Minimum wage to social security, labour reforms set for rollout

NEW DELHI: In one of the biggest reform initiatives, the Centre on Friday announced the implementation of the four labour codes, enacted five years ago, to replace 29 laws. The rollout, which will require notification of rules, comes within a week of a resounding electoral mandate in Bihar for the governing NDA after similar successes in Maharashtra, Haryana, and Delhi.

The biggest workforce regulation recast in decades is aimed at increasing the employability of women and ensuring safety, ensuring that gig workers are eligible for social security benefits, salaries are paid on time, and minimum wage is guaranteed.

At the same time, the laws provide more flexibility and certainty to businesses at a time when the economy is dealing with global headwinds. Investors have often cited India's archaic labour laws as one of the stumbling blocks while deciding on setting up factories in India and have flocked to countries such as Vietnam and Bangladesh amid diversification of production bases.

PM Modi called it the "most comprehensive and progressive labour-oriented reforms since Independence".

Officials said the rules for these four codes - on wages, industrial relations, social security and occupational safety and health - will be notified within 45 days for enforcement of the provisions.

While the Centre had enacted the laws as part of the response to the Covid crisis, reluctance in opposition-led states had prompted it to go slow. But with more than two dozen states showing willingness to move ahead with amendments in laws, the Modi govt decided to press ahead after extensive consultations.

All states, except West Bengal, have published draft rules on the provisions of the four codes, officials said.

Codes cap share of allowances in overall package
In any case, states that fail to notify the rules will have to follow those finalised by the Centre since labour is a subject under the concurrent list.

The codes cap share of allowances in overall compensation paid to salaried employee to ensure companies don't structure pays in a way that it results in lower social-security contribution by employers. For workers, there's a national floor wage, and states can notify higher payment.

ILO director-general Gilbert F Houngbo said, "Following with interest developments of India's new labour codes announced today..."

Under the new regime, fixed-term employees become eligible for gratuity after one year and social security coverage is expanded to all. All workers will get PF, ESIC, insurance, and other social security benefits. In addition, several sectors will now have mandatory annual health check-ups for their employees who are more than 40 years old.


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