Reforming Indian Labor Laws: Towards Simplicity and Inclusivity

India’s labor law landscape has long been described as one of the most complex in the world – a web of overlapping rules, definitions, and enforcement bodies that even legal experts found difficult to navigate. For decades, workers and employers alike operated under 29 separate central labor laws, many of them drafted during the pre-Independence era of the 1930s and 1950s, when the economy looked entirely different. The push to reform this system – and make it simpler, fairer, and more inclusive – culminated in a landmark legislative overhaul that finally came into full effect in November 2025. But does simplification alone mean better protection for every worker? That question sits at the heart of India’s ongoing labor law debate.

The problem with India’s old labor law framework 🔗

Before the reforms, India’s labor regulations were fragmented across dozens of statutes, each with its own definitions, authorities, and compliance requirements. A single factory could be subject to multiple overlapping laws – with different rules on wages, safety, disputes, and social security – all administered by separate government bodies. This multiplicity of laws led to genuine confusion, unpredictable enforcement, and heavy compliance costs, particularly for small businesses.

The Second National Commission on Labour had long recommended grouping these laws into four or five functional codes. The core criticisms of the old framework were consistent: it was hard to understand, harder to enforce, and in many places completely outdated. While most major economies had already consolidated their labor regulations in recent decades, India continued to operate under fragmented, complex, and in several parts outdated provisions spread across 29 central labor laws. The burden fell disproportionately on workers at the bottom of the wage ladder – those in informal, seasonal, or migrant work – who often had no awareness of what laws even applied to them.

According to the Periodic Labour Force Survey (2022-23), around 58.6% of workers do not have a written job contract, 46.8% are not eligible for paid leave, and 53.9% are not eligible for any social security benefits. Women, migrants, and Dalit workers remain disproportionately represented in this vulnerable segment of the workforce.

The 2020 labor code reforms: what changed 🔗

The Government of India consolidated 29 labor laws into four comprehensive 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 (OSHWC) Code (2020). All four came into full force on 21 November 2025, after years of drafting, consultation, and delayed state-level implementation.

Code on wages, 2019 🔗

This code merges four older wage-related laws – the Payment of Wages Act (1936), the Minimum Wages Act (1948), the Payment of Bonus Act (1965), and the Equal Remuneration Act (1976) – into a single legislation. Its most significant changes include a uniform definition of wages, a national floor wage below which no worker can be paid, and universal coverage for timely wage payment regardless of salary level. Gender equality in employment is also explicitly mandated – employers cannot discriminate on the basis of gender, including transgender identity, in recruitment, wages, or employment conditions for similar work.

Industrial relations code, 2020 🔗

This code consolidates three laws governing trade unions, standing orders, and industrial disputes. One of its most discussed changes is raising the threshold for government permission before retrenchment, layoffs, or closures from 100 workers to 300. While this gives smaller firms more flexibility in managing their workforce, it has sparked concerns among labor unions, as the increased threshold may dilute workers’ bargaining power in smaller establishments. The code also replaces the term “workman” with the gender-neutral “employee” and establishes two-member Industrial Tribunals for faster dispute resolution.

Code on social security, 2020 🔗

This is arguably the most expansive of the four codes, unifying nine laws on provident funds, employee insurance, maternity benefits, gratuity, and more. Critically, gig workers and platform workers are formally defined and recognized for the first time, with aggregators required to contribute 1%-2% of annual turnover to a social security fund. Fixed-term employees now become eligible for gratuity after just one year, compared to the previous requirement of five years. Maternity benefits have been extended to biological, adoptive, and commissioning mothers, and establishments above a prescribed threshold must provide crèche (childcare) facilities.

Occupational safety, health and working conditions (OSHWC) code, 2020 🔗

This code consolidates 13 laws, including the Factories Act (1948) and the Contract Labour Act (1970), and introduces several modernized requirements. It mandates medical check-ups for workers above a prescribed age in certain industries, requires Safety Committees in larger establishments, and formally permits women to work night shifts, subject to their consent and mandatory safety measures. Employers must issue appointment letters to all workers and maintain digital records. A single registration and compliance filing system replaces the earlier patchwork of multiple, overlapping filings.

How the codes aim to improve working conditions 🔗

Taken together, the four codes are designed to shift India’s labor governance from a punitive and bureaucratic model toward one that is more transparent and facilitative. The new Inspector-cum-Facilitator system, for example, repositions labor inspectors as guides who help employers achieve compliance, rather than solely as enforcers. A National OSH Board will set harmonised safety and health standards across sectors, and mandatory safety committees must be established in establishments with 500 or more workers.

For women workers specifically, the reforms mark a meaningful shift in legal recognition. The earlier laws were drafted in the 1930s and were built around a male, factory-based workforce – they did not anticipate the rise of the service sector, more women in gig and platform jobs, or the specific safety risks women face. The new codes address this gap through mandatory gender representation in Grievance Redressal Committees, equal pay protections extended explicitly to transgender persons, and the consent-and-safety model replacing outright exclusion from certain industries or working hours.

