After years of delays, the Indian government has finally notified all four labour codes—Code on Wages (2019), Industrial Relations Code (2020), Social Security Code (2020), and OSH Code (2020).
These codes replace 29 central labour laws and mark the biggest labour reform in independent India.
But while the government calls it a “modern, business-friendly regime”, trade unions call it “the biggest dilution of worker rights in decades.”
This ‘The Eastern Times’ analysis breaks down the full picture.
1️⃣ WHAT HAS CHANGED IN THE NEW LABOUR CODES?
A. Uniform Definition of Wages
Earlier: Different laws used different definitions, letting companies structure salaries to reduce PF & gratuity.
Now: “Wages” standardised — at least 50% of CTC must be basic + allowance, increasing PF & gratuity.
Impact:
Take-home salary may fall
Long-term retirement benefits rise
B. 48-Hour Weekly Limit, But Flexible Workweeks
Earlier: Mostly 8–9 hours/day, 6-day week.
Now: 48 hours/week remains, but companies can choose:
4-day week (12 hours/day)
5-day (9.6 hours/day)
6-day (8 hours/day)
Impact: Flexibility vs longer daily shifts.
C. Industrial Relations Becomes More Employer-Friendly
Earlier: Factories with 100+ workers needed government approval for layoffs/closure.
Now: Threshold raised to 300 workers.
Impact: Easier layoffs → unions say “hire-and-fire.”
D. Strikes Now Need Mandatory Notice
Earlier: Strikes in many sectors could be sudden.
Now: Workers must give 14-day strike notice, and cannot strike for 60 days after the notice.
Impact: Strikes become harder.
E. Fixed-Term Employment Legalised Nationwide
Earlier: Temporary workers had no legal clarity.
Now: Companies can hire for fixed durations with PF, ESI, gratuity.
Impact: More precarity vs formal benefits.
F. Single Licensing, Digital Compliance
Earlier: 10–20 separate licences, inspector visits, physical paperwork.
Now: One national licence & digital compliance.
Impact: Big ease for employers.
G. Gig & Platform Workers Get Social Security
(First time in India)
Food delivery, cab aggregators, e-commerce workers will get social security funds, insurance, and pension access.
Impact: Major step for informal sector welfare.
H. Penalties Reduced for Employers
Earlier: Multiple labour laws had jail terms for non-compliance.
Now: Jail provisions reduced to 22 offences, most replaced by monetary penalties.
Impact: Unions see this as weakening accountability.
2️⃣ WHAT WAS THE EARLIER SYSTEM & WHY WAS REFORM NEEDED?
Earlier regime was:
A. Fragmented: 29 different central laws
Overlapping definitions
Confusing compliance
Legal loopholes widely exploited
B. Inspector Raj & High Compliance Burden
Random inspections
Multiple registers, returns
Lack of digital transparency
C. Limited Coverage for Unorganised Workers
Only 10% of India’s workforce in the organised sector was fully covered.
D. Outdated Provisions
Factory Act, Trade Unions Act, Industrial Disputes Act — rules unchanged for decades despite new types of employment.
E. Rigid Hiring Rules
Companies, especially in manufacturing, avoided scaling above 100 workers to avoid strict layoff rules.
Why Reforms?
To improve:
Ease of doing business
Job formalisation
Attract manufacturing investment
Simplify labour compliance new labour codes
3️⃣ WHY ARE TRADE UNIONS PROTESTING? (In-Depth)
Here’s the full breakdown:
A. “Hire-and-Fire Culture”
Raising layoff thresholds from 100 → 300 workers allows companies to:
Fire workers without state approval
Close units more easily new labour codes
Unions fear: Permanent job security becoming rare.
B. Dilution of Right to Strike
Mandatory 14-day notice + 60-day restriction means:
No spontaneous strike
Strikes practically impossible in emergencies
Unions call this: “Criminalisation of peaceful protest.”
C. Long Daily Work Shifts (Up to 12 hours)
Though the weekly cap is same, daily shift becoming 12 hours is seen as:
Physically harmful
Reducing family/personal time new labour codes
D. Reduced Penalties for Employers
Reduction of jail terms seen as:
Favouring corporations
Weakening worker protection
Making violations easier new labour codes
E. Fixed-Term Jobs = No Job Stability
While benefits are included, fixed-term employees can be:
Let go anytime
Not unionised new labour codes
Used to replace permanent staff
F. Centralisation of Power
New codes shift power away from state governments, which unions believe:
Reduces local negotiation new labour codes
Weakens democratic oversight
G. Insufficient Social Security Funding
Though gig workers included, unions say:
No guaranteed funding
Companies can contribute very little
Benefits may remain “on paper”
4️⃣ WHO BENEFITS? WHO LOSES? —THE EASTERN TIMES ANALYSIS
Likely Winners
Large and medium businesses
Startups and manufacturing firms
Government’s Ease of Doing Business ranking
Workers seeking long-term PF & gratuity benefits
Gig workers accessing social security
Likely Losers
Permanent factory workers
Unionised workforce
Employees in units with 100–300 workers
Day-to-day wage earners facing longer working hours
Contract workers facing greater precarity
5️⃣THE EASTERN TIMES CONCLUSION: A MIXED BAG
The New Labour Codes represent India’s biggest structural reform since independence.
They simplify, modernise and digitise — but at the cost of worker bargaining power, job security and protest rights.
The challenge now is implementation:
How states enforce the codes
Whether gig workers actually receive benefits
Whether employers misuse flexibility
Whether long shifts become the norm
Whether worker safety is truly prioritised
India stands at a crossroads:
Will these reforms formalise employment or create a new era of precarious work?
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