The Four Labour Codes are a major legislative reform by the Government of India to consolidate and simplify existing labor laws. Passed between 2019 and 2020, they aim to promote ease of doing business and provide greater protection and uniformity for workers. Although passed by Parliament, they are not fully implemented yet as of June 2025—pending adoption by several states.
Overview: The Four Labour Codes
| Code Name | Consolidates | Key Focus |
| 1. Code on Wages, 2019 | 4 laws | Wages, equal remuneration, and payment timing |
| 2. Industrial Relations Code, 2020 | 3 laws | Employer-employee relationship, strikes, dispute resolution |
| 3. Occupational Safety, Health and Working Conditions (OSHWC) Code, 2020 | 13 laws | Health, safety, working conditions |
| 4. Social Security Code, 2020 | 9 laws | Provident Fund, ESI, maternity, gratuity, gig and platform workers |
1. Code on Wages, 2019
Consolidates:
- Payment of Wages Act, 1936
- Minimum Wages Act, 1948
- Payment of Bonus Act, 1965
- Equal Remuneration Act, 1976
Key Provisions:
- Universal applicability: Applies to all employees in organized and unorganized sectors.
- National floor wage: Introduced for uniformity; states cannot set wages below this.
- Gender-neutral pay: Mandates equal pay for equal work, regardless of gender.
- Payment timelines: Prescribes due dates for wage payments.
- Overtime: Clear overtime wage requirements (at least twice the normal rate).
2. Industrial Relations Code, 2020
Consolidates:
- Industrial Disputes Act, 1947
- Trade Unions Act, 1926
- Industrial Employment (Standing Orders) Act, 1946
Key Provisions:
- Fixed-term employment: Equal benefits to permanent employees, promoting flexibility.
- Increased retrenchment threshold: Establishments with up to 300 workers can retrench without government permission (was 100).
- Grievance Redressal Committees: Mandatory for establishments with 20+ workers.
- Recognition of trade unions: Provision for negotiating union (51% membership).
- Strikes: Notice required 14 days before and up to 60 days validity.
3. Occupational Safety, Health and Working Conditions Code (OSHWC), 2020
Consolidates:
- 13 Acts, including the Factories Act, Mines Act, Contract Labour Act, etc.
Key Provisions:
- Applicability: Covers factories (10 workers with power; 20 without), mines, dock work, etc.
- Single license: One license for operations across India (especially for contractors).
- Health & safety standards: Detailed duties on cleanliness, ventilation, lighting, etc.
- Working hours: Capped at 8 hours/day with provisions for overtime.
- Welfare provisions: Crèche, canteen, first-aid, separate washrooms.
- Annual health check-ups: Mandatory for specific categories.
4. Code on Social Security, 2020
Consolidates:
- 9 laws, including EPF Act, ESI Act, Maternity Benefit Act, Gratuity Act, etc.
Key Provisions:
- Coverage to gig & platform workers: First-time inclusion of Swiggy, Zomato, Ola, etc.
- Social security funds: For unorganized, gig, and platform workers.
- Voluntary registration: For self-employed, unorganized sector.
- EPF/ESI thresholds: Establishments with 20+ for EPF; 10+ for ESI.
- Digitized registration: Aadhaar-based and centralized.
Objectives of the Labour Code Reform
- Simplify and consolidate 29 central laws into 4 codes
- Balance flexibility for employers with protections for workers
- Ensure ease of compliance through digitization
- Encourage formalization of employment, especially gig/unorganized sector
- Attract investment by reducing legal ambiguity
Implementation Status (as of 2025)
- All four codes have been passed by Parliament.
- Central rules for all codes have been finalized.
- Implementation is pending in most states due to lack of state-level rules (labour is a concurrent subject).
- The government is pushing for uniform implementation.
Challenges & Criticisms
- Trade unions argue the Industrial Relations Code dilutes worker rights (e.g., strikes, layoffs).
- Complex implementation due to center-state coordination.
- Gig worker coverage still vague in execution.
- Employers face confusion during transition.
PROS OF THE FOUR LABOUR CODES
One of the most significant advantages of these reforms is the codification and simplification of complex labour laws. Instead of navigating multiple overlapping and sometimes contradictory statutes, both employers and employees can refer to a streamlined set of rules. This improves compliance, reduces litigation, and enhances clarity in interpretation.
The Code on Wages, for example, introduces a universal definition of “wages” applicable across all labour laws. This ensures uniformity in wage calculation for contributions to provident funds, bonuses, gratuity, etc., and prevents disputes over wage components.
The Industrial Relations Code introduces fixed-term employment, giving employers the flexibility to hire workers for specific durations while providing the same benefits as permanent employees (except retrenchment benefits). It also increases the threshold for government permission in retrenchment and layoffs, making it easier for industries to operate in a competitive global economy.
The OSH Code brings together health, safety, and working conditions under one umbrella and applies to a wide range of sectors including mines, factories, and construction sites. It emphasizes the need for annual medical check-ups, welfare facilities, and working hour regulations—crucial especially post-COVID.
