Four New Labour Codes Vs 29 Old Laws: Key Features, Changes, And Worker Impact Explained

New labour codes explained

New Labour Codes Explained: With the four major labour codes becoming effective from November 21, the India government has merged 29 old laws into one simple, modern framework, marking the biggest and historic overhaul into the country’s workforce system in decades. New four labour codes are aimed at ensuring compliance, streamlining enforcement, and modernising outdated laws. These will help ensuring better wages, wider social security coverage and improved health-related protections for workers across sectors.

Which Are These Four Labour Codes?

The four comprehensive labour codes are made up of 29 old labour laws – namely, the Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020 and the Occupational Safety, Health and Working Conditions Code, 2020.

An important reason of rationalising labour laws via codification was to simplify the registration, licensing framework by introducing the concept of a Single Registration, Single License, and Single Return, thereby reducing the overall compliance burden to spur employment.

What Are Changes & Impact On Workers?

Code 1: The Code of Wages, 2019

The Code on Wages, 2019 consolidates and rationalises the provisions of four existing laws- The Payment of Wages Act, 1936; The Minimum Wages Act, 1948; The Payment of Bonus Act, 1965; and The Equal Remuneration Act, 1976.

Important Provisions of this code are:

1. Universal Minimum Wages: The Code establishes a statutory right to minimum wages for all employees across both organized and unorganized sectors. This also introduces a floor wage provision that will be set up the Government based on minimum living standards, with region-wise variation.

2. Gender Equality in Employment: Employers will not discriminate on the basis of gender, including transgender identity, in recruitment, wages, and employment conditions for similar work.

3. Universal Coverage for Wage Payment: Provisions ensuring timely payment and preventing un-authorized deductions will apply to all employees, irrespective of wage limits (currently applicable only to employees earning up to ₹24,000/month).

4. Responsibility for Wage Payment: Employers, including companies, firms, or associations, will pay wages to employees employed by them. Failure to do so makes the proprietor/ entity liable for unpaid wages.

Code 2: The Industrial Relations Code, 2020

The Trade Unions Act, 1926, the Industrial Employment (Standing Orders) Act, 1946 and the Industrial Disputes Act, 1947 are merged and rationalised into the Industrial Relations Code (IR Code).

Fixed Term Employment (FTE): The eligibility of gratuity has been reduced to one-year from five-year earlier for direct, time-bound contracts with full parity in wages and benefits.

Women’s Representation: Ensures proportional representation of women in grievance committees for gender-sensitive redressal.

Layoff Provision: The threshold has been raised from 100 to 300 employees, easing compliance and enabling flexible workforce management.

Work-from-Home Provision: Permitted in service sectors by mutual consent, improving flexibility.

Work-from-Home Provision: Permitted in service sectors by mutual consent, improving flexibility.

Code 3: The Code on Social Security, 2020

The Code on Social Security incorporates existing nine Social Security Acts viz; The Employee’s Compensation Act, 1923; The Employees’ State Insurance Act, 1948; The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952; The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959; The Maternity Benefit Act, 1961; The Payment of Gratuity Act, 1972; The Cine-Workers Welfare Fund Act, 1981; The Building and Other Construction Workers’ Welfare Cess Act, 1996 and; The Unorganised Workers’ Social Security Act, 2008. The Code extends social security to all workers- including unorganized, gig, and platform workers-covering life, health, maternity, and provident fund benefits, while introducing digital systems and facilitator-based compliance for greater efficiency.

Expanded ESIC (Employees’ State Insurance) Coverage: ESIC now applies pan-India, eliminating the criteria of “notified areas.” Establishments with fewer than 10 employees may voluntarily opt in with mutual consent of employers and employees. Coverage would be mandated for hazardous occupation and extended to plantation workers.

Inclusion of Gig and Platform Workers: New definitions are included- “aggregator,” “gig worker,” and “platform worker” to enable social security coverage. Aggregators to contribute 1- 2% of annual turnover (capped at 5% of payments to such workers).

Expanded Definition of Dependents: Coverage extended to maternal grandparents and in case of female employees it also includes dependent parents-in-law, broadening family benefit access.

Commuting Accidents Covered: Accidents during travel between home and workplace are now deemed employment-related, qualifying for compensation.

Code 4: The Occupational Safety, Health and Working Conditions Code 2020

The Code has been drafted after amalgamation, simplification and rationalization of the relevant provisions of the 13 Central Labour Acts- The Factories Act, 1948; The Plantations Labour Act, 1951; The Mines Act, 1952; The Working Journalists and other Newspaper Employees (Conditions of Service and Miscellaneous Provisions) Act, 1955; The Working Journalists (Fixation of Rates of Wages) Act, 1958; The Motor Transport Workers Act, 1961; The Beedi and Cigar Workers (Conditions of Employment) Act, 1966; The Contract Labour (Regulation and Abolition) Act, 1970; The Sales Promotion Employees (Conditions of Service) Act, 1976; The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979; The Cine-Workers and Cinema Theatre Workers (Regulation of Employment) Act, 1981; The Dock Workers (Safety, Health and Welfare) Act, 1986 and; The Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996.

Unified Registration: A uniform threshold of 10 employees is set for electronic registration. One registration for an establishment has been envisaged in place of 6 registrations in the Acts. This will create a centralised database and promote ease of doing business.

Extension to Hazardous Work: The Government can extend the Code’s provisions to any establishment, even with one employee, engaged in hazardous or life-threatening occupations.

Simplified Compliance: Introduces one license, one registration, one return framework for the establishments, reducing redundancy and compliance burden.

Women’s Employment: Women can work in all types of establishments and during night hours (before 6AM, beyond 7PM) with consent and safety measures, fostering equality and inclusion.

National Database for Unorganised Workers: A national database to be developed for unorganized workers including migrants to help migrant workers get jobs, map their skills and provide other social security benefits.

Contract Labour- Welfare & Wages: Principal employers to provide welfare facilities like health and safety measures to contract workers. If the contractor fails to pay wages, the principal employer has to pay unpaid wages to the contract labour.

Working Hours & Overtime: Normal working hours capped at 8 hours/day and 48 hours/week. Overtime allowed only with worker consent and paid at twice the regular rate.