Content
- India’s Labour Reforms: Simplification, Security, and Sustainable Growth
- Occupational Safety, Health and Working Conditions (OSH) Code, 2020
India’s Labour Reforms: Simplification, Security, and Sustainable Growth
Why is it in News?
- Government released an official update highlighting progress and impact of the four Labour Codes, consolidating 29 laws into 4.
- Employment data shows 16.83 crore jobs added (2017–18 to 2023–24), fall in unemployment from 6% → 3.2%, and 1.56 crore women entering formal jobs.
- Reinforces the narrative of a simplified, tech-enabled, growth-oriented labour regime ahead of full implementation.
Relevance:
- GS 2 – Governance & Labour Regulation
Consolidation of 29 laws into 4 Codes.
Federal issues: floor wage, state rule delays.
Governance shift: single registration, digital compliance, inspector-cum-facilitator. - GS 3 – Economy, Employment & EoDB
Formalisation via EPF/ESIC expansion, gig worker inclusion.
Lower compliance cost → improved EoDB, investor confidence.
Labour market flexibility: FTE, layoff threshold (100→300), flexible work models.
Boost to manufacturing & productivity. - GS 1 – Society & Social Justice
Wage equality (including transgender workers).
Women’s participation through night-work provisions.
Protection for informal, unorganised, and migrant workers.
Four Labour Codes
- Code on Wages (2019) – uniform wage, bonus, and remuneration rules.
- Industrial Relations Code (2020) – dispute settlement, trade unions, lay-offs, and employer–employee relations.
- Code on Social Security (2020) – EPF, ESIC, gig/platform worker protection, health/maternity benefits.
- Occupational Safety, Health & Working Conditions Code (2020) – safety, working hours, migrant workers, contract labour reforms.
Rationale
- 29 fragmented laws → 4 streamlined Codes for uniformity.
- Reduce compliance burden (single registration, return, license).
- Improve enforcement through unified inspector-cum-facilitator and digital systems.
- Align with modern economy—gig work, platform economy, flexible work, tech-driven HR.
- Based on Second National Commission on Labour recommendations.
Code on Wages, 2019
Core Aim: Universal and fair wage system across sectors.
Key Provisions
- Universal Minimum Wage → all workers, organised & unorganised.
- Floor Wage → no State can set below Centre-set living standard.
- Uniform “Wages” definition → simplifies PF, gratuity, bonus calculations.
- Gender-equal wages including transgender inclusion.
- Overtime: ≥2x wages.
- Inspector-cum-Facilitator for compliance guidance.
- Decriminalisation of first-time offences.
Benefits
- Uniform wage regime → eliminates 200+ wage rates across States.
- Strengthens wage justice for informal labour.
- Reduces litigation due to uniform wage definition.
Concerns
- Floor wage disagreements between Centre–State.
- Cost concerns for MSMEs due to wage parity.
Industrial Relations Code, 2020
Core Aim: Balance flexibility for industry with worker protection.
Key Provisions
- Fixed Term Employment with benefits parity.
- Lay-off/Retrenchment threshold raised 100 → 300 workers.
- Trade Union Recognition: 51% membership rule.
- Re-skilling Fund: 15 days’ wages for retrenched workers.
- Greater digitalisation: e-registration & e-communication.
- Mandatory 14-day strike notice for all industries.
- Expanded definition of “industry” & “worker.”
Benefits
- Predictability for investors → boosts manufacturing.
- Reduces contract labour misuse via FTE.
- Streamlined dispute-resolution → faster adjudication.
- Strengthens collective bargaining structures.
Concerns
- Threshold increase criticised as weakening job security.
- Stricter strike provisions seen as limiting labour rights.
Code on Social Security, 2020
Core Aim: Universalise social protection, including gig/platform workers.
Key Provisions
- 9 laws merged, covering EPF, ESIC, maternity, gratuity etc.
- Gig & platform worker recognition → aggregator contribution 1–2%.
- Social Security Fund for unorganised sector.
- Pan-India ESIC—no more “notified areas”.
- Gratuity for fixed-term employees after 1 year.
- Expanded dependent definition (maternal grandparents, in-laws).
- Accident during commute = employment injury.
- Digitised compliance: online returns, algorithmic inspection.
Benefits
- First global model to include gig workers in statutory social security.
- Reduces harassment via risk-based inspections.
- Better portability of benefits across employers.
Concerns
- Limited coverage of unorganised sector (~380M workers).
