Labour Reforms and Labour Codes UPSC: 4 Labour Codes, Laws and Types

By BYJU'S Exam Prep

Updated on: November 14th, 2023

Four Labour Codes were passed by the Indian Parliament in 2020 as a part of the Labour Reforms needed in the country. India will have the second-largest labour force after China in 2022, with a population of about 501 million people. In India, there are organized and unorganized sections of the labour force. The Concurrent List in India includes the issue of labour, allowing both the Parliament and state legislatures to pass laws on it. There were more than 40 central laws and more than 100 state laws governing labour and associated issues prior to the adoption of the new labour regulations.

Through this article, we will be discussing the Labour Reforms in the context of the recent Labour Codes. The article will also shed light on the types of Labour Codes and the future impact they would have on the Labour Reforms. The topic is extremely important for the upcoming UPSC Exam.

Labour Reforms

The Concurrent List of the Indian Constitution specifies labour as a subject, which means that both the Central and State governments may pass laws as long as certain issues are reserved for the Center. There were more than 40 central laws and more than 100 state laws governing labour and associated issues before adopting the new labour regulations.

  • The central labour laws should be grouped into categories such as industrial relations, wages, social security, safety, welfare, and working conditions, according to the Second National Commission on Labour’s (2002) recommendation.
  • For the sake of transparency and uniformity, the Commission recommended simplifying the labour rules.

4 Labour Codes

To replace 29 sets of labour regulations, the Parliament approved 4 labour codes in 2020 to integrate these numerous laws. All 4 Labour Codes have already been approved by the Parliament and have the President’s approval.

The 4 Labour Codes were effective from 01 July, 2022 onwards.

44 labour laws were combined into 4 types of codes under the new set of regulations, namely:

Code of Wages Act 2019

  • The measure attempts to open the door for implementing minimum wages and labour reforms in the nation by replacing outdated and ineffective labour laws with more transparent and responsible ones.
  • In each employment location where any industry, trade, business, or manufacturing is taking place, it supervises the wages and bonus payments.
  • It aims to guarantee every worker’s “Right to Sustenance,” universalizes the requirements for minimum wages and prompt payment of wages regardless of the industry or wage ceiling, and strives to strengthen the legal protection of the minimum wage.
  • The ability of the central government to set the minimum wage while considering workers’ living conditions.
  • The bill subsumes the following laws under it- The Payment of Wages Act, 1936; the Minimum Wages Act, 1948; the Payment of Bonus Act, 1965 and The Equal Remuneration Act, 1976,
  • The measure stipulates that employees who receive a monthly income must receive it by the seventh of the next month, those who work weekly must receive it on the last day of the week, and those who receive a daily wage must receive it on the same day.

Social Security Code Bill, 2020

  • It suggests creating a National Social Security Board to advise the federal government on creating appropriate programs for various categories of unorganized workers, gig workers, and platform workers.
  • A further requirement for aggregators using gig workers is that they make social security contributions of 1% to 2% of their annual revenue, with a maximum contribution of 5% of the total amount paid by the aggregator to gig and platform workers.

Occupational Safety, Health, and Working Conditions Code Bill, 2020

  • Interstate migrant workers move independently from one state to work in another, earning up to Rs. 18,000 a month, according to the criteria.
  • The suggested concept distinguishes between regular work and just contractual employment.
  • The former provision for temporary housing for employees close to the workplaces has been removed, and a journey allowance, a one-time payment of transportation costs to be made by the employer for an employee’s travel to and from their place of employment, has been proposed.

Industrial Relations Code Bill, 2020

  • The Industrial Employment (Standing Orders) Act of 1946 requires employers of industrial establishments with 100 or more employees to specify the terms of employment and standards of behaviour for employees.
  • Every industrial firm with 300 or more employees currently engaged or engaged on any day during the previous calendar year is subject to the new standing order requirement.
  • It also adds new requirements for executing a valid strike. Instead of just the time for conciliation, the prerequisites for workers before going on a lawful strike now include the timeframe for arbitration proceedings.
  • Additionally, it has been suggested to establish a fund for reskilling laid-off workers with support from the employer in the amount of the 15th day of their most recent paycheck.

Benefits of Labour Codes

The following are the benefits of the 4 Labour Codes:

  • The 2019 Code of Wage Act, which streamlines the concept of wages, is projected to decrease litigation. This will guarantee that every worker receives a minimum wage, which will also be accompanied by an increase in the worker’s spending power, so boosting economic growth.
  • The three Codes (IR, SS, and OSHW) consolidate 25 central labour regulations that have been on the table for at least 17 years, simplifying the labour rules.
  • It will significantly increase employment and industry while reducing the number of definitions and authorities that apply to firms.
  • The codes call for a solitary licensing procedure.
  • The guidelines also modernize the adjudication procedure and streamline outdated legislation governing industrial disputes, facilitating the early settlement of disputes.
  • Industry experts and some economists predict that this reform will increase investment and facilitate commercial transactions. It significantly lessens internal inconsistencies and complexity, boosts flexibility, and modernizes rules.
  • Women must be allowed to work at night in any industry, but it must be ensured that the employer has made provisions for their security and that they have given their approval before working at night.
  • The length of the maternity leave has been extended from 12 to 26 weeks. As a result of the Pradhan Mantri Rojgar Protsahan Yojana (PMRPY), women were permitted to work in mines.

Why are Labour Reforms Needed?

According to the theory of economic growth, greater GDP does not necessarily result in higher incomes for the lowest earners. To facilitate the creation of better-quality livelihoods for Indian residents now and in the future, the paradigm guiding employment and labour policies must also shift.

Gig Economy

Whether they are farmers, factory workers, or service workers, they must be heard within their businesses and during the policy-making process if the goal of labour reforms is to increase the ease of earning, better livelihoods for all citizens, and more dignity.

Labour Codes UPSC

The topic of Labour Codes and Labour Reforms in India is specifically covered under the UPSC GS Paper 2 Syllabus, which deals with government schemes and policies. With India being back on track post-pandemic, it was essential to implement the 4 Labour Codes under the Labour Reforms. Aspirants must stay updated with the topic and recent happenings through the Current Affairs.

Labour Reforms UPSC Questions

Question: A pregnant women employees is entitled to get paid maternity leave for

  1. 6 weeks
  2. 10 weeks
  3. 12 weeks
  4. 16 weeks

Answer: Option C

Question: A worker who has been employed in an office for more than a year but dismissed by his employer without any appropriate reason. This matter must be addressed under the

  1. Industrial Disputes Act, 1947
  2. Minimum Wages Act, 1948
  3. The Payment of Wages Act, 1936
  4. None of the Above

Answer: Option A

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