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New Labour Codes
- What are the Labour Laws in India?
Answer: – Indian labour law refers to laws or statutes regulating the labour or workforce in India whether in organised sector or unorganised sector.
- Who can make law related to labours in India?
Answer: – Labour laws are part of the concurrent list and accordingly both the Central and the State governments can legislate wherever they feel need for the same.
- What are the various Labour laws in India till now?
Answer: – For list of such various Labour laws please refer Annexure-A below.
- Need for changes in Labour Laws in India?
Answer: – In India, the law relating to employees/workmen has always been a complex subject due to various factors whether due to its old laws, multiplicity of laws/regulatory authorities, Central vs. States legislation and so on. As mentioned above Labour laws are part of the concurrent list and accordingly both the Central and the State governments can legislate wherever they feel need for the same However, instead of bringing clarity, this has created confusion due to overlapping and multiplication. And a single subject has been placed under multiple laws. For instance, the maternity benefits aspect has been provided in more than four legislations. Wages definitions also have been provided in various Acts leading to varying interpretations. Further, there were 12 definitions of wages in the different Labour Laws leading to litigation besides difficulty in its implementation Lastly, some of these laws are too old, and not in line with current economic and industrial requirement. Therefore, consolidation and codification of the entire set of labour laws is the urgent need of India and its manufacturing industry to scale up further and put its footprint in global manufacturing base. Recognizing the changes in the population composition over time and changes in socio economic factors it is imperative to make changes in old labour laws.
- What are New Labour Codes?
Answer: – Following are the 4 Labour Codes passed by the Central Government
| Sr No | Code |
| 1 | Code on Wages, 2019 |
| 2 | Occupational Safety, Health and Working Conditions Code, 2019 |
| 3 | Industrial Relations Code, 2019 |
| 4 | Code on Social Security, 2019 |
- Are all earlier old Laws are subsumed into new Codes?
Answer: – No, out of all labour laws 29 Laws are subsumed into above 4 Codes, which means henceforth, all the matters specified in the 29 Acts are now included in 4 Labour Codes. List of such Acts which were subsumed by the said above Codes are listed in ANNEXURE-B below
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- What are the major changes brought in by these labour Codes?
Answer: – Following are the list of major changes brought in by these Codes a. Key changes relate to the coverage of small firms, deciding thresholds for prior permission for retrenchment, strengthening labour enforcement, allowing flexible forms of labour, and promoting collective bargaining
- Most labour laws apply to establishments over a certain size (typically 10 or above). Size-based thresholds may help firms in reducing compliance burden. However, one could argue that basic protections related to wages, social security, and working conditions should apply to all establishments. Certain Codes retain such size-based thresholds
- Labour compliances and economic considerations have resulted in increased use of contract labour. However, contract labour have been denied basic protections such as assured wages. The Codes do not address these concerns fully. However, the Industrial Relations Code introduces a new form of short-term labour – fixed term employment.
- There are several registered trade unions but no criteria to ‘recognise’ unions which can formally negotiate with employers. The Industrial Relations Code creates provisions for recognition of unions.
- The procedure for determination of minimum wages by the appropriate Government is in line with the provisions of the Minimum Wages Act, 1948. However, the Code introduces the concept of Floor Wage, which is to be determined by the Central Government after considering the minimum living standards of workers in a manner to be prescribed under no circumstance, fix a minimum wage rate which is lower than the floor rate determined by the Central Government
- Labour Codes by simplifying, amalgamating, and rationalising the relevant provisions of the existing Central Labour Laws
- It has been ensured that employees getting monthly salary shall get the salary by 7th of next month, those working on weekly basis shall get the salary on last day of the week and daily wagers should get it on the same day
- Mandatorily revise floor wages at an interval not exceeding five years
- Change in definition of wages, accordingly, in effect, at least 50 per cent of the gross remuneration of employees should form the basis to calculate benefits, such as gratuity, retrenchment compensation and provident fund, etc. in situations where the sum of basic salary and other fixed allowances (such as dearness allowance) is less than 50 per cent of the gross remuneration. Currently, most employers have a wage structure in which the basic salary ranges from 25% to 40% of the CTC of the employee, and this forms the basis for both provident fund and gratuity contributions. With the wages under the codes moving to at least 50% of the CTC, there is going to be an impact from both PF and gratuity perspectives.
