Explained: Labour Reform Bills, 2020

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The parliament of India has passed three labour reform bills by voice vote amid opposition’s disapproval namely: 1) Code on Occupational Safety, Health and working conditions; 2) Industrial Relations Code, and 3) Social Security Code.

The labour ministry had drafted 4 Codes to consolidate 29 central laws. Out of these 4 Codes, 3 had received approval from the parliament of India and 1 Code which concerned wages had already been enacted last year. The government has held nine rounds of tripartite consultations to draft these Codes.

Objectives and Premise of the Bills

The objectives of these bills are to provide all kinds of facilities and a healthy environment for workers. The main purpose of labour reform is to provide a transparent system to suit the changing business environment. In other words, these bills were enforced to safeguard the interests of workers and to provide them with universal social security.

The Occupational Safety, Health, and the Working Condition Code, 2020 deal with the laws related to health, occupational safety, and working conditions of workers. The Industrial Code, 2020 deals with the laws related to trade union, particularly the conditions of employment. It also amends the laws related to the investigation and settlement of disputes concerning workers.

Lastly, the Code on Social Security, 2020 deals with the laws related to social security for both workers of organized and unorganized sectors.

Code on Wages

The Code on Wages, 2019 is also known as the ‘wage code’. This Code consolidates the provision of 4 labour laws concerning wages and bonus payment related matters.

This Code ensures guaranteed minimum pay and timely payment to workers. It has universalized the provision of minimum wages and timely payment of wages to all employees, irrespective of the sector and wage ceiling. Furthermore, the Code seeks to abolish wage discrimination between men and women, as well as, transgender people. This is, of course, a unique approach towards gender equality as well. It seeks to address all issues related to delays in payment of wages and provisions relating to the equal payment.

The Government’s Stance

Labour Minister Santosh Gangwar said: “[t]he purpose of this reform is to provide a transparent system to cope with the changing business environment.” He also said that these bills would expand the ambit of the Employee Provident Fund Organization and the Employees State Corporation of India. It would safeguard the interests of workers by providing them with social security. This move is said to be game-changing and will fulfil PM Modi’s resolution to ensure universal social security.

The said reforms are considered to be a “Milestone for the welfare of workers.” These bills would balance the needs of workers, industry, and other stakeholders. Resultantly, it will provide an effective and conducive environment, and will take care of issues related to it.

RCP Singh JD(U) supports this bill by stating that it is a win-win situation for both the employer and employee. The right to strike is not taken away, whereas it was made mandatory to give prior notice to sort out differences through harmonious discussion during the period. Moreover, the amendment addresses the issue of gig workers, online platform workers, gender discrimination, and equal wages.

The Code provides powers to the state government on rules related to hiring, retrenchment, and fixing work hours in factories. It also ensures that the government extends social security to all organized, unorganized, and gig workers.

The Bill would give autonomy to states to amend labour laws to suit their industrial needs without seeking the Centre’s permission.

Opinion of Opposition

The Codes were criticized for being anti-labour. It is considered that simplifying 40 Central and 100 State Labour Laws into 4 Codes is problematic.

In order to provide a proper definition to the unorganized workers/ gig workers and others, the government could have expanded the ambit. Rather, the government has chosen to restrict the definition of a worker through this new Code.

It was made available for only 2 days with hundreds of pages where MPs themselves had less chance to study them. It was introduced during the recession and unemployment, without consulting workers. It is reported that the government had an opportunity to bridge the gap between social security for formal and informal workers, but failed to do so. The labour ministry did not consult all stakeholders on introducing the new Bill after substantial changes.

The Industrial Relations Code mandates for a notice for doing strike before 60 days. It is said that the notice that leads to automatic conciliation and striking during conciliation is illegal. So, it prohibits the right to strike.


Amid opposition, the parliament of India passed 3 labour reform bills this year. The NDA government has merged 29 Central Laws into 4 Codes where the Code on wages was already passed by parliament last year.

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