Labour Gains: The new labour codes align India with the best international practices

 ATMANIRBHAR BHARAT imagines an India where workers stand with dig­nity and industries grow with strength, not at each other’s cost but side by side. It seeks a future in which prosperity does not tilt to one side, but rises for all. Ac­cording to data provided by the Union Ministry of Labour & Employment, over the span of the last six years, total employment in India increased from 47.5 crore in 2017-18 to 64.33 crore in 2023-24, while the unemployment rate declined from 6 per cent to 3.2 per cent. Significantly, 1.56 crore women entered the formal workforce during this period, highlighting how labour em­powerment not only strengthens individual livelihoods but also drives broader socio-economic transformation, reduces poverty, and advances inclusive growth.

It is precisely this philosophy that lies at the heart of the new labour codes. The Second National Commission on Labour, which submitted its report in June 2002, had closely studied the complexities of the Indian labour-law framework and high­lighted that the country was functioning under more than 40 Central labour laws and nearly 100 state labour laws, many of which overlapped or contradicted each other. This fragmented and overlapping legal framework placed workers and in­dustries in a cycle of confusion, where rights were difficult to enforce and com­pliance was burdensome. The commis­sion, therefore, recommended that la­bour legislation be consolidated into four broad groups—namely wages, industrial relations, social security, and welfare and working conditions—so that rights and obligations could be understood clearly by all. Acting on these recommendations, the Union government initiated deliberations in tripartite committees comprising repre­sentatives of the government, employers, and workers. After years of consultation, refinement and consensus-building, the present government introduced the four labour codes which came into force on November 21, 2025. These reforms did not occur in a single year, they are the outcome of sustained effort of more than two decades, reflecting deep thought and the collec­tive will of all stakeholders of the labour ecosystem.

This historic transformation of labour laws is firmly based in the constitutional mandate of social and economic justice. La­bour welfare has always drawn strength from the Preamble and the Directive Principles of State Policy, particularly Articles 38, 39, 41, 42, and 43, which call for living wages, humane working conditions, and adequate social security for all. The labour codes seek to fulfil these constitutional ideals in a modern, inclusive, and technology-enabled manner.

The rationale behind codifying 29 existing labour laws into four labour codes was to make India’s labour system simpler, more efficient, and suited to today’s economy. Labour law reform is an ongoing process, and the government wanted to modernise the framework so that it works better for both workers and employers. These changes aim to make it easier to do business, create more jobs, and ensure every worker has access to safety, health, social security, and fair wages.

One of the main reasons for this reform was simplifying compliance. From the employer’s perspective, compliance has become far more predictable, transpar­ent and less time-consuming, allowing management to focus on growing the business rather than getting entangled in paperwork. For instance, earlier, small establishments had to follow multiple laws separately, filing provident fund (PF) returns under Section 6 of the EPF Act, 1952; Employees’ State Insurance (ESI) returns under Section 44 of the ESI Act, 1948; and maintaining wage and attendance records under Section 13A of the Payment of Wages Act, 1936; Section 18 of the Minimum Wag­es Act, 1948; and Section 61 of the Factories Act, 1948. This often meant submitting 10 or more different returns a year. Yet work­ers had no simple way to verify whether their PF or ESI contributions were actually deposited. The new labour codes simplify this process through digital consolidation. Section 142 of the Code on Social Secu­rity, 2020 provides Aadhaar-based digital

 identity for workers to track PF and ESI online; Section 50 of the Code on Wages, 2019 allows a single return and single register; and Section 33 of the Occupational Safety and Working Conditions Code, 2020 enables one electronic licence and registration for es­tablishments. These changes, while ensuring compliance, have not compromised on transparency and protection for workers, and thus have created an environment where both industry and labour can thrive together.

ANOTHER MAJOR REASON behind bringing the labour codes was to streamline enforcement, which earlier was scattered and confusing. Previously, different authorities handled different labour laws: one for wages, another for safety, another for social security, and this made inspections slow and unpredictable. Now, with the introduction of the four amalgam­ated codes, the system of authorities has become unified and digitally integrated. For example, under Section 122 of the Code on Wages, 2019, a single inspector-cum-facilitator replaces mul­tiple labour inspectors, making inspections more transparent and less arbitrary.

Let us take the example of a boutique run by a woman en­trepreneur to understand how this amalgamation of laws cre­ates real change on the ground. Earlier, even a small garments-stitching unit with about 20-25 workers had to secure multiple licences, maintain separate registers for different labour laws, and face inspections from several departments. The owner often spent more time dealing with compliance than growing her business, and her workers did not always have clarity about their wages, safety measures, or social security benefits.

With the labour codes in place, the same boutique can now function with one online registration, one licence, and one digital annual return. Inspections are carried out through computer-based selection by an inspector-cum-facilitator, ensuring trans­parency instead of uncertainty or harassment-driven visits. The woman entrepreneur is now free to invest her time and resources in expanding production and hiring more workers rather than handling paperwork. Her workers also benefit, as wage pay­ments, safety norms and social security contributions are digitally tracked, ensuring fairness, timely benefits, and a safe workplace.

