Are the labour codes labour-friendly?
News:
Recently, India’s sweeping labour-law overhaul — replacing 29 statutes with four labour codes — triggered nationwide protests as trade unions called the changes “anti-worker”. The government claims the reform will simplify compliance and expand social security, but critics warn of rising job precarity and weakened collective bargaining.
Arguments in Favour of the labour Codes
1. Streamlining 29 Laws Into 4 Codes
Consolidating fragmented labour laws into four codes simplifies compliance, harmonises definitions across States, reduces disputes, litigation, and administrative delays, while providing clarity, predictability, and uniformity for industries and workers nationwide.
- Example: Ambiguous definitions of “wages” and “worker” previously caused frequent disputes across courts and industrial sectors.
2. Expanding Social Security
The codes extend social security to gig, platform, fixed-term, and small-establishment workers, improving welfare, protection, and financial safety, harmonising benefits, and including previously excluded vulnerable groups in pensions, insurance, and welfare schemes.
- Example: App-based delivery partners now enjoy legal coverage for health, retirement, and insurance benefits under the new system.
3. Digital Compliance and Transparency
Mandatory online registration, licensing, and inspections reduce corruption, increase efficiency, simplify compliance, improve monitoring, and create harmonised digital systems across industries, providing transparency and accountability for workers and employers.
- Example: Randomised e-inspections prevent inspector-raj and ensure fair treatment of small factories consistently nationwide.
4. Attracting Investment and Formalisation
Uniform labour laws enhance India’s ease of doing business, attract investment, strengthen formalisation, harmonise employment rules, improve predictability, and make industries confident in long-term expansion, growth, and workforce stability across sectors.
- Example: Electronics and automobile manufacturers prefer a consistent national framework rather than varied State-level regulations.
5. Flexibility for Job Creation
The Industrial Relations Code allows fixed-term employment and raises layoff thresholds, giving industries flexibility to meet seasonal demand, adjust workforce, harmonise operations, and expand without regulatory hurdles or legal complications.
- Example: Textile and footwear firms scale production during peak seasons efficiently without bureaucratic delays.
6. Safety Standards and Reskilling
The OSHWC Code modernises safety standards and introduces reskilling funds, harmonising workplace protection, preparing retrenched workers for technological changes, and increasing workforce employability and adaptability.
- Example: Mandatory annual health checks and reskilling programs improve worker well-being and career readiness.
Arguments Against the Labour Code
1. Oversimplification Risks
Merging diverse labour laws may ignore sector-specific requirements, disadvantage small industries, increase administrative burden, reduce flexibility, and harm local enterprises, as harmonised standards may be unsuitable for heterogeneous workforces or micro-enterprises.
- Example: Small businesses struggle to comply with national rules that fail to reflect regional or operational realities.
2. Weak Protection for Gig Workers
Recognition of gig and platform workers lacks enforcement, minimum wage guarantees, job security, and clear dispute resolution mechanisms. Harmonisation alone cannot ensure effective protection, leaving vulnerable workers exposed to exploitation and income instability across multiple sectors.
- Example: App-based delivery staff gain legal recognition but remain exposed to low pay and unstable employment conditions.
3. Digital Compliance Excludes Informal Sector
Mandatory online registration burdens informal workers and small enterprises with low digital literacy and infrastructure, reducing coverage and access to benefits, leaving them unprotected despite harmonised labour provisions.
- Example: Rural micro-enterprises may fail to navigate portals, leaving workers unprotected from social security benefits.
4. Employer-Favouring Provisions
- The codes prioritise employer flexibility over worker rights. Fixed-term contracts reduce permanency, weaken collective bargaining, and decrease employee leverage in negotiations despite harmonised rules favouring operational efficiency.
- Example: Companies avoid long-term obligations, reducing workforce stability and limiting employees’ influence over workplace conditions.
5. Higher Layoff Thresholds Reduce Security
Raising retrenchment thresholds to 300 workers allows firms to dismiss employees without government approval, significantly increasing job precarity, especially for smaller formal sector employees, despite harmonised regulatory provisions.
- Example: Companies may keep staff below thresholds, bypass oversight, and leave workers vulnerable to sudden termination.
6. Unclear Implementation of Safety and Reskilling
Safety and reskilling provisions exist but lack funding, monitoring, and operational clarity. Harmonisation alone does not ensure practical benefits, leaving retrenched workers and vulnerable employees without meaningful training, safety, or employability support in real-world scenarios.
- Example: Reskilling funds for retrenched employees remain largely unimplemented, offering minimal workforce skill development support.
Conclusion:
The new labour codes aim to harmonise laws, expand social security, improve compliance, and attract investment, offering industries flexibility and workers some protections. However, gaps in enforcement, weak safeguards for gig workers, digital exclusion, and employer-favouring provisions risk undermining job security and worker rights. A balanced approach with strict implementation, monitoring, and inclusive social security is essential for fair, safe, and sustainable labour reforms in India.
