Labour Codes and the Gaps in Worker Protection

Context

The implementation of India’s labour reform framework has sparked renewed debate over worker welfare, as several operational regulations are perceived to inadequately protect gig workers, fixed-term employees, contract labourers, and trade unions despite the enactment of the four labour codes.

What are the New Labour Reforms?

Unified Labour Framework

• Labour Codes – Operational from November 21, 2025, the reforms consolidate numerous labour legislations into a streamlined regulatory structure.
• Purpose – To simplify compliance procedures, strengthen workforce participation, and adapt labour governance to emerging employment patterns.
• Vision – To create a productive labour market capable of supporting industrial growth, employment generation, and economic self-reliance.

Major Codes Under the Reform Package

• Wage Code, 2019 – Integrates four legislations, including laws governing minimum wages and bonus payments.
• Industrial Relations Code, 2020 – Brings together laws relating to industrial disputes and worker organisations.
• Social Security Code, 2020 – Merges multiple social protection laws covering provident fund, insurance, and maternity benefits.
• Occupational Safety and Working Conditions Code, 2020 – Consolidates workplace safety, welfare, and employment-condition regulations across sectors.

Which Shortcomings Persist in the Implementing Regulations?

Importance of Operational Rules

• Execution Mechanism – Rules provide detailed procedures required for enforcing legislative provisions.
• Interpretative Role – They become particularly significant where statutory provisions leave room for discretion.
• Expectation vs Reality – Stakeholders anticipated clearer worker-friendly safeguards, but many ambiguities continue.

Challenges in Fixed-Duration Employment

• Formal Recognition – The Industrial Relations Code institutionalises fixed-duration employment arrangements.
• Absence of Service Limits – No prescribed minimum contract period or cap on repeated renewals exists.
• Potential Consequence – Employers may increasingly replace permanent positions with continuously renewed short-term contracts.
• Worker Insecurity – Extremely brief employment spells can undermine job stability and income security.

Unclear Wage Benchmarking

• Floor Wage Ambiguity – Regulations do not clearly differentiate the concept of a floor wage from statutory minimum wages.
• Consultative Deficit – Although States are to be consulted, procedures for meaningful consultation remain unspecified.
• Implementation Concerns – This may reduce state participation to a procedural formality.

Biases in Wage Determination

• Outdated Consumption Norms – Wage calculations continue to rely on traditional family consumption assumptions.
• Gender Inequality – Adult women continue to be assigned lower consumption weights than men, influencing wage fixation outcomes.
• Structural Impact – Such assumptions may reinforce gender disparities within labour policy.

Issues with Hour-Based Wage Calculation

• Current Methodology – Hourly wages are derived by dividing daily wages by eight working hours.
• Conceptual Limitation – This assumes workers can obtain work throughout the remaining day, which may not be realistic.
• Global Practice – Several countries determine hourly wage standards independently rather than deriving them from daily rates.
• Emerging Relevance – The issue is particularly important for domestic workers and platform-based service providers.

Why Do Platform and Gig Workers Continue to Face Risks?

Undefined Employment Status

• Regulatory Gap – The Social Security Rules do not clearly define employer-worker relationships in digital labour platforms.
• Continued Classification – Gig workers remain categorised as self-employed members of the unorganised sector.
• Implication – Access to labour rights and social protections remains uncertain.

Unresolved Gratuity Protection

• Insurance Provision Missing – Rules do not operationalise gratuity insurance mechanisms envisioned under the Code.
• Worker Exposure – Employees remain vulnerable if employers fail to fulfil gratuity obligations.
• Implementation Vacuum – Detailed procedures for enforcement are absent.

Trade Union Recognition Barriers

• Membership Requirement – A single trade union must secure at least 30% workforce membership to obtain recognition.
• Impact on Smaller Unions – Emerging or smaller unions may struggle to achieve the threshold.
• Collective Bargaining Concerns – Worker representation may weaken further amid declining union influence.
• Additional Observation – The membership threshold originates from the Rules rather than the parent legislation.

Lack of Clarity on Fixed-Term Contracts

• Regulatory Silence – Rules do not clarify conditions for engagement, extension, or repeated renewal of fixed-term workers.
• Risk of Misuse – Employers may exploit the uncertainty to avoid creating regular employment opportunities.

Which Worker Protections Remain Inadequately Addressed?

Sector-Specific Welfare Deficiencies

• Safety Framework – Occupational safety regulations prescribe broad workplace welfare standards.
• Missing Benefits – Certain sector-specific protections, including housing and healthcare support for plantation labourers, are not explicitly covered.
• Coverage Concern – Welfare entitlements may become uneven across occupations.

Contract Labour Uncertainty

• No Activity Classification – Rules do not identify tasks suitable for contract labour deployment.
• Core vs Peripheral Work – The distinction between essential and non-essential activities remains undefined.
• Operational Implication – Contract workers could increasingly be deployed in critical operational roles without clear safeguards.

Lost Regulatory Opportunity

• Unresolved Controversies – Several contentious provisions highlighted by labour organisations and scholars remain untouched.
• Persisting Ambiguity – Key questions regarding employment security and worker rights continue unresolved.
• Overall Outcome – The regulatory framework leaves significant room for interpretation, potentially diluting worker protections.

What Lies Ahead?

• Strengthening Employment Security – Clear limits on fixed-term contracts and renewals are necessary to prevent excessive casualisation.
• Refining Wage Policies – Wage determination should adopt transparent and gender-neutral methodologies.
• Protecting Gig Workers – Legal recognition of employment relationships and social security coverage must be strengthened.
• Empowering Worker Representation – Recognition norms should facilitate rather than hinder collective bargaining.
• Clarifying Contract Labour Use – Defining permissible sectors and distinguishing core functions from ancillary activities remains essential.
• Improving Welfare Standards – Sector-specific safety, housing, healthcare, and welfare provisions should be incorporated to ensure comprehensive labour protection in a rapidly evolving economy.

Source : The Hindu