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ANNEXURE-A – List of various Labour Laws in India
| Sr
No |
Law |
| 1 | Payment of Wages Act, 1936; |
| 2 | Minimum Wages Act, 1948; |
| 3 | Payment of Bonus Act, 1965; and |
| 4 | Equal Remuneration Act, 1976 |
| 5 | Factories Act, 1948; |
| 6 | Mines Act, 1952; |
| 7 | Dock Workers (Safety, Health and Welfare) Act, 1986; |
| 8 | Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996; |
| 9 | Plantations Labour Act, 1951; |
| 10 | Contract Labour (Regulation and Abolition) Act, 1970; |
| 11 | Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979; |
| 12 | Working Journalist and other Newspaper Employees (Conditions of Service and Miscellaneous Provision) Act, 1955; |
| 13 | Working Journalist (Fixation of Rates of Wages) Act, 1958; |
| 14 | Motor Transport Workers Act, 1961; |
| 15 | Sales Promotion Employees (Condition of Service) Act, 1976; |
| 16 | Beedi and Cigar Workers (Conditions of Employment) Act, 1966; and |
| 17 | Cine-Workers and Cinema Theatre Workers (Regulation of Employment) Act, 1981 |
| 18 | Trade Unions Act, 1926; |
| 19 | Industrial Employment (Standing Orders) Act, 1946, and |
| 20 | Industrial Disputes Act, 1947 |
| 21 | Employees’ Provident Funds and Miscellaneous Provisions Act, 1952; |
| 22 | Employees’ State Insurance Act, 1948; |
| 23 | Employees’ Compensation Act, 1923; |
| 24 | Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959; |
| 25 | Maternity Benefit Act, 1961; |
| 26 | Payment of Gratuity Act, 1972; |
| 27 | Cine-workers Welfare Fund Act, 1981; |
| 28 | Building and Other Construction Workers’ Welfare Cess Act, 1996; and |
| 29 | Unorganised Workers Social Security Act, 2008 |
| 30 | Labour Laws (Simplification of Procedure for Furnishing Returns and Maintaining Registers by Certain Establishments) Act, 1988 |
| 31 | Apprentices Act, 1961 |
| 32 | Bonded Labour System (Abolition) Act, 1976 |
| 33 | Child and Adolescent Labour (Prohibition and Regulation) Act 1986 |
| 34 | Public Liability Insurance Act 1991 |
| 35 | Dock Workers (Regulation of Employment) Act 1948 |
| 36 | Dock Workers (Regulation of Employment) (Inapplicability to Major Ports) Act 1997 |
| 37 | Coal Mines Provident Fund and Miscellaneous Provisions Act, 1948 |
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| 38 | Provident Funds Act, 1925 |
| 39 | Seamen’s Provident Fund Act, 1966 |
| 40 | Sexual Harassment at Workplace Act, 2013 |
| 41 | Boilers Act, 1923 |
| 42 | Employment of Manual Scavengers and Construction of Dry Latrines (Prohibition) Act, 1993 |
| 43 | Prohibition of Employment as Manual Scavengers and their Rehabilitation Act, 2013 |
ANNEXURE-B – Old Acts being Subsumed into new Codes
| Labour Codes | Acts being subsumed |
| Code on Wages, 2019 | 1) Payment of Wages Act, 1936 |
| 2) Minimum Wages Act, 1948 | |
| 3) Payment of Bonus Act, 1965; and | |
| 4) Equal Remuneration Act, 1976 | |
| Occupational Safety, Health and Working Conditions Code, 2019 | 1) Factories Act, 1948; |
| 2) Mines Act, 1952; | |
| 3) Dock Workers (Safety, Health and Welfare) Act, 1986; | |
| 4) Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996; | |
| 5) Plantations Labour Act, 1951; | |
| 6) Contract Labour (Regulation and Abolition) Act, 1970; | |
| 7) Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979; | |
| 8) Working Journalist and other Newspaper Employees (Conditions of Service and Miscellaneous Provision) Act, 1955; | |
| 9) Working Journalist (Fixation of Rates of Wages) Act, 1958; | |
| 10) Motor Transport Workers Act, 1961; | |
| 11) Sales Promotion Employees (Condition of Service) Act, 1976; | |
| 12) Beedi and Cigar Workers (Conditions of Employment) Act, 1966; and | |
| 13) Cine-Workers and Cinema Theatre Workers (Regulation of Employment) Act, 1981 | |
| Industrial Relations Code, 2019 | 1) Trade Unions Act, 1926; |
| 2) Industrial Employment (Standing Orders) Act, 1946, and | |
| 3) Industrial Disputes Act, 1947 | |
| Code on Social Security, 2019 | 1) Employees’ Provident Funds and Miscellaneous Provisions Act, 1952; |
| 2) Employees’ State Insurance Act, 1948; | |
| 3) Employees’ Compensation Act, 1923; |
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| 4) Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959; | |
| 5) Maternity Benefit Act, 1961; | |
| 6) Payment of Gratuity Act, 1972; | |
| 7) Cine-workers Welfare Fund Act, 1981; | |
| 8) Building and Other Construction Workers’ Welfare Cess Act, 1996; and | |
| 9) Unorganised Workers Social Security Act, 2008 |