Overview Of New Labour Codes, 2020

With a view to simplify and reform archaic labour laws and to facilitate employment growth while protecting workers rights, the Government of India had decided to consolidate 29 central labour laws into 4 labour codes, Namely :

  1. The Code on Wages, 2019
  2. The Code on Social Security, 2020
  3. The Occupational Safety, Health and Working Conditions Code, 2020
  4. The Industrial Relations Code, 2020


The Code on Wages was passed by the Parliament and received the President’s assent in August 2019.On September 23, 2020, the Parliament of India passed remaining 3 long awaited labour codes and thereafter received President’s assent on September 29, 2020.

Soon after getting the codes passed in Parliament, the ministry had in October said that it intend to implement the rules under the codes from the beginning of the next financial year i.e by April 2021.


1) The Code on Wages, 2019 :

  • The Code on Wages, 2019 seeks to consolidate and simplify four pieces of legislation :
    • Payment of Wages Act, 1936,
    • Minimum Wages Act, 1948,
    • Payment of Bonus Act, 1965 and
    • Equal Remuneration Act, 1976
  • This Code is the first of the four labour codes which has now become an Act.
  • Having brought together various previous legislations under a single umbrella, the Code has expanded the definition of “employer” as well as “employee”, resulting in a broad based applicability of the regulations and is now applicable to employees in both organised and unorganised sectors.
  • Further, the provisions of the Minimum Wages Act and the Payment of Wages Act used to apply only to workers drawing wages below a particular ceiling and working in scheduled employments only. However, under the Code, the minimum wages and the payment of wages provisions cover all establishments, employees and employers as defined unless specifically exempt (the member of the Armed Forces of the Union and apprentice engaged under the Apprentices Act, 1961 are specifically excluded from the definition of employee).


2) The Code on Social Security, 2020 :

  • The Social Security Code subsumes 9 labour laws relating to social security :
    • The Employees’ Compensation Act, 1923
    • The Employees’ State Insurance Act, 1948
    • The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
    • The Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959
    • The Maternity Benefit Act, 1961
    • The Payment of Gratuity Act, 1972
    • The Cine-Workers Welfare Fund Act, 1981
    • The Building and Other Construction Workers’ Welfare Cess Act, 1996 and
    • The Unorganised Workers Social Security Act, 2008.
  • The Code aims to provide better social security benefits such as provident fund, insurance and gratuity to workers.
  • It extends the reach of the Employees’ State Insurance Corporation and the Employees’ Provident Fund Organization (which regulate benefits such as provident fund, insurance, pension, etc.) to the workers in the unorganised sector and the platform and gig workers.
  • The Code further stipulates gratuity benefit for fixed term employees without any condition for minimum service period as envisaged under the current regime.


3) The Occupational Safety, Health and Working Conditions Code, 2020 :

  • The OSH Code subsumes 13 labour laws relating to safety, health and working conditions :
    • The Factories Act, 1948
    • The Contract Labour (Regulation and Abolition) Act, 1970
    • The Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979
    • The Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996
    • The Mines Act, 1952,
    • The Dock Workers (Safety, Health and Welfare) Act, 1986
    • The Plantations Labour Act, 1951
    • The Working Journalists and Other Newspaper Employees (Conditions of Service) and Miscellaneous Provisions Act, 1955
    • The Working Journalists (Fixation of Rates of Wages) Act, 1958
    • The Motor Transport Workers Act, 1961
    • The Sales Promotion Employees (Conditions of Service) Act, 1976
    • The Beedi and Cigar Workers (Conditions of Employment) Act, 1966 and
    • The Cine-Workers and Cinema Theatre Workers (Regulation of Employment) Act, 1981.
  • The Code aims to regulate the occupational safety, health and working conditions of workers employed in establishments.
  • The Code seeks to widen its applicability on different types of workers such as audio visual workers, inter-state migrants or sales promotion employees.
  • It also attempts to promote gender equality by allowing women workers to work at night subject to obtaining their consent.
  • The Code further introduces the concept of deemed registration of establishments to circumvent the prolonged delays in administrative processes and provides that if an establishment is registered under any concerned law, it shall be deemed to be registered under the this Code.


4) The Industrial Relations Code, 2020 :

  • The IR Code subsumes 3 labour laws relating to industrial relations :
    • The Trade Unions Act, 1926
    • The Industrial Employment (Standing Orders) Act, 1946 and
    • The Industrial Disputes Act, 1947.
  • The Code aims to streamline the laws regulating industrial disputes and trade unions in India.
  • For the benefit of the employers, the Code has introduced various aspects such as increasing the threshold of workers to three hundred (300) for obtaining the consent of the concerned government in case of lay off, retrenchment or closure of the establishment, notice of change not required to be given subject to the conditions stipulated in the IR Code, increasing the wage threshold to INR 18,000 (Indian Rupees Eighteen Thousand) for exclusion from the definition of worker, etc.


In the changed economic scenario post COVID-19 pandemic, the government has to balance the rights of workers and economic recovery. These Bills make significant changes to regulation of labour and the employer-employee relationship in several ways.