India’s social security coverage has expanded from about 19% of the workforce in 2015 to more than 64% in 2025 – a dramatic increase that the new codes aim to push even further, particularly for gig workers, migrant workers, and workers in the unorganised sector.

The critiques: who is still left behind? 🔗

Despite the scope of these reforms, labor rights advocates and researchers have raised significant concerns about whether the new codes genuinely protect India’s most vulnerable workers. The central criticism is straightforward: the codes are largely designed around the formal sector and set minimum thresholds by employee count that effectively exclude much of India’s workforce.

The informal sector gap 🔗

Informal sector workers are persistently plagued by non-payment of minimum wages, deplorable working environments, unhealthy living conditions, and a lack of access to social security. The new codes do not fully resolve this. The Social Security Code, for instance, covers establishments with 10 or more workers – which means the vast majority of India’s tiny enterprises and domestic workers remain outside the formal social security net. Maternity benefits only apply to women employed in establishments with 10 or more workers, effectively excluding a large number of women workers in the informal sector.

The four Labor Codes primarily focus on the formal sector and enterprises above a certain employee threshold, leaving out vast sections of the informal economy. With roughly 90% of India’s workforce in informal employment, this is not a marginal gap – it is the central challenge.

Gig workers: recognition without full rights 🔗

While the formal recognition of gig and platform workers is a genuine step forward, critics argue it does not go far enough. Gig workers remain outside traditional employer-employee frameworks, and the codes do not mandate contributions that would secure pensions, provident funds, or health insurance in the way permanent workers are protected. The aggregator contribution model (1-2% of annual turnover) is a starting point, but it falls well short of the comprehensive social security that formal employees receive.

Women’s safety and night shift provisions 🔗

The provision allowing women to work night shifts in all industries – framed as a progressive gender equality measure – has also drawn scrutiny. Without strong monitoring mechanisms, this provision could expose women to vulnerabilities in poorly regulated industries such as hospitality, manufacturing, and gig-based delivery. The “consent and safety” model only works if enforcement is robust – something India’s labor inspection system has historically struggled to deliver.

Delegation and skeletal frameworks 🔗

A structural critique running across all four codes is the heavy reliance on delegated legislation – meaning that many key protections are left to future state-level rules that may or may not be notified. The codes have done much to consolidate the existing labor law legislations into four classes, but critics argue that compilation cannot be equated to genuine consolidation, and that the amendment aspect of the reforms has proved insufficient. Implementation also remains uneven across states, creating a patchwork of compliance obligations that mirrors some of the very problems the reform was supposed to solve.

What genuine inclusivity would require 🔗

The labor code reforms are the most significant restructuring of India’s labor governance in decades, and their intent – to create a simpler, fairer, and more modern framework – is not in question. What remains in question is whether intent translates into lived protection for India’s most marginalized workers.

Scholars and civil society organizations consistently point to the same gaps: the codes are unlikely to make a meaningful difference until central and state governments actively engage with unorganized workers and their unions to understand their specific, sector-level challenges. Genuine reform requires not just legislative consolidation, but investment in enforcement infrastructure, worker awareness, and state capacity.

Gender-responsive labor policies – including workplace safety standards, childcare support, and flexible hours – are essential to closing the participation gap. Any reform that structurally excludes the workers most at risk, whether domestic workers, construction laborers, or women in informal gig roles, cannot be called fully inclusive regardless of the formal protections it offers on paper.

What do you think? The 2020 labor codes promise simplification and inclusivity, but a large share of India’s workforce remains in informal work with limited access to these protections – does legal recognition without robust enforcement actually change conditions on the ground? And when labor reforms are designed primarily around formal sector thresholds, can they ever be truly gender-inclusive given that women are overrepresented in informal, domestic, and gig work?

References

1. https://cjp.org.in/critical-examination-of-indias-new-labour-codes/
2. https://www.pib.gov.in/PressReleseDetailm.aspx?PRID=2192463&reg=3&lang=2
3. https://sambodhi.co.in/navigating-the-gaps-labor-laws-and-indias-informal-workforce/
4. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2192524&reg=3&lang=2
5. https://www.india-briefing.com/doing-business-guide/india/human-resources-and-payroll/india-new-labor-codes
6. https://www.staffingindustry.com/news/global-daily-news/india-rolls-out-four-labour-codes-in-historic-workforce-reform
7. https://www.littler.com/news-analysis/asap/indias-labor-law-overhaul-snapshot-key-changes
8. https://www.ungender.in/new-labour-laws-ungendering-workplaces-india/
9. https://idronline.org/article/rights/do-indias-labour-codes-address-informal-workers-needs/
10. https://www.theindiaforum.in/economy/impact-new-labour-codes-workers
11. https://www.tandfonline.com/doi/full/10.1080/23311886.2023.2238458