The Four Labour Codes: A Transformative Shift in India's Workforce Governance

In a landmark move, the Government of India has consolidated 29 fragmented and outdated labour laws into four comprehensive Labour Codes, marking one of the most significant structural shifts in the country's workforce governance since Independence. The goal of this overhaul is two-fold: to simplify the regulatory environment for businesses and to universalize social security and welfare benefits for all workers.

The four codes are:

1. The Code on Wages, 2019
2. The Industrial Relations Code, 2020
3. The Code on Social Security, 2020
4. The Occupational Safety, Health and Working Conditions (OSHWC) Code, 2020

Key Highlights and Benefits for Workers

The reforms prioritize enhanced security and equality across the spectrum of employment:

• Universal Minimum Wages: The Code on Wages, 2019 guarantees a statutory right to minimum wages for all employees, regardless of the sector (organized or unorganized). This expands coverage from roughly 30% to 100% of the workforce. The Central Government will also set a National Floor Wage that no State can undercut.
• Formalization and Timely Pay: Mandatory Appointment Letters must now be issued to all workers, helping to formalize employment and create a work history. Timely payment of wages is strictly enforced, and overtime must be compensated at double the normal rate.
• Social Security for Gig Workers: For the first time, the law formally recognizes Gig Workers, Platform Workers, and Aggregators. Aggregators are mandated to contribute 1-2% of their annual turnover (capped at 5% of payments to workers) towards a dedicated Social Security Fund for these workers.
• Fixed-Term Employment Parity: Fixed-Term Employees (FTEs) now receive the same benefits as permanent workers, including social security and leave. Crucially, they become eligible for gratuity after just one year of continuous service, down from the previous five-year requirement.
• Gender Equality: Gender discrimination is explicitly prohibited, mandating Equal Pay for Equal Work. Women are now permitted to work night shifts across all establishments and in previously restricted roles (like underground mining or heavy machinery), subject to their consent and stringent safety protocols.

Focus on Ease of Doing Business

To reduce the compliance burden for employers, the Codes introduce several simplification measures:

• Single Compliance Framework: The 29 old laws are replaced by a Single Registration, Single Licence, and Single Return system, replacing the previous web of multiple filings.
• Higher Thresholds for Approvals: The requirement for seeking government approval for layoffs, retrenchment, or establishment closure has been raised from 100 to 300 workers for certain categories, offering greater flexibility to medium and large firms.
• Decriminalization: For many first-time minor offences, the law substitutes imprisonment with monetary fines and allows for the compounding of offences, streamlining legal processes.
• Inspector-cum-Facilitator System: A new system introduces randomized, web-based, algorithm-driven inspections to ensure transparency and accountability, positioning inspectors as facilitators rather than punitive authorities.