Critiquing the New Labour Codes: Balancing Worker Rights and Economic Growth

India’s four new Labour Codes – the Code on Wages (2019), the Industrial Relations Code (2020), the Code on Social Security (2020), and the Occupational Safety, Health and Working Conditions (OSH) Code (2020) – represent the most sweeping restructuring of labour law in the country in decades. The government consolidated 29 existing statutes into these four codes to simplify compliance, reduce regulatory fragmentation, and modernise India’s workforce governance. But behind the legislative ambition lies a serious and growing debate: do these reforms actually protect workers, or do they quietly prioritise the ease of doing business over labour rights? For workers in the informal sector – and particularly for women, agricultural labourers, and the self-employed – the answer is far from settled.

The scale of India’s informal workforce 🔗

To understand why the critique of the new Labour Codes runs deep, it helps to grasp the sheer scale of India’s informal economy. According to IDR Online, India has approximately 110 million informal sector workers engaged in agriculture, construction, small factories, domestic work, ragpicking, street vending, and more. As of May 2022, over 94 percent of workers registered on the e-Shram portal reported a monthly income of ₹10,000 or less. The Rosa Luxemburg Foundation notes that over 90 percent of India’s workforce falls outside the formal, organised sector – with self-employment constituting 55.8 percent of all employment, casual labour at 22.7 percent, and regular employment accounting for only 21.5 percent. These workers typically lack written contracts, have no job security, receive subsistence-level wages, and face unsafe working conditions. This is the population the Labour Codes were supposed to reach. Critics argue the Codes fall well short of that goal.

Limited coverage and exclusions 🔗

One of the most persistent criticisms of the new Labour Codes is that they fail to extend meaningful protection to the workers who need it most. The Codes apply based on establishment size – and the thresholds have been raised, not lowered, compared to earlier law.

Threshold increases that exclude small establishments 🔗

As reported in a detailed analysis of the Codes, the new framework doubled the thresholds for coverage – from 10 to 20 workers in power-driven units, and from 20 to 40 workers in non-powered establishments – effectively excluding millions of workers from legally enforceable safety and health regulations. Contract labour safeguards were similarly weakened by raising the licensing threshold from 20 to 50 workers, sharply reducing oversight and transferring workplace risks from employers to workers. For women workers, who are disproportionately concentrated in small enterprises and home-based work, these raised thresholds mean that formal legal protections remain out of reach. Al Jazeera’s reporting on the Codes quoted the labour rights group Aajeevika Bureau, warning that linking social benefits to the size of the establishment would leave out millions of informal workers performing home-based work or employed in small units.

Agricultural and self-employed workers left behind 🔗

Agriculture is the single largest employer of women in India, yet it remains outside the primary scope of the Labour Codes. The India Forum’s analysis points out that the Social Security Code 2020 does not fully embrace the universalisation of social security as a legislative right. For instance, the definition of a “factory” retains threshold limits tied to worker numbers, meaning that unorganised sector workers in smaller enterprises still fall outside the scope of social security provisions. Many factories in the small and medium enterprise (SME) category employ fewer than 10 permanent workers – putting them beneath the floor of coverage entirely. For self-employed workers, who make up the majority of India’s workforce, the protections offered by the Codes are even more tenuous. As the Rosa Luxemburg Foundation observes, social security in India remains sector-specific and limited, providing coverage to only a fraction of informal workers whose arrangements blur the line between employment and self-employment.

Gig workers: recognition without rights 🔗

The Code on Social Security formally recognises gig and platform workers for the first time – a step that has been widely cited as progressive. However, Citizens for Justice and Peace (CJP) notes that this recognition is largely hollow. Gig workers remain outside traditional employer-employee frameworks, and the Code does not mandate contributions that would secure pensions, provident funds, or health insurance for them. The responsibility for social protection is shifted from employers to the state, entrenching precarity in the rapidly expanding platform economy. Women who drive this gig economy – from platform-based home-care workers to aggregator-linked domestic helpers – face the same gap between legislative acknowledgement and enforceable rights.

Challenges in defining worker protections 🔗

Even where the Codes do extend coverage, the definitions they use are vague enough to create significant grey areas – and those grey areas tend to disadvantage the most vulnerable workers.

The ambiguity around “hazardous processes” 🔗

The Occupational Safety, Health and Working Conditions (OSH) Code, 2020 consolidates 13 earlier laws into a single framework. On paper, it offers an enabling provision that allows the government to extend its coverage to any establishment engaged in hazardous or life-threatening activities, even if it employs just one worker. India Briefing confirms this provision as part of the Code’s design. However, critics point out that the application of what constitutes a “hazardous process” is left largely to delegated legislation – meaning the detailed rules are to be framed by the Central or State governments at a later stage. CJP’s analysis describes all four Codes as having “skeletal legislative frameworks” where substantial amounts of lawmaking are deferred to future rules. This means that some of the most critical safety protections for workers in construction, mining, textiles, and chemical industries exist as legislative promises rather than implemented realities. For women working in hazardous industries – such as fireworks manufacturing, beedi rolling, and chemical processing – this ambiguity carries real physical risk.

Safety committees: limited in reach 🔗

The OSH Code mandates that formal safety committees be established in workplaces – but only in establishments with 500 or more workers. As compliance guides for manufacturing HR confirm, these committees are responsible for monitoring safety practices, reviewing incidents, and recommending corrective actions. The threshold of 500 workers, however, means that the vast majority of Indian establishments – which are small and medium in scale – are not legally required to constitute such bodies. For workers in smaller firms, there is no formal, structured mechanism for raising safety concerns or challenging unsafe conditions. Women workers, who are already less likely to occupy positions of workplace authority, lose a critical avenue for institutional representation when safety committees are optional or absent.

