The Government of India has officially notified and brought into force the four Labour Codes, replacing 29 old labour laws. This is the biggest restructuring of labour regulations since Independence.
The goal is to make the laws simple, uniform, worker-friendly, and business-friendly.
These codes apply to wages, industrial relations, social security, and occupational safety & working conditions.
Page Contents
- 1. Code on Wages, 2019
- 2. Industrial Relations Code, 2020
- 3.Code on Social Security, 2020
- A. Major Social Security Benefits Covered
- Detailed Gratuity Provisions Under the Enactment
- 4. Occupational Safety, Health & Working Conditions (OSH) Code, 2020
- Common Features Across All Codes
- Why These Enactments Matter
- In Summary (Layman Version)
1. Code on Wages, 2019
(Deals with salary, minimum wage, payment rules, and wage definition)
This Code combines 4 old wage laws and provides clear, nationwide rules on how workers must be paid.
Key Provisions Explained Simply
A. Minimum Wage & National Floor Wage
- Every worker in India must get at least a minimum wage.
- The Central Government will decide a floor wage for the entire country.
- No state can set wages below the national floor wage.
B. Timely Payment of Wages
- Employers must pay wages within the fixed time limit without delay.
- This rule applies to all employees, not only those earning below a particular wage ceiling.
C. Equal Pay for Equal Work
-
Men and women must receive equal pay for equal work or work of similar nature.
D. Standard Definition of “Wages”
- A single, uniform definition of wages is used under all labour laws.
- If allowances exceed 50% of total salary, the extra amount will be added back to wages.
- This prevents companies from artificially reducing wages to avoid PF, gratuity, etc.
Newly Enacted Implementation Points
- Companies must maintain digital wage registers.
- Wage-related inspections will be done by inspector-cum-facilitators using an online system.
- Minimum wage revisions will be done every five years, as permitted by law.
2. Industrial Relations Code, 2020
(Deals with trade unions, hiring/firing rules, dispute resolution, and industrial peace)
This code merges 3 old laws and aims to create a balance between worker rights and business flexibility.
A. Hiring & Retrenchment Without Permission
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Industrial establishments with up to 300 workers can hire or retrench workers without prior government approval.
(Earlier this limit was 100.)
B. Recognition of Trade Unions
- A union with 51% membership becomes the sole negotiating union.
- If no union crosses 51%, a negotiating council is formed.
C. Grievance Redressal Committee
- Every establishment with 20 or more workers must have this committee.
- At least one woman member is compulsory.
D. Dispute Settlement & Tribunal Reforms
- Disputes must be resolved within a fixed time frame.
- The Code encourages conciliation and mediation before formal litigation.
Newly Enacted Points
- Mandatory strike notice period in public utility services.
- Online filing of disputes and digital compliance dashboards.
3.Code on Social Security, 2020
(Deals with PF, ESI, maternity benefits, gratuity, gig workers, welfare schemes)
This is the largest and most inclusive of the four codes.
A. Major Social Security Benefits Covered
The following benefits are provided to workers:
- Provident Fund (PF)
- Employees’ State Insurance (ESI)
- Maternity Benefit
- Gratuity
- Employee Compensation
- Life, disability & dependent benefits
- Old-age protection
These are extended to:
- Organized sector workers
- Unorganized workers
- Gig workers
- Platform workers
- Self-employed workers
- Fixed-term employees
- Migrant workers
Detailed Gratuity Provisions Under the Enactment
Gratuity rules have been modernized and expanded through this Code.
1. One-Year Eligibility for Fixed-Term Employees
- A fixed-term employee becomes eligible for gratuity after one year of continuous service.
- This is a major reform (old laws required five years).
2. In Case of Death or Disablement
- The 5-year condition is removed for all workers.
- Gratuity becomes immediately payable to:
- dependents
- nominees
- legal heirs
3. Continuous Service Explained
An employee is considered in continuous service even if absent due to:
- sickness
- accident
- maternity leave
- lockout/strike
- temporary closure
- laid-off period
This protects workers from losing gratuity due to unavoidable breaks.
4. Digital Gratuity Settlement
- Claims can be submitted on an online central portal.
- Employers must settle gratuity claims within a time-bound period.
- Late payment attracts interest and penalties.
5. Uniform Definition of Wages
-
Gratuity must be computed using the new wage definition, preventing manipulation of salary components.
6. Increase in Gratuity Ceiling
-
The Central Government is empowered to revise the gratuity ceiling (₹20 lakh currently) without amending the Act.
Gig Workers & Platform Workers
For the first time in India:
- Gig workers (freelancers, app-based workers)
- Platform workers (Swiggy, Zomato, Ola, Uber, Amazon Delivery partners)
are formally included in social security legislation.
Aggregator Contribution
- Companies must contribute 1% to 2% of their annual turnover.
- This money goes to a Social Security Fund for gig workers.
4. Occupational Safety, Health & Working Conditions (OSH) Code, 2020
(Deals with worker safety, health checks, working hours, women’s safety, migrant labour)
This Code combines 13 old laws into one unified system.
A. Workplace Safety
-
Standard safety rules apply across factories, construction sites, mines, docks, and plantations.
B. Women Allowed Night Shifts
- Women can work at night with their consent.
- Employer must ensure:
- safe transport
- CCTV
- female supervisors
- safe working environment
C. Health & Welfare Facilities
Employers must provide:
- clean drinking water
- separate toilets
- first-aid arrangements
- canteens (where required)
- adequate ventilation and lighting
D. Annual Health Check-ups
- Mandatory for workers in hazardous occupations.
- Free annual health check-ups for all workers above 40 years.
E. Migrant Workers
- Single inter-state migrant worker licence for contractors.
- Workers can register themselves through Aadhaar-linked mobile apps.
Common Features Across All Codes
A. One Registration, One Licence, One Return
- Big relief for businesses.
- Replaces multiple state and central filings.
B. Inspector-cum-Facilitator System
- Inspectors will act more like advisors to help businesses comply.
- Randomized, computer-generated inspection system to avoid harassment.
C. Complete Digitalization
- Unified online portal for:
-
- PF
- ESI
- Gratuity
- Migrant worker registry
- Gig worker welfare schemes
D. Uniform Definitions
-
Terms like wages, employee, employer, establishment, continuous service are standardized.
Why These Enactments Matter
For Workers
- More social security coverage
- Faster wage payments
- Better safety
- Gratuity after 1 year for fixed-term staff
- Access to PF, ESI, maternity benefits
- Gig workers get legal protection
For Employers
- Less paperwork
- Clear rules
- Flexibility in hiring
- Digital records
- Faster dispute resolution
In Summary (Layman Version)
The new Labour Codes make:
- salary rules simpler
- worker benefits stronger
- gratuity easier to get
- gigs/platform workers protected
- workplaces safer
- paperwork lesser
- industrial disputes fewer
This is India’s most modern and simplified system of labour laws till date.
Author Bio
This article is most useful to understand new labour codes on one page. Thanks