On November 21, the Union government said the four consolidated labour codes on wages, industrial relations, social security, and occupational safety and health had been brought into force, replacing 29 national labour laws, five years after Parliament had signed off on them and four years beyond the original 2021 deadline.
The gap was because labour is in the Concurrent List, so both the Union government and the states had to draft and finalise detailed rules under each code. The Centre had also said it wanted to bring all four codes into force together, which meant waiting until most of the states had completed their rule-making, of course many of them were slow to do this while others were reluctant (given trade-union opposition and criticism that the codes diluted protections and eased retrenchment). Then of course there was the COVID-19 pandemic, various Assembly elections, and the 2024 Lok Sabha election.
Anyway, in a statement accompanying the announcement, the Ministry of Labour and Employment presented the codes’ entering into force as an overhaul that would simplify compliance and extend social security and minimum wages to workers across sectors. In fact a substantial part of the Ministry’s claims rests on actual legal changes. They replace a patchwork of national and state laws with a more consolidated framework on wages, industrial relations, social security, and occupational safety and health such that employers already within the formal net now deal with a more coherent set of statutes and a single system of registrations and returns. The code on wages extends the minimum wage framework from “scheduled employments” to all employees, closing a formal gap that had left some occupations outside the statute even as some states expanded their schedules.
The codes also formally defined “gig workers”, “platform workers”, and “aggregators”, creating a legal basis on which the Union government could found schemes funded by “aggregator” contributions. The occupational safety code turns appointment letters into a statutory duty for all covered employers, including for existing workers, and introduces a general requirement of annual health check-ups for workers older than 40 years, extending a form of medical surveillance that was earlier confined largely to specified hazardous processes.
Unfortunately the announcement also has a pattern of overstatement that raises important questions about whether the Ministry is aware of the real constraints on what the new framework can deliver.
The foremost example is the Ministry’s language on social security coverage. According to the release, all workers “will get PF, ESIC, insurance and other social security benefits” — but the code does no such thing. It consolidates the statutes on PF, ESIC, maternity, gratuity, and employees’ compensation and empowers the Union government to frame schemes for new categories of workers and to extend the ESIC scheme to new sectors. Whether any given worker receives PF or ESI still depends on the notifications and the nature of the establishment.
Similarly, the ESI scheme has expanded gradually and its coverage still depends on notified areas and sectors; it’s also true that the codes give governments more flexibility to expand the scheme and makes it possible, in principle, to cover smaller establishments or individual workers involved in hazardous processes. However, the claim that “social protection coverage will be expanded to all workers” is really a policy aspiration tied to future notifications and resources rather than a statement of what the law already guarantees today.
Second, the shift from “inspectors” to “inspectors-cum-facilitators” means officials are now tasked not only with detecting violations and prosecuting violators but also with advising employers on how to comply and with using risk-based inspection plans that emphasise predictability and graded responses.
Risk-based inspections can in principle focus attention on more harmful sectors but in practice they can also narrow the number of surprise visits and turn inspection into a negotiated exercise. When the same official is expected to build cooperative relationships with employers while also being an enforcer, the incentive to treat violations as matters to be counselled away rather than penalised becomes stronger. And for workers in sectors where accidents are hidden and trade union presence is weak, the shift only weakens the prospect of government officials identifying and pursuing breaches.
The codes also preserve headcount thresholds for registration and for many duties on safety and social security. Many contractors and principal employers already respond to these thresholds — including in the last five years — by splitting operations across multiple small entities, by cycling workers through short-term engagements, and by labelling them as ‘partners’ or ‘volunteers’ so that no single establishment appears to cross the line that would trigger stricter obligations.
My ‘favourite’ example of such corruption in action is an incident in 2016 when “India’s 16 occupational safety laws couldn’t prevent two deaths” at the Anna University campus in Chennai. As Thomas Manuel wrote in The Wire at the time:
The needless tragedy of the two deaths is mirrored by the tragedy that is the state of the laws and public institutions set up to deal with incidents such as these. There are sixteen laws (and a dozen or more boards, directorates, inspectorates and other bodies) that deal broadly with the subject of working conditions and occupational health and safety (OHS) in India. But despite this seeming glut, the circumstances that led to the death of Shankar and Deepan seem to have contravened no law at all.
Like most such deaths, this one too was easily reduced to a question of compensation. U. Lakshmikanthan, Deputy Commissioner of Labour, stated that after reading the media reports on the deaths, he suo moto initiated a complaint, summoning representatives of the university and the employer to his office. But his intervention was only to adjudicate on the amount of compensation that would be paid to the family of the deceased as per the statutes of the Employees Compensation Act 1923. This Act discusses the terms on which compensation will be paid by the employer in the event of the death or disability of an employee. It doesn’t have anything to say on questions of occupational health in the strict sense. Lakshmikanthan did not disclose the compensation that had been decided but the maximum allowed under the law is approximately Rs 11 lakh.
The Directorate of Industrial Health and Safety (DISH) … reacted quite differently. P. Bose, the director of DISH, stated that after a preliminary investigation, it was decided that the case did not fall within his purview. It didn’t come under the Factories Act 1948 as Kavimeena Rubber Products employed less than ten people and the incident happened outside the manufacturing premises. It also wasn’t covered by the Building And Other Construction Workers (Regulation Of Employment And Conditions Of Service) Act, 1996, because – again – more than ten workers were required for the Act to apply as well as the fact that the cost of construction had to be more than ten lakh rupees.
An inspector-cum-facilitator abiding by risk-based protocols and time limits may never see the full picture of a fragmented workforce and may lack both the mandate and the institutional backing to piece it together. In the event of a serious injury or death, thus, principal employers and contractors can still argue over who — if anyone — had a direct employment relationship with the worker and whether the work even fell within the categories the codes explicitly regulate.
Finally, in the Ministry’s announcement, there are paragraphs on beedi rollers, plantation workers, media workers, mine workers, IT staff, dock workers, and export units — but no discussion of sanitation workers employed through layers of contractors and others who perform tasks that often amount to manual scavenging by another name, and where deaths are frequent.
For these workers, the concerns are still whether the principal employer can keep them off the books and whether inspectors and courts will push past the chain of contracts to fix liability on those who control the work and profit from it. The codes contain some tools that could help — e.g. treating workers supplied by an unlicensed contractor as if they were directly employed by the principal employer — but the communique overall only highlights more general welfare themes.
Indian labour law has long been more protective than practice on the ground would suggest. The codes plug some genuine gaps, update definitions, consolidate a mosaic of statutes, and extend certain obligations. But for informal workers or those working in small, unregistered units, reform continues to depend on whether employers and contractors are registered at all, whether inspectors have the mandate and capacity to look beyond paperwork, and whether state governments choose to use the discretion the codes give them to broaden coverage.