DAW 24TH November 2025, Mains Answer Writting 2026
Question
Discuss the merits and demerits of the four ‘Labour Codes’ in the context of labour market reforms in India. What has been the progress so far in this regard? (250 Words, 15 Marks).
Model Answer
Approach:
Introduction:
Four Labour Codes unify 29 laws to simplify compliance, support Ease of Doing Business, and expand social security- especially for informal and gig workers- aligned with Article 43.
Body:
Merits of the Labour Codes
Demerits and Concerns
Status of Implementation
Conclusion:
The Labour Codes offer transformative simplification and wider social security, but their success hinges on effective implementation and inclusion of informal and gig workers, supporting SDG-8 and the goal of Viksit Bharat 2047.
Introduction:
India’s labour laws were long fragmented across multiple legislations, creating compliance complexity and limiting labour market efficiency. In line with Article 43, which calls for securing a living wage and humane working conditions, the Government- following the recommendations of the Second National Commission on Labour- consolidated 29 central laws into four comprehensive Labour Codes:
Code on Wages: Standardized wage and bonus payments.
Industrial Relations Code: Streamlines dispute resolution and labour relations.
Occupational Safety, Health, and Working Conditions Code (OSHWC): Ensures safe and healthy working conditions.
Code on Social Security: Expands social security benefits.
Together, these Codes seek to boost the ease of doing business while expanding social security and protections for workers, especially in the informal and gig sectors. "The saving of labour of the individual should be the object and honest humanitarian considerations, and not greed, the motive." - Gandhiji.
Body: Merits of the four labour codes:
Simplification and Rationalisation of Labour Laws:
The consolidation of 29 laws into 4 Codes reduces compliance burden through uniform definitions and integrated registrations.
Example: The Code on Wages replaces four separate wage laws like the Minimum Wages Act and Payment of Wages Act.
Universal and Fair Wage Protection:
The Codes ensure a universal minimum wage and timely payment for all workers, including the unorganised sector.
Example: The National Floor Wage ensures no worker receives wages below the minimum living standard.
Enhanced Ease of Doing Business:
Greater flexibility in hiring and retrenchment encourages investment and a more dynamic labour market.
Example: Firms with up to 300 workers can now lay off employees without prior government approval (Industrial Relations Code).
Expansion of Social Security Coverage:
Social security benefits have been extended to previously excluded groups like gig, platform, and unorganised workers.
Example: Aggregators like Uber, Ola, Swiggy, Zomato must contribute to a social security fund (Code on Social Security).
Improved Worker Safety and Workplace Welfare:
The OSHWC Code strengthens safety norms, welfare facilities, and working conditions, especially in hazardous sectors.
Example: Mandatory safety measures, ventilation, lighting, and welfare provisions in industries like construction and mining.
Time-Bound Dispute Resolution and Better Industrial Relations:
Structured processes for grievance redressal and collective bargaining reduce industrial disputes.
Example: Companies with 20+ workers must form a Grievance Redressal Committee (Industrial Relations Code).
Promotion of Formalisation:
Bringing informal and unorganised workers into formal systems promotes financial security and accountability.
Example: Mandatory registration of migrant workers through online portals for access to portability of benefits.
Flexibility with Protection via Fixed-Term Employment:
Fixed-term employment gives firms flexibility while ensuring full benefits to workers.
Example: Fixed-term workers are entitled to same wages and social security as permanent employees.
Stronger Gender Equality and Social Welfare:
The Codes reinforce equal pay, safe working conditions, and continued maternity benefits.
Example: Equal wages for work of similar nature under the Code on Wages; 26 weeks maternity leave under Social Security Code.
Demerits of the Four Labour Codes:
Weakening of Collective Bargaining and Right to Strike:
The Codes make strikes more difficult by introducing longer notice periods and higher voting thresholds.
Example: The Industrial Relations Code mandates a 60-day strike notice and requires 75% worker approval, reducing the ability of unions- similar to the backlash seen after Brazil’s 2017 labour reforms.
Job Insecurity Due to Employer-Friendly Provisions:
Increasing the threshold for prior government approval for layoffs may lead to easier retrenchment.
Example: Factories with up to 300 workers can retrench employees without government permission, raising concerns for job security in MSMEs.
Inadequate Social Security for Informal, Gig, and Platform Workers:
While intended to expand coverage, the Code lacks clear mechanisms for actual implementation and enforcement.
Example: Gig workers with platforms like Swiggy or Uber remain unsure about contribution rates, registration, and benefit delivery- similar to early issues faced by California’s gig-worker law (AB5).
Ambiguity and Over-Delegation of Powers:
Several critical definitions and entitlements are left to delegated legislation, leading to legal uncertainty.
Example: Definitions of “wages,” “worker,” and “gig worker” can vary across states, risking differing interpretations and compliance burdens.
Uneven Implementation Across States:
Labour being a Concurrent List subject leads to variation in rules and delayed implementation.
Example: Many states have not yet fully notified rules under the Codes, resulting in fragmented timelines and regional disparities.
Insufficient Occupational Safety Provisions:
While safety is emphasised, enforcement capacity remains weak, especially in high-risk sectors.
Example: Construction and mining sites often lack adequate inspections, leading to frequent accidents despite provisions in the OSHWC Code.
Power Imbalance in Fixed-Term Employment:
Fixed-term contracts allow flexibility but may worsen workers’ bargaining position due to employer discretion over renewal.
Example: Workers on seasonal manufacturing contracts may avoid raising grievances fearing non-renewal, weakening long-term job security.
Limited Awareness Among Workers:
Large sections of the unorganised and rural workforce remain unaware of their rights under the new Codes.
Example: Many informal and migrant workers are still not registered on the e-Shram portal, limiting access to benefits despite legal provisions.
Impact on Migrant Workers Despite Provisions:
Though the Codes mandate digital registration, lack of inter-state coordination limits real portability of benefits.
Example: Migrant workers in states like Maharashtra and Gujarat face delays in receiving PDS and social security benefits due to incomplete database integration.
Progress of Labour Codes Implementation:
State-specific Progress: Some states like Madhya Pradesh and Gujarat have moved ahead with notifying certain aspects of the Codes, while others are still in the consultation stage.
E.g.: Gujarat has notified rules under the Industrial Relations Code.
Final Notification of All Four Codes in Nov 2025- Major Policy Shift
On November 21, 2025, the government officially implemented all four Codes, marking the biggest transformation of labour law since Independence.
Example: The Codes now guarantee universal social security (including gig workers), gender pay parity, night-shift rights for women, gratuity after 1 year for fixed-term employees, and a national floor wage.
Implementation Challenges Ahead: Compliance Burden, Digital Systems & Social Security Rollout
Even after notification, execution remains complex- especially for MSMEs, gig-worker funds, and digital enforcement platforms.
Examples:
Gig and platform worker Social Security Boards are still being operationalized.
MSMEs warn of higher ESIC/PF costs.
The Unified Shram Suvidha Portal is being upgraded for real-time compliance and e-governance.
Conclusion:
The Labour Codes mark an ambitious step toward streamlining India’s labour framework by enhancing the Ease of Doing Business while expanding social security. Yet, their real impact depends on swift implementation, awareness, and continuous stakeholder feedback.
Strengthening digital literacy, ensuring inclusion of informal and gig workers, and adopting global best practices- such as Denmark’s “flexicurity” model- can help India balance labour market flexibility with worker protection.
A coordinated and transparent approach will be crucial for achieving SDG-8 (Decent Work and Economic Growth) and realising the vision of Viksit Bharat 2047.