Shortcomings of four labour codes in India!

By M.Y.Siddiqui

India’s four new labour codes on wages, social security, industrial relations and occupational safety aim to ostensibly simplify 29 central laws, yet face criticism for reducing worker protection, empowering employers, and leaving vast informal sector gaps. Key issues include strict strike limitations, high employee thresholds for layoff approvals, and ambiguous protections for gig workers. Experts on workings of earlier labour laws or industrial relations maintain that the four labour codes are primarily intended to serve the RSS agenda to benefit employers or corporates at the costs of workers’ welfare. It is perceived to be disadvantageous to the working class.

Key shortcomings of the four labour codes are restricted right to strike, expansion of fixed time employment, increased threshold for layoffs, unclear gig worker coverage, inadequate coverage for informal sector, fragmented protections, inspection power dilution, enforcement weakness, ambiguity in wage determination. Common shortcomings across all the four Codes include excessive delegated legislation, lack of uniformity, conflict of interest. Industrial Relations Code introduces strict conditions, 14-day notice, 60-day cooling-off and mandates that 75 percent of workers must vote to strike, weakening collective bargaining. The Code legalizes fixed term employment enabling ‘hire and fire’ policies without the same protections as permanent employees. Increased threshold for layoffs allows firms with up to 300 employees, previously 100 to layoff workers without government permission.

The codes promote fixed term contracts, which may reduce employment stability and provide unequal bargaining power between workers and employers. The Industrial Relations Code makes strikes nearly impossible by requiring a 14-day notice for all industries and a 60-day cooling off period, essentially banning prompt industrial action. There are inadequate coverage and security for workers. The Social Security Code extends to gig/platform workers. In this case, the implementation mechanisms are vague, and benefits are not clearly guaranteed. Key protections like safety regulations are tied to workforce size, with thresholds raised for factories from 20 to 50 workers, excluding many small enterprises and their small workers. The requirement that 75 percent of workers must vote for a strike to be legal is seen as an attempt to dilute the role of unions. This reduces trade union power.

Implementation and regulatory concerns involve ‘Inspector-Facilitator’ role, delegated legislation, uniformity issues, wage definition, and excluded coverage. The shift from inspector ‘inspector-cum-facilitator’ is criticized as a conflict of interest, potentially weakening compliance monitoring. Many crucial aspects, including definitions of benefits and wage thresholds, are left to government rule making, leading to uncertainty. As labour is on the Concurrent List of the Constitution of India, where executive power can be exercised by both the Central and State governments, concurrently or separately from each other, lack of uniform, nation-wide rules across states could lead to a fragmented labour market. The Code on wages does not strictly define the method for calculating a living wage, leaving it to the central government to set a floor wage. The Code also excludes coverage of unpaid labour. The codes largely fail to account for women’s unpaid care work and informal working arrangements.

The labour codes are still not fully implemented, with many states yet to finalise their respective rules. Despite the grand sales pitch by the RSS Pariwar union government, trade unions say the new labour codes weaken job security and lock workers into unstable employment!

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