- Aggregator resistance over contribution norms.
Occupational Safety, Health & Working Conditions Code, 2020
Core Aim: Create harmonised national safety & working conditions regime.
Key Provisions
- 13 laws consolidated.
- Single registration, license, return framework.
- Revised factory thresholds → 20 (power) / 40 (no power).
- Women allowed in all jobs & night work with safety measures.
- ISMW widened → includes self-migrating workers.
- National Database of Unorganised Workers.
- Working hours: max 8 hours/day, 48 hours/week.
- Safety Committees for establishments >500 workers.
- Contract labour reforms: all-India 5-year license.
- Victim compensation: ≥50% of fines.
Benefits
- Stronger national standards for safety & health.
- Improves migrant worker welfare (travel allowance, portability).
- Enhances women’s participation in labour market.
Concerns
- Higher thresholds dilute safety oversight for small factories.
- Implementation capacity challenges for states.
Macro Impact
Economic
- Simplifies compliance → improves India’s EoDB score.
- Encourages formalisation → more registrations, EPF/ESIC enrolments.
- Flexibility in hiring → boosts manufacturing & exports (Make in India).
Workforce
- Universal wage & social security → better worker protection.
- Improves labour mobility, safety, and gender inclusion.
- Recognises gig/platform workers → pioneering global precedent.
Federalism
- Centre-set floor wage & uniform definitions may cause Centre–State frictions.
- Codes depend heavily on State rules → implementation delays.
Key Challenges
- Several states yet to fully notify rules → partial implementation.
- MSME compliance cost fears despite simplification.
- Trade union concerns over retrenchment threshold & strike rules.
- Digital infrastructure gaps across states.
Conclusion
India’s Labour Codes represent one of the largest structural reforms in independent India’s labour governance. They merge a fragmented regime into a coherent, tech-driven, compliance-light, worker-centric framework. The Codes strengthen wage equity, social security, safety, and gender inclusion, while giving industries the flexibility needed for modernizing India’s labour markets. Effective implementation by states remains the decisive next step for achieving sustainable, inclusive, and future-ready growth.
Occupational Safety, Health and Working Conditions (OSH) Code, 2020
Why is it in News?
- Ministry of Labour released a detailed update on the implementation status and reforms impact of the OSH Code, 2020.
- Highlights include drastic procedural simplification, expanded worker coverage, improved health & safety architecture, and ease of doing business measures.
- Forms part of the government’s broader labour reforms consolidating 29 laws into 4 Labour Codes.
Relevance:
- GS 2 – Governance & Regulatory Reforms
13 laws merged into one OSH Code.
National OSH Board for uniform standards.
Algorithmic inspections & inspector-cum-facilitator. - GS 3 – Economy & Industrial Ecosystem
Single licence/return; third-party audits; digitised records.
Higher factory thresholds → MSME support.
Deemed approvals → faster project clearances. - GS 1 – Labour Welfare, Women & Migrant Workers
Mandatory appointment letters; improved leave norms.
Expanded ISMW coverage → portability & travel allowance.
Night-work with safeguards; crèche facilities for ≥50 employees.
Basics
Purpose
- Consolidates 13 Central labour laws → 1 Code to reduce fragmentation and create national-level uniformity in safety, health, and working conditions.
Objective
- Dual focus:
(i) Protect worker safety, health, dignity, welfare.
(ii) Improve regulatory efficiency and encourage investment, formalisation, and industrial growth.
Consolidation (Before and After)
| Parameter | Earlier Regime | OSH Code (2020) |
| Acts | 13 | 1 |
| Sections | 620 | 143 |
| Rules | 868 | 175 |
| Registrations | 6 | 1 |
| Licenses | 4 | 1 |
| Forms | 55 | 20 |
| Returns | 21 | 1 |
| Compounding | None | Yes |
| Improvement Notice | No | Yes |
Impact: Massive simplification → reduces compliance cost, boosts formalisation.
Worker Welfare & Employment Conditions
Appointment Letters
- Mandatory for all employees → clarity of employment terms, wages, designation, social security.
- Reduces disputes, supports wage transparency and formalisation.
Paid Annual Leave
- Eligibility reduced 240 → 180 days of work per year.
- Enhances rest, improves productivity, aligns with global norms.
Working Hours & Overtime
- Standard: 8 hours/day, 48 hours/week.
