Wider social security net to minimum wage: Long stalled, labour reforms roll in
Draft rules to be published within a week; 45-day feedback window to be given
Labourers are loading the sacks filled with harvested paddy grain in a truck at grain market near sirhind road in Patiala. (Source: Express Archives) Over five years after they were cleared by Parliament, the Centre on Friday implemented the four long-pending labour codes covering wages, industrial relations, social security and working conditions.
Welcoming the announcement, Prime Minister Narendra Modi described the codes as “one of the most comprehensive and progressive labour-oriented reforms since Independence”.
A senior official told The Indian Express that the Government is likely to pre-publish draft rules for the labour codes within a week, after which it will provide a 45-day window for public comments before finalising the rules. Some of the provisions of the codes that relate to the industry may come into effect from April 1, 2026, the official said.
The Parliament had cleared the Code on Wages in 2019 and the rest of the three codes in 2020 — Industrial Relations Code; Code on Social Security; and Occupational Safety, Health and Working Conditions Code. They will replace 29 Central labour laws and are aimed at widening the social security net for all workers, including gig workers as they define gig and platform work and aggregators for the first time. The Ministry of Labour and Employment said there will be a provision for compensation for accidents occurring while travelling between home and workplace that will now be treated as employment-related accidents. “Aadhaar-linked Universal Account Number will make welfare benefits easy to access, fully portable, and available across states, regardless of migration,” it said. The codes will also define a National Floor Wage along with mandating timely wage payments.
However, the codes have certain contentious provisions such as the norms for fixed-term employment, retrenchment and curtailment of the right to strike by trade unions for which they had earlier come under criticism from trade unions.
The Prime Minister said these labour reforms will build a future-ready ecosystem that protects the rights of workers and strengthens India’s economic growth. “It also significantly simplifies compliance and promotes ‘Ease of Doing Business.’ These Codes will serve as a strong foundation for universal social security, minimum and timely payment of wages, safe workplaces and remunerative opportunities for our people, especially Nari Shakti and Yuva Shakti,” he posted on X.
Taking to X, Union Labour Minister Mansukh Mandaviya posted that the new codes will ensure “appointment letters for the youth, equal pay and respect for women, gratuity for fixed-term employees after one year of employment, free annual health check-ups for workers above 40 years of age, double wages for overtime, 100% health security for workers in hazardous sectors, and social justice for workers as per international standards”.
Another Government official said the codes have been notified and draft rules will be issued in 5-7 days. “Rules will keep coming. But all the sections that do not require rules will be implemented immediately,” the official said. As labour is a concurrent subject, the Centre and states have to frame laws and rules. A majority of the states, over 18 of them, have already carried out labour laws-related changes, except West Bengal, the official said.
The Government will engage with the public and stakeholders in the finalisation of the corresponding rules, regulations, schemes, etc., under the codes, in line with wide-ranging consultations carried out during the drafting process. “During transition, the relevant provisions of the existing labour Acts and their respective rules, regulations, notifications, standards, schemes, etc., will continue to remain in force,” the Ministry of Labour and Employment said.
Ten central trade unions including Indian National Trade Union Congress (INTUC), All India Trade Union Congress (AITUC ), Hind Mazdoor Sabha (HMS), Centre of Indian Trade Unions (CITU), Trade Union Coordination Centre (TUCC), Self Employed Women’s Association (SEWA), All India Central Council of Trade Unions (AICCTU), Labour Progressive Federation (LPF) and United Trade Union Congress (UTUC) condemned the “blatantly unilateral implementation of anti-worker, pro-employer labour codes”.
“In unequivocal terms we call it the Union Govt’s deceptive fraud committed against the working people of the nation…in spite of the stiff resistance, the ruling regime in the Union Govt, dizzied with the victory in Bihar elections has felt super empowered to make effective the four labour codes from today as per the media reports and tweets by the Ministry of Labour & Employment. The Central Trade Unions Joint platform had urged to convene the Indian Labour Conference (ILC) immediately and had urged for scrapping of labour codes even in the meeting convened by the Ministry on 13th November on draft Shram Shakti Niti 2025.
“Even in the pre-budget consultation meeting held on 20th November by the Ministry of Finance it was urged on behalf of the Joint Platform of Trade Unions to scrap labour codes and convene ILC, which has not been held after 2015. The government remained obstinately unresponsive. Instead, without heeding to any of the appeals, protests and strikes of the central Trade Unions, this Union government has made effective the labour codes to cater to the demands of employers’ representatives and BMS and other fringe supporters of the Govt made in the pre-budget consultative meeting,” a joint statement by the 10 unions said.
Backing the Government’s announcement, Confederation of Indian Industry (CII) Director General Chandrajit Banerjee said, “By consolidating 29 diverse laws, these Codes ensure better wages, stronger social security, enhanced workplace safety and a more predictable regulatory environment for both workers and industry. A resilient workforce and a progressive labour framework remain vital to India’s growth story — and this landmark decision will decisively advance the nation’s journey toward a more inclusive, innovative and Aatmanirbhar Bharat.”
Experts said the recent move towards bringing in laws for social security for gig workers by a few states such as Karnataka, Telangana, Bihar and Rajasthan would have also played a role in the Centre moving ahead with its Social Security Code. “One hopes the implementation aspects of the codes will be taken care of as the Code on Wages and Social Security Code, touch the lives of millions of people. A few state governments moved towards providing special security for gig workers. That has also exercised pressure on the central government to implement these codes…there were e-Shram registrations but they did not make much progress causing grave concern as they are necessary for extension of minimum wage and social security…I would consider first two years as a period of experimentation and plugging of the loopholes. The full impact of the codes can be realised once the implementation hassles are sorted out,” K R Shyam Sundar, Professor of Practice, Management Development Institute said.
Under the four labour codes, the Ministry said women will be permitted to work in night shifts and in all types of work (including underground mining and heavy machinery), subject to their consent and mandatory safety measures.
The labour codes also introduce the concept of Fixed Term Employment (FTE), under which the employers will be able to hire workers directly under a fixed-term contract, with the flexibility to tweak the length of the contract based on the seasonality of industry. These workers, however, will be treated on a par with regular workers during the tenure of the contract. “Workers will receive benefits equivalent to permanent staff. FTE guarantees workers get leave benefits, regulated working hours, and medical benefits. Workers will receive wages equal to permanent employees, which can be higher than minimum wages, thereby increasing income opportunities and expanding social security benefits,” the Ministry said.
Under FTE, the Ministry said the workers will become eligible for gratuity after one year of continuous service. At present, gratuity is given after five years of continuous service. “FTE will lead to the migration of contractual employment into the establishment’s permanent employment structure, and not the conversion of permanent jobs into FTE,” it said.
The Code on Wages seeks to redefine the break-up of wages to increase the share of the basic pay component — a provision to enable higher provision for social security for establishments, especially in the service sector. Earlier, in February 2019, an expert committee on determining the methodology for minimum wages had suggested a uniform Rs 375 a day (Rs 9,750/month) or five regional wages ranging from Rs 342-447 a day (Rs 8,892-Rs 11,622/month). A new committee is likely to be formed now, sources said.
The codes also aim to expand the social security provisions for workers out of the coverage of the government’s welfare schemes as of now. According to the Code on Social Security, aggregators employing gig workers have to contribute 1-2 per cent of annual turnover for social security, with the total contribution not exceeding 5 per cent of the amount payable by the aggregator. The Government is working towards finalising the contours of this scheme, officials said.
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