Four Labour Codes Explained: Benefits, changes, and what workers must know

Four Labour Codes: In a historic decision, the Union government has announced the implementation of the four Labour Codes, which rationalised 29 existing labour laws, with immediate effect. "The four labour codes have been notified and now they are the law of the land," said Labour Minister Mansukh Mandaviya at a press conference in New Delhi. This landmark move lays the foundation for a future-ready workforce and stronger, resilient industries driving labour reforms for Aatmanirbhar Bharat, a ministry statement said.

Four New Labour Codes

1. The Code on Wages, 2019
2. The Code on Social Security, 2020
3. The Industrial Relations Code, 2020
4. The Occupational Safety, Health and Working Conditions Code, 2020

Impact of the new labour codes

This historic reform ensures that workers gain easier access to security, dignity, health, and welfare measures, reinforcing India’s commitment to a fair and future-ready labour ecosystem.

Codification of 29 existing labour laws into four labour codes

The codification of 29 existing labour laws into four Labour Codes was undertaken to address long-standing challenges and make the system more efficient and contemporary. The codification aims to enhance ease of doing business, promote employment generation, ensure safety, health, social and wage security for every worker.

Benefits for Contractual Workers

1. Fixed-term employees (FTE) will increase employability and ensure social security, legal protection like benefits equal to permanent employees.
2. Fixed-term employees will become eligible for gratuity after one year of continuous service.
3. Principal employer will provide health benefits and social security benefits to contract workers.
4. Promoting preventive healthcare: Workers to get free annual health check-up.

Benefits for Gig and Platform workers

1. 'Gig work', 'Platform work', and 'Aggregator' have been defined for the first time in the Code.
2. Provision of Welfare Fund - Aggregators must contribute 1-2% of annual turnover, capped at 5% of the amount paid or payable to gig & platform workers.
3. Aadhaar-linked Universal Account Number will make welfare benefits easy to access, fully portable, and available across states, regardless of migration

Benefits for Women Workers

1. Gender discrimination is legally prohibited.
2. Equal pay for equal work has been ensured.
3. Women are permitted to work night shifts and in all types of work (including underground mining and heavy machinery), subject to their consent and mandatory safety measures.
4. Maternity benefits including upto 26 weeks of paid leave, crèche facilities, and flexibility to work from home.
5. Women workers to get health benefits - medical bonus of Rs 3,500.
6. Provision to add parents-in-law in Family Definition of Female Employees, expanding dependent coverage and ensuring inclusivity.

Key reasons behind the reform

Simplifying compliance: Multiplicity of laws leads to difficulty in compliance.
Streamlining enforcement: Multiplicity of authorities in different labour laws led to complexity and difficulty in enforcement.
Modernising outdated laws: Most labour legislations were framed during the pre-Independence era, necessitating alignment with today’s economic realities and technological advancements.

Moreover, the development also simplifies the registration, licensing framework by introducing the concept of a Single Registration, Single License, and Single Return, thereby reducing the overall compliance burden to spur employment.