The Social Security Code breaks new ground by legally recognizing gig and platform workers, making India one of the first countries to do so. It mandates the creation of social security funds for workers in the unorganized sector and allows for their voluntary registration for benefits like life insurance, maternity leave, and pension schemes.
From a business perspective, these reforms are seen as critical to improving India’s ease of doing business ranking. They promote digitization, eliminate multiple registrations, and streamline compliance processes.
CONS / CRITICISMS OF THE FOUR LABOUR CODES
Despite the simplification, the codes have been heavily criticized by trade unions, labour economists, and civil society groups. A key concern is the dilution of workers’ rights, especially in the Industrial Relations Code.
The provision allowing employers to retrench workers or close establishments without prior government approval—if the number of workers is under 300—was earlier capped at 100. Critics argue this will encourage employers to keep operations fragmented or artificially under the threshold to avoid scrutiny.
The right to strike is also heavily curtailed. Workers now must provide 14 days’ notice before striking and the strike must occur within 60 days of the notice. This severely restricts workers’ bargaining power, particularly in informal or high-risk sectors like mining and construction, where conditions often demand immediate collective action.
While the Social Security Code includes gig and platform workers, the actual benefits are not clearly defined. The law only talks about setting up welfare funds and registering such workers, without specifying how contributions will be made or who will bear the financial burden (employer/platform, state, or central government).
Additionally, excessive delegation to executive rule-making has been flagged by legal experts. Many critical provisions are left to be defined in the “rules” that will follow. This undermines legislative authority and may result in important worker protections being shaped—or diluted—by bureaucrats rather than Parliament.
Another major drawback is the lack of consultation and hasty passage of the Codes. Most of the laws were passed during the COVID-19 lockdown period, with limited debate and little input from trade unions or labour welfare organizations. This has generated a lack of trust and pushback from many stakeholders.
COMMITTEE RECOMMENDATIONS
The Second National Commission on Labour, chaired by Ravindra Varma in 2002, laid the foundation for these reforms. It strongly advocated for the consolidation of labour laws to address the dual challenge of rigidity in organized sector employment and complete neglect in the informal sector. The Commission emphasized balancing labour flexibility with social security and supported contractual employment models with adequate safeguards.
Subsequent Standing Committees on Labour, especially those reviewing the draft labour codes in 2019–2020, reiterated the need for simplification but cautioned against weakening fundamental rights. They recommended greater clarity in definitions (e.g., wages, gig workers), greater consultation with labour unions, and better data collection mechanisms for effective policy implementation.
Committees also advised the government to create a robust and inclusive social security framework, particularly for informal and migrant workers, many of whom fall outside formal employment protections.
SUPREME COURT JUDGMENTS & LEGAL BACKGROUND
Though the Supreme Court has not yet ruled directly on the new labour codes (as they await implementation), its jurisprudence over decades plays a vital role in shaping the context.
In Bandhua Mukti Morcha v. Union of India (1984), the Supreme Court held that the right to livelihood is a fundamental right under Article 21 of the Constitution. Any law that weakens workers’ ability to survive with dignity would fail the constitutional test.
In Unichoyi v. State of Kerala (1961) and Manganese Ore India v. Chandi Lal Saha (1991), the Court underscored that minimum wage is not charity but a constitutional obligation, reinforcing the state’s duty to ensure a just wage system—which becomes relevant to how “floor wages” under the new Code on Wages are determined.
In R.D. Shetty v. International Airport Authority (1979), the Court held that equal pay for equal work is a constitutional right, which supports the universal and gender-neutral pay provisions under the new wage code.
In National Campaign Committee for Central Legislation on Construction Labour v. Union of India (2018), the Court criticized the government’s failure to implement welfare boards and schemes despite having massive unspent funds. This judgment is a cautionary reminder that passing legislation alone is insufficient without implementation and monitoring.
WAY FORWARD: RECOMMENDATIONS
The Centre must ensure that states frame their rules quickly and in alignment with the spirit of the central codes. It is crucial that social dialogue with unions and employers is continued to fine-tune implementation.
The ambiguities around gig and platform workers must be addressed through clearer guidelines and financial models. The state should also ensure that workers are not deprived of the right to strike or collective bargaining, and that fixed-term employment does not become a tool to avoid long-term benefits.
Employers must begin revising their internal HR and legal policies to align with the codes. Labour lawyers and compliance officers should stay updated with state-level developments and advise accordingly.
Civil society should monitor the roll-out and raise awareness among informal workers, helping them register for social security benefits.
Finally, the judiciary may be called upon to test the constitutionality of several provisions, especially those that curb fundamental labour rights. A balanced, rights-based approach to these codes is essential if India is to modernize its labour law system without compromising social justice.
Way Forward for Stakeholders
| Stakeholder | Key Actions |
| Employers | Review and align HR, compliance, contracts with new codes |
| Employees | Understand rights, especially in wage payment, working hours |
| Legal/HR Professionals | Prepare for digital registrations, new documentation |
| Policy Makers | Facilitate state-level adoption and rule making |
