Labour codes

Background and evolution

Several states, including Rajasthan, Madhya Pradesh and Uttar Pradesh, had already amended their labour laws in the 2010s to raise thresholds and simplify rules, and studies of those reforms informed the codes. During the COVID-19 lockdown, some states temporarily suspended many labour laws to revive industry, which sparked controversy and highlighted the need for a stable national framework.

India's labour laws grew piecemeal over a century, with dozens of central acts and many more state acts covering wages, factories, trade unions, disputes, provident funds and other matters. Overlapping definitions, multiple registers and inspections made compliance burdensome, especially for small firms, while most workers, in the informal sector, were outside the scope of protection altogether. Economists argued that rigid rules on retrenchment and closure discouraged firms from growing and hiring formally, while unions worried that reform would weaken job security.

The Second National Commission on Labour in 2002 recommended grouping laws into a few codes. After years of consultation, Parliament passed the four codes in 2019 and 2020. Implementation was delayed because states had to frame their own rules. This page looks at the codes as an attempt to balance flexibility for employers with security for workers, and at what they mean for the structure of employment.