The inspector-to-facilitator shift 🔗

A structural change embedded in the Codes has drawn sharp criticism from labour rights advocates: the transition from labour inspectors to “Inspector-cum-Facilitators.” Sabrang India’s critical appraisal explains that this shift moves the enforcement philosophy away from deterrence and toward self-certification and advisory compliance. Surprise inspections are replaced by web-based randomised checks – a model that assumes employers will voluntarily comply with safety and welfare norms. In an economy where labour violations are systemic and informalisation is widespread, this assumption is difficult to sustain. The practical result is weaker state oversight in sectors notorious for exploitation, including construction, textiles, and mining – all of which employ significant numbers of women.

Balancing worker welfare and business interests 🔗

At the heart of the critique lies a fundamental tension: the Labour Codes were designed to attract investment and reduce the “compliance burden” on businesses, but critics argue this objective has come at the direct cost of worker protections.

Raising the threshold for retrenchment 🔗

Under the Industrial Relations Code, only establishments with 300 or more workers are now required to seek government permission before carrying out layoffs, retrenchments, or closures. The earlier threshold was 100 workers. Fisher Phillips’ legal analysis confirms this increase as a central feature of the Code. While proponents argue this gives businesses the flexibility needed to respond to market conditions, labour unions and policy analysts see it as a significant rollback of job security for workers in medium-sized firms. The CJP notes that economic studies show greater job insecurity pushes workers into informal or precarious employment, undermining long-term industrial stability – a consequence that falls disproportionately on women, who are more likely to be employed in the affected establishment sizes.

Standing orders made optional for most firms 🔗

The India Forum’s review highlights that the Industrial Relations Code now requires standing orders – formal documents governing terms of employment, work hours, leave, and misconduct procedures – only in establishments with 300 or more employees. The earlier threshold was 100. In establishments employing fewer than 300 workers where certified standing orders are not in place, there are no guaranteed written terms for workers. This ambiguity disproportionately affects women workers, who are far more likely to need formal documented protections when filing complaints about discrimination, sexual harassment, or unfair dismissal.

The tension between formalisation and flexibility 🔗

The Codes introduce and validate Fixed-Term Employment (FTE) – a provision that allows employers to hire workers on fixed contracts for any duration. On one hand, FTE workers are entitled to wages and social security benefits proportional to their tenure. On the other hand, The India Forum warns that this provision could accelerate the erosion of regular employment, which has already been declining in India in both the formal and informal sectors. Women who depend on continuous employment for maternity benefits, provident fund accumulation, and gratuity entitlement are particularly exposed to the instability that rotating fixed-term contracts can create. KPMG’s assessment of the Codes also notes that Central and State rules are still being finalised, creating a dual compliance environment and uncertainty about eventual regulatory alignment – leaving workers in a period of legal limbo even as the Codes are technically in force.

What the codes get right – and where the gap remains 🔗

It would be reductive to dismiss the Labour Codes entirely. Several provisions represent genuine advances. The Code on Wages mandates equal pay for equal work and prohibits gender-based discrimination in wages and recruitment – provisions that align with ILO principles on gender parity in wages. The OSH Code formally permits women to work night shifts and in all types of establishments, including underground mining and heavy machinery, subject to their consent and adequate safety measures – dismantling long-standing occupational exclusions. The Social Security Code extends maternity benefits of 26 weeks to women in the unorganised sector for the first time, and mandates crèche facilities in establishments with 50 or more employees. Proportional representation of women in grievance redressal committees is also required under the new framework.

Yet the gap between legislative intent and ground-level implementation is wide. IDR Online concludes that the Labour Codes are unlikely to make a tangible difference until Central and State governments actively engage in dialogue with unorganised workers and their unions, understand sector-specific challenges, and invest in enforcement infrastructure. Without strong political will and administrative capacity, the promise of simplification risks becoming, in practice, a weakening of protections for millions of workers – many of them women – who have the most to gain and the most to lose from how these Codes are finally implemented.

What do you think? Given that the majority of India’s women workers are employed in the informal sector, do the new Labour Codes genuinely address their needs – or do the raised thresholds and deferred rules simply replicate old exclusions under a new legal framework? And in balancing “ease of doing business” with worker welfare, who should bear the greater burden of that compromise?

References

1. https://www.fisherphillips.com/en/news-insights/indias-new-labor-codes.html
2. https://idronline.org/article/rights/do-indias-labour-codes-address-informal-workers-needs/
3. https://www.rosalux.de/en/news/id/53666/indian-workers-need-rights-not-benefits
4. https://www.wsws.org/en/articles/2026/02/11/icja-f11.html
5. https://www.aljazeera.com/economy/2020/9/24/why-indias-new-historic-labour-laws-may-not-work-for-workers
6. https://www.theindiaforum.in/economy/impact-new-labour-codes-workers
7. https://cjp.org.in/critical-examination-of-indias-new-labour-codes/
8. https://www.india-briefing.com/news/how-indias-new-osh-code-reshapes-labor-compliance-40915.html/
9. https://blog.xoxoday.com/empuls/understanding-the-oshwc-code-under-indias-labour-code-what-manufacturing-hr-must-know/
10. https://sabrangindia.in/indias-new-labour-codes-a-critical-appraisal/
11. https://kpmg.com/in/en/blogs/2025/12/indias-labour-codes-reforms-to-reality.html