions Opposed?

10 Central Trade Unions issued a joint statement calling the Codes:

“Anti-worker and pro-employer.”

Their concerns:

  • Ease of firing due to changes in layoff/closure rules (Industrial Relations Code)

  • Fixed-term employment may reduce permanent jobs

  • Wide discretion given to employers

  • Fear that implementation may dilute labour rights

Despite protests, the government maintains that these Codes:

  • Formalise employment

  • Increase protection

  • Simplify the ecosystem

  • Boost competitiveness

4. Significance of the Reform

This reform matters because India aims to:

  • Become a global manufacturing hub

  • Improve ease of doing business

  • Expand formal employment

  • Ensure universal social security

  • Protect the interests of 50 crore+ workers

This shift balances worker protection with economic flexibility.

5. Why This Is Important for UPSC 2026

Prelims Focus Areas

  • Four Labour Codes

  • Universal social security

  • Gig/platform worker definitions

  • National floor wage

  • Inspector-cum-facilitator model

  • Industrial Tribunal changes

Mains Relevance

  • GS2: Social justice, governance, policy implementation

  • GS3: Inclusive growth, labour reforms, MSME support

  • Essay: Labour markets, Gig economy, Social security

In answers, use as an example for:

  • Formalisation of the workforce

  • Social security reforms

  • Women and the labour sector

  • India’s demographic dividend

  • Future of the gig and platform economy

6. Conclusion

The implementation of all four Labour Codes marks a pivotal moment in India’s labour reform history. By replacing outdated and fragmented laws with a modern, comprehensive framework, India is moving towards a more formalised, protective, and globally competitive labour ecosystem.

These reforms aim to balance workers’ rights with economic growth—an essential requirement for India’s vision of becoming a Viksit Bharat by 2047.

By Suryavanshi J K -
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