India's fragmented labour law regime — comprising 29+ central Acts — has been consolidated into 4 Labour Codes passed in 2019-2020. These codes aim to simplify compliance, extend social security to unorganised workers, and balance employer flexibility with worker protection. Though passed, implementation depends on states framing their rules.
The 4 Labour Codes
| Code | Year | Laws Subsumed |
|---|---|---|
| Code on Wages | 2019 | Minimum Wages Act, Payment of Wages Act, Payment of Bonus Act, Equal Remuneration Act |
| Industrial Relations Code | 2020 | Industrial Disputes Act, Trade Unions Act, Industrial Employment (Standing Orders) Act |
| Social Security Code | 2020 | EPF, ESI, PMSYM, EDLI, Maternity Benefit Act, Payment of Gratuity Act, Building & Construction Workers Act, Unorganised Workers Act |
| OSH Code (Occupational Safety) | 2020 | Factories Act, Mines Act, Dock Workers Act, Contract Labour Act, Beedi & Cigar Workers, Building & Construction Workers, Plantations Labour Act (13 Acts) |
Code on Wages 2019 — Key Changes
- Universal applicability — covers all employees regardless of wage ceiling
- Concept of "floor wage" — national minimum wage below which no state can set minimum wages
- Bonus: applicable to employees with salary up to Rs. 21,000/month; minimum 8.33%, maximum 20%
- Wages must be paid by 7th (monthly) / 14th (fortnightly) / 7th (weekly)
- Wages include basic + DA + retaining allowance — not HRA, bonus, PF, gratuity
Industrial Relations Code 2020 — Key Changes
- Fixed-term employment contracts permitted in all sectors (no restrictions)
- Threshold for seeking government permission to retrench/layoff/close changed to 300 workers (from 100)
- Works committees mandatory for establishments with 100+ workers
- Strikes: 60-day notice required in public utilities; 14-day notice in other establishments
- Trade union recognition: TU with 51%+ membership gets sole bargaining agent status
Social Security Code 2020 — Key Changes
- PF extended to all establishments with 20+ workers (same as before)
- ESI extended to establishments with 10+ workers; employee contribution: 0.75%, employer: 3.25%
- Gratuity for fixed-term employees: payable even before 5 years (proportionate to tenure)
- Gig workers and platform workers to be covered by social security
- Unorganised workers' social security fund
OSH Code 2020 — Key Changes
- Unified registration for establishments
- 10 hours max working hours per day; 48 hours per week
- Contract labour: if principal employer discontinues contract work, workers to be absorbed
- Annual health check mandatory for hazardous process workers above 45 years
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Frequently Asked Questions
How many labour laws do the 4 codes replace?
The 4 Labour Codes consolidate 29 central labour laws, significantly simplifying India's labour compliance framework.
What is the retrenchment threshold under the Industrial Relations Code 2020?
Government permission required to retrench, layoff, or close for establishments with 300+ workers (increased from 100 under the old Industrial Disputes Act).
What is the ESI employee and employer contribution rate?
Employee contribution: 0.75% of wages. Employer contribution: 3.25% of wages under the Social Security Code 2020.
Are gig workers covered under the Social Security Code?
Yes. The Social Security Code 2020 for the first time extends social security protection to gig workers and platform workers.
What is the maximum daily working hours under OSH Code 2020?
10 hours per day and 48 hours per week.
What is the Code on Wages definition of 'wages'?
Wages include basic salary, dearness allowance, and retaining allowance. Excluded: HRA, bonus, PF/ESI contributions, gratuity, and overtime allowance.
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