In a historic move, the government has today announced the implementation of the four Labour Codes, which rationalised 29 existing labour laws, with immediate effect. The four labour codes are -- 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.
"The four labour codes have been notified and now they are the law of the land," said labour minister Mansukh Mandaviya.
Benefits of Labour Reforms Across Key Sectors:
- Fixed-Term Employees (FTEs) to receive all benefits equal to permanent workers
- Gratuity eligibility after just one year, instead of five.
- Contract workers to get free annual health check-up
- Equal pay for equal work ensured and gender discrimination is legally prohibited
- Women are permitted to work night shifts and in all types of work (including underground mining and heavy machinery), subject to their consent and mandatory safety measures
- All workers to get appointment letters, promoting social security, employment history and formal employment
A comparison of the labour ecosystem, before and after the implementation of the Labour Codes:
| Pre Labour Reforms | Post Labour Reforms | |
| Formalisation of Employment | No mandatory appointment letters | Mandatory appointment letters to all workers. Written proof will ensure transparency, job security, and fixed employment. |
| Social Security Coverage | Limited Social Security Coverage | Under Code on Social Security, 2020 all workers including gig & platform workers to get social security coverage. All workers will get PF, ESIC, insurance, and other social security benefits. |
| Minimum Wages | Minimum wages applied only to scheduled industries/employments; large sections of workers remained uncovered | Under the Code on Wages, 2019, all workers to receive a statutory right minimum wage payment. Minimum wages and timely payment will ensure financial security. |
| Preventive Healthcare | No legal requirement for employers to provide free annual health check-ups to workers | Employers must provide all workers above the age of 40 years with a free annual health check-up. Promote timely preventive healthcare culture |
| Timely Wages | No mandatory compliance for employers payment of wages | Mandatory for employers to provide timely wages, ensuring financial stability, reducing work stress and boosting overall morale of the workers. |
| Women workforce participation | Women’s employment in night shifts and certain occupations was restricted | Women are permitted to work at night and in all types of work across all establishments, subject to their consent and required safety measures. Women will get equal opportunities to earn higher incomes – in high paying job roles. |
| ESIC coverage | ESIC coverage was limited to notified areas and specific industries; establishments with fewer than 10 employees were generally excluded, and hazardous-process units did not have uniform mandatory ESIC coverage across India | ESIC coverage and benefits are extended Pan-India - voluntary for establishments with fewer than 10 employees, and mandatory for establishments with even one employee engaged in hazardous processes. Social protection coverage will be expanded to all workers. |
| Compliance Burden | Multiple registrations, licenses and returns across various labour laws. | Single registration, PAN-India single license and single return. Simplified processes and reduction in Compliance Burden. |
