Government of India has recently initiated the process of overhauling and reforming bulk of its labour legislations (around 40 plus).This is the right step in the right direction at the right time keeping in mind the overall investment scenario and moving towards the main aim i.e. making India an industrial and manufacturing hub in the global map of the world as envisaged in most of the flagship schemes of the Government like Make In India, Start Up India and so on. 

As far as labour laws history is concerned, India inherited its labour laws/ practices from British Raj and at that time (under colonial rule) rights like freedom of making association/unions, better wages, wage parity, working conditions and other labour rights were not available and suppressed totally. However, after independence and especially after adoption of Constitution of India in 1950, certain labour rights (for example articles 14-16, 19(1)(c), 23-24, 38, and 41-43A) were recognized and given effect. Since, India inherited and adopted most of the laws from English system; a need was always felt by the stakeholders to amend the laws which are not in line with independent India. However the speed of making such change was very slow till the globalization and liberalization touched Indian boundaries in 1991. Even after liberalisation, though the changes were made in the various laws but not in the way all stakeholders (especially Indian business houses and foreign investors) expected therefore Government of India has come up with vision document ( setting firm deadlines for the reforms and implementation aspects.

As far as labour laws are concerned, both, the Central Government and respective State Legislatures can make laws pertaining to the same subject matter because the entry/subject “Labour” is matter of concurrent list which means both centre and the state has the power to enact the laws from time to time as per the need and as a result both have made various legislation on the same subject matter. One can get an idea about the multiplicity of laws pertaining to labour in India from the very fact that centre has enacted more than 50 labour laws and the state legislature has framed more than 150 labour laws which leads to contradictory interpretations on the same subject and thereby it has become quite difficult for any organization to comply with all central and state laws at the same time. If India wants to become an industrial hub then one of the key factor or hurdle is our archaic laws which are to be streamlined in line with the current business requirements in order to attract businesses across the world and encourage domestic investment opportunities and entrepreneurship.   

Therefore, Government of India has initiated the process of merging and reforming bulk of its central legislations into four codes i.e. Code on Wages, Code on Social Security, Code on Industrial Safety & Welfare and Code on Industrial Relations in order to simplify the entire process and legal system relating to labour hiring in India as explained hereunder:  

1.         Code on Wages Bill, 2019- This code has become the law after getting the assent of the President on 8th August, 2019 but the Central Government has not notified the same till now. This code subsumes relevant provisions of the previous laws pertaining to workers’ wages and bonus and equal remuneration for men and women. The new code will remove multiplicity of labour laws that presently exist in current Indian Legal system and will also ensure that the minimum wages of workers can be fixed. The Central Government will fix the minimum wages of workers working in certain sectors and the state government in the respective states will have the power to fix minimum wages for other sectors.  The Code introduces the concept of a ‘Inspector cum facilitator’ who will carry out inspections and also provide employers and workers with information on how to improve their compliance with the law. This concept is introduced by the new code to ensure proper compliance of these newly made laws in the organizations where more than 10/20 or more workers are employed on any day during an accounting year.

2.         Code on Occupation Safety, Health and Working Conditions, 2019- This code was introduced in Lok Sabha by the Minister of Labour and Employment. As the name suggests the code is established to take care of safety, health and working conditions of the employees working in different organizations. Earlier, the employers did not provide even the basic facilities including health and other working conditions to employees working in their organisation and as the result the workers used to get exploited by the employers. So legislature came up with various enactments like Factories Act, 1948, The Mines Act, 1952 and so on to protect their interest at large. But now the government has come up with more updated and relevant code and looks to consolidate 13 existing laws in order to protect the interest of the workers and promote better compliance. It is the duty of the employer to provide a hygienic work environment with sufficient space, clean drinking water and other basic amenities. The central and state governments will set up Occupational Safety and Health Advisory Boards at the national and state level, respectively. These Boards will advise the central and state governments on the standards, rules, and regulations to be framed under the Code.

3.        Code on Social Security, 2019- This code is drafted by the Ministry of Labour and Employment  to simplify, amalgamate, rationalize and replace the central labour legislations which includes 8 different legislations including The Employees Compensation Act, 1923; The Employee Provident Fund and Miscellaneous Provisions Act, 1952 and so on. The Ministry invited the comments on the said code from the stakeholders and the public at large.

4.        Code on Industrial Relations, 2019- The Union Cabinet on 20th November, 2019 approved the Labour Code on Industrial Relations 2019. After the enforcement of this code companies can hire workers on fixed-term contract of any duration. The code has retained the threshold on the worker count at 100 for prior government approval before retrenchment, but it has a provision for changing 'such number of employees' through notification. Fixed-term employment means a worker can be hired for any duration, three months or six months or a year depending on season and orders. This code will also absorb 3 earlier enactments like The Trade Unions Act, 1926; Industrial Dispute Act and Industrial Employment (Standing Order) Act, 1946.

Recently the Labour Ministry has sent aforesaid two important bills, (one on Industrial Relations and second on Social Security), to the Parliament’s standing committee for their review and opinion.

These proposed codes are basically trying to simply the labour laws, ease up the entire process, remove duplicity and lessen the compliance burden on the businesses so that key aim “Ease of Doing Business” can be achieved in order to attract domestic investment as well as foreign investments. It will also help in reducing labour side litigation once laws are streamlined and simplified, this will again give boost to the overall economy and productivity. Therefore the vision, schedule and proposed action plan of the Government seems fine at this stage however a lot will depend upon the implementation phase including resolving the resistance of various trade unions and reconciling the interest of various stakeholders. 

CS Manupreet Singh Batra

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