- Flexible work models allowed:
- 4-day week (12 hours/day),
- 5-day week (9.5 hours/day),
- 6-day week (8 hours/day).
- Overtime at ≥ 2× wages; limit determined by State.
- Benefits: higher earnings + work–life balance flexibility.
Inter-State Migrant Workers (ISMW)
Expanded Definition
- Includes directly employed, contractor-employed, and self-migrating workers.
Key Benefits
- Annual to-and-fro journey allowance.
- Portability of BOCW benefits and PDS ration.
- Toll-free grievance helpline.
- Mandatory reporting of ISMW in registration.
National Worker Database
- Central database for unorganised workers, including migrants.
- Supports job matching, policy formulation, portability of benefits.
Health, Safety, and Well-being
Safety Committees
- Mandatory for:
- Factories (≥500 workers)
- BOCW (≥250 workers)
- Mines (≥100 workers)
- Tripartite representation → strengthens on-site safety governance.
Universal Coverage
- Health & safety obligations now apply to all sectors, earlier restricted to only 7.
Health Coverage
- Free annual health check-ups for all employees.
- Plantations can avail ESIC services.
National OSH Board
- Replaces 6 different boards.
- Sets national safety standards across sectors → uniformity + better compliance.
Victim Compensation
- Courts can direct ≥50% fine to injured worker/legal heirs.
Social Security Fund
- Penalties & compounding amounts credited to a welfare fund for unorganised workers.
- Expands financial support base for vulnerable workers.
Ease of Doing Business
A. Extended Applicability
- Govt may apply the Code to any establishment (even 1 employee) handling hazardous operations.
B. Electronic Single Registration & Returns
- 1 registration, 1 license, 1 return.
- Centralised digital filing system → faster approvals, lower compliance cost.
C. Revised Factory Thresholds
- Licensing threshold raised:
- With power: 10 → 20 workers
- Without power: 20 → 40 workers
- 30-day deemed approval for setting up/expanding factories.
Impact:
- Faster industrialisation;
- Encourages MSMEs;
- Promotes job creation.
D. Inspector-cum-Facilitator
- Shifts from punitive “Inspector Raj” to compliance support.
- Randomised, web-based inspections → transparency, less harassment.
E. Third-Party Audit
- Startups/qualified establishments may use accredited third-party auditors.
- Faster certification → boosts industrial growth.
F. Digitisation of Records
- Registers reduced 84 → 8 → significant administrative relief.
Contract Labour Reforms
Core vs Non-Core Activities Defined
Allows contract labour even in core activities when:
- Activity is ordinarily outsourced, or
- Does not require full-time workers, or
- Sudden work surge occurs.
Impact: clarity + flexibility for industry; better job matching for workers.
Threshold Raised
- Applicability increased 20 → 50 workers.
- Small contractors exempt from licensing → boosts small business viability.
Welfare & Wages
- Principal employer liable for unpaid wages & welfare facilities.
- Ensures timely wage payment & minimum standards of care.
Compounding and Decriminalisation
Compounding
- Fines-only offences: 50% of max fine.
- Fines/imprisonment offences: 75%.
Decriminalisation
- Many procedural violations shifted to monetary penalties.
- 30-day improvement notice before legal action.
Benefits
- Encourages voluntary compliance.
- Reduces litigation & fear of criminal prosecution.
- Supports business continuity.
Women Centric Provisions
Universal Employment Access
- Women can work in all sectors, including at night, with consent & safety measures.
Crèche Facilities
- Establishments with ≥50 employees must provide crèches.
- Gender-neutral provision (not limited to women employees).
Impact: increased female labour force participation (FLFP).
Impact Overall
Pro-Worker
- Universal health checks, appointment letters, safer workplaces.
- Higher overtime earnings, portable benefits for migrants.
- Protection for digital media workers, stunt artists, journalists.
Pro-Industry
- Unified licensing, digital processes, third-party audits.
- Higher thresholds reduce regulatory pressure on MSMEs.
- Faster approvals encourage investment & job creation.
Pro-Growth
- Uniform national safety standards → reduces accidents, boosts productivity.
- Eases compliance → enhances India’s global competitiveness.
Conclusion
The OSH Code, 2020 creates a unified, transparent, and modern labour safety ecosystem, balancing worker protection with economic competitiveness. It simplifies procedures, expands coverage, strengthens safety governance, and reduces regulatory friction—aligning India’s labour market with the needs of a growing, diversified, and technology-driven economy.
