Legal ViewOpinion

Less paper work, more security for workers and greater freedom for the industrialists

Government have passed Labour Reforms from the parliament to regulate and protect the interests of workers rights in India. There were 44 central labour laws which used to exist. Out of these 44 laws, 12 were old and were of no use. So they were previously repealed. The remaining 29 laws comprised of a total of 1232 sections.

Under the Labour Reforms, these 1232 sections from 29 different laws have been clubbed and simplified into 479 sections in merely 4 acts. These reforms have reduced the paper work and formalities by making 1 registration, 1 inspection and 1 return. These reforms have ended the limit of 100 workers to use perverse incentive for MSMEs. These have further reduced the litigation costs as well as compliance costs. Reforms have additionally ended the inspector raj by introducing faceless inspections. Other benefits of the reforms includes Night shifts for women is permitted with proper safety measures. Definition of Migrant workers have been made comprehensive due to which there rights could be protected and they could avail all benefits. Dignity of labours along with assured wages and other benefits have been extended to the labours throughout. These reforms could certainly make India’s position better in ease of doing business.

First of the 4 new acts passed is ‘Code on Wages’. This act has been introduced by clubbing 4 acts into 1. The new act provides Statutory rights for workers with respect to minimum salary and timely wages and is applicable for both organised sector and unorganized sector. Earlier there were over 500 Classifications of minimum wages which use to make it difficult for the workers to claim their rights. The new act standardized the classification and divided it into merely 12 types. Modi government have focused more on Skill development, so this act have put skill as a determinant to fix wage of the workers.

Another Act passed by the government in parliament is the Industrial Relations Code. This act has been introduced by clubbing 3 acts into 1. The new act increased the retrenchment limit to 300 from 100. This act mandates payment of 15 days of wages per completed year of service if retrenched. This act mandates companies to have re-skilling fund for the retrenched workers. This will allow Industries to have proper functioning. Along with this, Fixed term employment has been introduced where workers can be directly hired without any middlemen contractors and be granted all benefits. This act will strengthen rights of both industrialists and workers. There has been issues of strike which has been taken care by thus act. A notice period of 14 days before strike has been made mandatory so to avoiding flash strikes. This will allow better negotiations and avoid unnecessary stoppage of work.

Another Act passed by Government to strengthen the labour laws is Occupational Safety & Health Code. It is formed by the clubbing 13 acts into 1. Earlier, 6 registrations were required which has been reduced to 1 in the new act. Earlier, 4 licenses were required which has been reduced to 1. Earlier, 21 returns had to be filed which has been reduced to 1. This will allow less paper work which has been the demands of industrialists since ages. As per the new act, a single all India valid license is required for hiring contract workers which will be valid for 5 years. New act have raised the applicability threshold of law increased from 10 (power) and 20 (non-power) to 20 and 40 respectively. To promote new companies, the act have made provisions through which they may be exempted from the laws by specific local orders for a time period so to grow. Mechanism of welfare provisions has also been simplified under the new act.

Last of the labour reforms has been introduced through Social Security Code which has been formed by clubbing 9 acts into 1. The new act have extended the Employment’s State Insurance Corporation to every district of the country, thus covering more workers. The new act have also extended the social security measures for the workers throughout platforms and backgrounds. Furthermore, this have allowed welfare funds and social security features to be available for workers from unorganized sector which was only available to workers from organised sector earlier.

The Labour Reforms have made labour laws of India as per the International standards. The reforms have allowed less paper work, more security for workers and greater freedom for the industrialists.

Author: Adv. Shashank Shekhar Jha
Legal Editor,

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