Context:

The Union Ministry of Labor and Employment has set a deadline of March 31, 2025, for all states and Union Territories (UTs) to finalize and publish the draft rules for the four labour codes.

More on the News

As per the Union Ministry of Labour and Employment, 32, 31, 31 and 31 States/Union Territories have pre-published the draft rules under the following four codes respectively: -

• The Code on Wages, 2019, 
• The Industrial Relations Code, 2020, 
• The Code on Social Security, 2020 and 
• The Occupational, Safety, Health and Working Conditions Code, 2020.

The ministry has identified the following reforms in labour laws.  

• Single Registration 
• Single Return 
• Firm-based common licence with five years validity.

In 2024, 6 regional meetings were held to facilitate State/UT Governments for framing the Rules within the ambit of Labour Codes.

About Labour Reforms

The Parliament passed the 4 labour Codes to replace 29 existing labour laws dealing with wages, social security, occupational safety and industrial relations.

The Code on Wages, 2019: It replaces/subsumes 4 laws related to wages and bonus payment:

• The Payment of Wages Act, 1936 
• The Minimum Wages Act, 1948 
• The Payment of Bonus Act, 1965 
• The Equal Remuneration Act, 1976

The Industrial Relations Code, 2020: The code replaces 3 labour laws:

• The Industrial Disputes Act, 1947 
• The Trade Unions Act, 1926 
• The Industrial Employment (Standing Orders) Act, 1946

The Code on Occupational Safety, Health and Working Conditions, 2020: The Code consolidates 13 existing Acts regulating health, safety, and working conditions. These include:

• The Factories Act, 1948 
• The Mines Act, 1952 
• The Contract Labour (Regulation and Abolition) Act, 1970 
• Inter-State Migrant Workmen Act, 1979

The Social Security Code, 2020: It replaces 9 laws related to social security. These include: 

• The Employees’ Provident Fund Act, 1952 
• The Maternity Benefit Act, 1961 
• The Unorganised Workers’ Social Security Act, 2008

Significance of the Labour Reform

The four labour codes aim to:

• Address labour market rigidities while prioritizing worker welfare and rights.
• Simplify regulatory compliance and improve ease of doing business.
• Since ‘labour’ as an item came under the Concurrent List of the seventh schedule of the Constitution, there were over 100 states and 40 central laws regulating the various aspects of it.
• And thus, there was a need to club these laws together to improve ease of compliance and ensure uniformity. 

Key objectives include:

• Decriminalization of minor offences to reduce litigation and compliance burdens.
• Focus on skill development to create a skilled workforce for a dynamic economy.
• Efficient dispute resolution with stronger mechanisms for fairness and efficiency.