From the perspective of workers, the new labour codes have also thoughtfully strengthened protections for groups that need greater support, including women, gig workers, platform work­ers, and those in the unorganised sector, reflecting India’s com­mitment to social justice, which not only safeguards workers’ rights but also aligns the country with international labour standards, bringing global recognition while strengthening the values enshrined in the Constitution. Protecting women in the workforce ensures their dignity, safety, and economic par­ticipation, which in turn strengthens families, communities, and the nation, building a stronger and more inclusive India. Under the Code on Social Security, 2020, certification for preg­nancy, delivery, miscarriage, medical termination of pregnancy, tubectomy, or related illness has been simplified and made more accessible, allowing proof from a registered medical practitioner, ASHA, auxiliary nurse, or midwife, compared to the Maternity Benefit Act, 1961. Women may also work from home after ma­ternity leave where feasible, and establishments with 50 or more workers must provide crèche facilities with allowed visits dur­ing work hours.

The codes ensure gender equality by prohibiting discrimina­tion in recruitment, wages, and employment conditions, guar­anteeing equal pay for equal work under the Code on Wages, 2019, while women’s voices are strengthened through repre­sentation in grievance redressal committees as per Section 4 of the Industrial Relations Code, 2020, and one-third membership for women in Central and State Advisory Boards under Section 42 of the Code on Wages, 2019, responsible for wage fixation and employment policy. Women are empowered to work in all establishments, including night shifts and hazardous industries, with their consent and under mandatory safety, transport, and facility provisions specified in Section 43 of the Occupational Safety, Health, and Working Conditions Code, 2020.

FOR THE FIRST time, the new labour codes have provided statutory recognition to gig workers and platform work­ers, terms which have never previously been defined in Indian law as they were earlier grouped randomly under un­organised workers. Respectively, under Sections 2(35) & 2(60) of the Code on Social Security, 2020, a gig worker is defined as someone performing work outside a traditional employer-employee relationship, while a platform worker provides ser­vices through online platforms under similar non-traditional arrangements. This recognition gives them independent legal status and access to targeted social security schemes covering health, maternity, old-age, disability, and insurance, as provided under Chapter IX of the Code, with a registration mechanism under Section 113. By explicitly including gig, platform, and unorganised workers, the codes bring a large and previously unprotected segment of the workforce into the social security net, addressing forms of work and employment arrangements that traditional labour law never contemplated. Similar protec­tions for gig and platform workers have existed in countries such as the UK, Germany, and Canada for several years, and the Indian framework now aligns with these global trends, ensur­ing that emerging forms of work are recognised, regulated, and supported in a rapidly evolving economy.

Two of the most striking and transformative features of the labour codes are the introduction of the National Floor Wage and the mandatory issuance of appointment letters to every worker.

Earlier, India did not have a nationally enforceable floor wage. Each state fixed its own minimum wage and, in many cases these wages varied drastically for the same type of work, a worker in one state could earn far less than a worker in another. This uneven system pushed millions of labourers into distress migration, widened regional inequality, and indirectly weak­ened the constitutional promise of dignity under Articles 14, 19, and 21 because the value of labour was not respected uniformly across the country.

The National Floor Wage is a single benchmark that ends wage disparity across states and restores dignity to every worker. States are free to set wages higher, but not lower than the nation­ally notified floor. This prevents exploitation, provides stabil­ity to migrant workers, and enables every working family to secure a basic standard of living no matter where they reside. More importantly, once a uniform floor wage is ensured, states can progress towards a living wage, which is not only reflected in the Directive Principles under Articles 38 and 43 but also aligned with global labour standards. The International Labour Orga­nization (ILO) constitution and the ILO’s Global Wage Report 2024-25 emphasise that a living wage is central to social justice and decent living for workers. The codes bring India firmly into that global conversation, signalling that the country is moving beyond mere subsistence wages towards internationally recog­nised standards of worker welfare.

Equally historic is the mandate of appointment letters for all workers, ending the era of invisible employment. Earlier, mil­lions of workers had no written proof of employment. Without an appointment letter, workers could not prove service tenure, wages, working hours, or eligibility for benefits, and in disputes everything rested on oral statements, leaving workers vulner­able and employers exposed to prolonged litigation. Under the labour codes, every worker must now receive a written appoint­ment letter at the time of joining. What was once a privilege available only in organised white-collar employment has now become a legal right for all, including those in informal and un­skilled sectors. With this, no worker’s labour can be denied or diluted in the eyes of the law.

While the labour codes mark a milestone in India’s labour journey, it is also true that no reform of this magnitude arrives without questions, anxieties, or criticism. The recent demon­strations at Jantar Mantar reflect the concerns of certain labour unions and worker groups which fear that the transition may reduce job security, weaken bargaining power, or that it adheres to a capitalist outlook. Such voices are an important part of a democratic society and signal the need for constant dialogue. However, it is equally important to recognise that a few appre­hensions should not overshadow the larger and long-term ben­efits that the reforms seek to achieve. As with any major legal shift, the true impact of the labour codes will emerge gradually through judicial interpretation, administrative practice and lived experience of employers and workers alike. Since no case has yet been decided under the new codes, the legal position is still evolving, and patience is essential before arriving at de­finitive conclusions. What remains certain, however, is that the principles behind the codes align with the constitutional vision of dignity, security, and fair opportunity for all.