Understanding the new labour law reforms in India

Table of contents

1. Unification of labour laws

2. Code on Wages, 2019

3. Code on Social Security, 2020

4. Code on Industrial Relations, 2020

5. Occupational Safety and Healthy Working Conditions Code, 2020

6. List of acts that are getting replaced

Unification of labour laws

Labour laws are an integral tool that guarantees the social welfare of workers and provides guidelines for employers to follow. Historically, the Government of India and the Ministry of Labour and Employment have implemented multiple such laws to ensure the safety of workers and to protect their rights. A healthy workplace naturally improves its organisation's productivity, which has positive implications for economic growth.

While these laws offer much-needed benefits, the sheer volume of laws has led to compliance complexity. The complexity is magnified because of the vast number of states in India, and the fact that both the central and state governing bodies had the right to create these regulations.

As a result, there are over 100 state laws and 40 central laws regulating different aspects of labour like industrial disputes, working conditions, social security, and wages. By simplifying this system to four new labour codes bringing together different aspects of labour, the ministry aims to make compliance easier and ensure uniformity in labour laws.

These codes take a framework-based approach to encompass the vastly different scenarios in the workplace, and they are expected to be implemented at one go by financial year 2022 to 2023. In this guide, we will see an overview of the four newly proposed codes, and also review all the regulations that are getting replaced.

Code on Wages, 2019

The labour code on wages, notified in 2019, universalizes minimum wages to all employees in both organised and unorganised sectors. This new code also amalgamates the definition of wages across all the legislation. According to the new code, wages are now classified into three categories. Inclusions, exclusions, and conditions governing the exclusions. Read our in depth blog about the code on Wages.

Code on Social Security, 2020

The social security code aims to improve the benefits offered to employees, such as provident fund, gratuity, or insurance. It also extends the reach of social security schemes to all sectors of workers, including gig workers and platform workers. Read our blog to understand the code on Social Security.

Code on Industrial Relations, 2020

The Industrial Relations Code, 2020, streamlines the laws related to trade unions, employment conditions for industries, and a comprehensive handling of industrial disputes. The revisited rules also place a higher emphasis on building a strong employer-employee relationship, creating better working conditions, collective bargaining, and re-skilling of employees. Read our in-depth guide to understand more about the code.

Occupational Safety, Health and Working Conditions Code, 2020

The primary goal of the code on occupational health and safety of workers is to ensure that employees across all sectors are treated equally and have safe working conditions. It allows employers to stay compliant with fewer registration formalities and promotes ease of doing businesses in India. The OHSW code will be applicable to every organisation that employs more than 10 employees. Read in detail about the code here.

Here's a compilation of the new labour codes that are replacing the existing rules