India Implements New Labour Codes

Summary of New Labour Codes Implementation in India

1. Labour Codes Overview:

   • The Government of India is set to implement four new labour codes:
     1. Code of Wages (2019)
     2. Industrial Relations Code (2020)
     3. Code on Social Security (2020)
     4. Occupational Safety, Health, and Working Conditions Code (2020)
   • These codes replace 29 existing laws, creating a unified and modern framework for labour regulations across the country.

2. Need for New Labour Codes:

   • Previous laws were overly complex and outdated, imposing a cumbersome compliance burden that deterred businesses from hiring.
   • Workers, particularly in gig and platform economies, lacked uniform social security.

3. Economic and Employment Gains from Labour Reforms:

   • States implementing labour reforms have reported significant economic growth and job creation:
     • Gujarat: GSDP projected at ₹25.63 trillion (2023-24, 13.36% YoY growth).
     • Punjab: GSDP growth of 9.43% CAGR (FY16 to FY24), with an expected ₹1.25 lakh crore investment generating 4.5 lakh jobs.
     • Bihar: Projected GSDP of ₹9.76 lakh crore (2024-25, 13.5% growth).
     • Maharashtra: Highest GSDP anticipated at ₹42 lakh crore (2024-25, 5.5% annual growth).
     • Uttar Pradesh: Organised manufacturing jobs increased by 7.4 lakh (2014-15 to 2023-24).
     • Andhra Pradesh: GSDP of ₹16.41 lakh crore (2024-25, 12.5% growth), numerous investor proposals.

4. Constitutional Context:

   • Labour is a Concurrent List subject under the Indian Constitution, necessitating coordination between central and state governments for effective regulation.
   • Implementation at the central level must align with state-defined rules to ensure equitable social security coverage for workers.

5. Changes for Various Worker Groups:

   • Gig & Platform Workers: Defined legally; aggregators to contribute 1–2% of turnover to welfare funds; injury during commuting recognized as an employment-related issue.
   • Contractual Workers: Guaranteed health and social security benefits from principal employers; free annual health check-ups.
   • Women Workers: Equal pay, prohibition of gender discrimination, night work with safety measures, 26 weeks maternity leave, and crèche facilities included.
   • Migrant Workers: Equal wages and access to welfare benefits across states, including provisions for pending wage claims.

6. Fixed Term Employment (FTE):

   • Introduced as a mechanism to promote direct employment and reduce casualisation.
   • FTE workers receive the same benefits as permanent staff, including equal wages, gratuity after one year, and regulated working conditions.

7. Positives of New Codes:

   • Aims to enhance employment formalisation, increase social security coverage, and provide better workplace protections, including regulated working hours and safety standards.

8. Challenges Ahead:

   • Delays in central-level implementation could lead to uneven coverage of social security and add compliance complexity for employers operating in multiple states.

These new labour codes represent a significant transformation in India’s labour landscape, striving to create a more equitable and efficient working environment.