New Delhi, Nov 21 (NationPress) The introduction of the new Labour Codes signifies a pivotal change in India's workforce environment -- effectively balancing worker welfare with the operational efficiency of businesses, according to government data released on Friday.

Employment in India has experienced impressive growth, increasing from 47.5 crore in 2017-18 to 64.33 crore in 2023-24, representing a net addition of 16.83 crore jobs in just six years.

In the same timeframe, the unemployment rate has seen a significant drop from 6.0 percent to 3.2 percent, with 1.56 crore women joining the formal workforce, highlighting the Government’s commitment to inclusive and sustained labour empowerment.

“These provisions ease compliance, enhance safety, and promote fairness in wages. Furthermore, these reforms establish a foundation for a more equitable, transparent, and growth-oriented economy. They reaffirm India’s dedication to developing a modern labour ecosystem that empowers both workers and industries, paving the way for inclusive and sustainable progress,” the official statement indicated.

The four Labour Codes comprise the Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020, and the Occupational Safety, Health and Working Conditions Code, 2020.

This landmark reform simplifies compliance, modernizes outdated regulations, and creates an efficient framework that facilitates ease of doing business while protecting workers’ rights and welfare.

Empowering labour is fundamental to a prosperous and self-reliant India.

Labour law reforms are an ongoing endeavor. The Government remains committed to modernizing and refining the legislative framework to align with the evolving economic and industrial landscape of the nation.

The codification of 29 existing labour laws into four Labour Codes was undertaken to tackle long-standing challenges and enhance system efficiency. The codification aims to promote ease of doing business, boost job creation, and guarantee safety, health, social, and wage security for every worker.

The primary motivations behind this reform include simplifying compliance, streamlining enforcement, and updating obsolete laws.

According to the official statement, a key reason for rationalizing labour laws through codification was to simplify the registration and licensing framework by implementing the concept of a Single Registration, Single Licence, and Single Return, thereby reducing the overall compliance burden to stimulate employment.

The Code on Wages, 2019 aims to consolidate and rationalize the provisions of four existing laws: The Payment of Wages Act, 1936; The Minimum Wages Act, 1948; The Payment of Bonus Act, 1965; and The Equal Remuneration Act, 1976. It seeks to strengthen workers’ rights while promoting simplicity and uniformity in wage-related compliance for employers.

The Code establishes a statutory right to minimum wages for all employees across both organized and unorganized sectors. Previously, the Minimum Wages Act applied only to scheduled employments covering 30 percent of workers.

A statutory floor wage will be determined by the Government based on minimum living standards, allowing for regional variations. No state can set minimum wages below this level, ensuring uniformity and adequacy nationwide.

“Appropriate governments will determine minimum wages considering workers’ skill levels (unskilled, skilled, semi-skilled, and highly skilled), geographic areas, and job conditions such as temperature, humidity, or hazardous environments,” the statement noted.

Employers are prohibited from discriminating based on gender, including transgender identity, in recruitment, wages, and employment conditions for similar work. Provisions ensuring timely payment and preventing unauthorized deductions will apply to all employees, regardless of wage limits (currently applicable only to employees earning up to Rs 24,000/month).

Additionally, employers must compensate all employees with overtime wages at least twice the normal rate for any work performed beyond regular working hours. Employers, including companies, firms, or associations, are responsible for paying wages to their employees. Failure to do so holds the proprietor/entity liable for unpaid wages.

The new code alters the traditional role of “Inspector” to “Inspector-cum-Facilitator,” emphasizing guidance, awareness, and advisory roles in addition to enforcement to enhance compliance. First-time, non-imprisonable offenses can be compounded by paying a penalty. However, repeat offenses within five years cannot be compounded.

The Code replaces imprisonment for certain first-time offenses with monetary fines (up to 50 percent of the maximum fine), creating a less punitive and more compliance-oriented framework.

The Industrial Relations Code (IR Code) permits direct, time-bound contracts with full parity in wages and benefits, allowing gratuity eligibility after one year. This provision reduces excessive contractualization and provides cost efficiency to employers.

A Re-skilling Fund has been established, funded by industrial contributions equal to 15 days' wages for every worker retrenched, supplemental to retrenchment compensation. The fund will be credited to the worker's account within 45 days of retrenchment.

It encompasses sales promotion staff, journalists, and supervisory employees earning up to Rs 18,000 per month, ensuring proportional representation of women in grievance committees for gender-sensitive redressal.

The Code on Social Security, 2020, expands ESIC (Employees' State Insurance) coverage. ESIC now applies nationwide, eliminating the criteria of “notified areas.” Establishments with fewer than 10 employees may opt-in voluntarily with mutual consent from both employers and employees. Coverage will be mandatory for hazardous occupations and extended to plantation workers.

A five-year limit has been established for initiating EPF inquiries and recovery proceedings, to be completed within two years (extendable by one). The practice of suo-moto reopening of cases has been abolished, ensuring timely resolution.

Employers appealing EPFO orders are now required to deposit only 25 percent of the assessed amount (down from 40-70 percent), alleviating financial burdens and ensuring ease of business and access to justice.

New definitions such as “aggregator,” “gig worker,” and “platform worker” have been introduced to enable social security coverage.

“Wages” now encompass basic pay, dearness allowance, and retaining allowance; 50 percent of the total remuneration (or a percentage as may be notified) will be included to compute wages, ensuring consistency in calculating gratuity, pension, and social security benefits.

The fourth code, the Occupational Safety, Health and Working Conditions Code 2020, strikes a balance between protecting worker rights and safe working conditions while creating a business-friendly regulatory environment. This will stimulate economic growth and employment, making India’s labour market more efficient, equitable, and prepared for the future.

A uniform threshold of 10 employees has been set for electronic registration. One registration for an establishment is envisioned to replace the six registrations previously required under various Acts. This will create a centralized database and promote ease of doing business. The government can extend the Code’s provisions to any establishment, including those with a single employee, engaged in hazardous or life-threatening occupations.

Women are permitted to work in all types of establishments during night hours (before 6 AM, beyond 7 PM) with consent and safety measures in place, promoting equality and inclusion. “Working journalists” and “cine workers” now encompass employees in electronic media and all forms of audio-visual production.