Centre Urges States to Implement Labour Codes

Syllabus: GS2/ Polity and Governance; GS3/ Economy

Context

  • The Union Government has urged states and Union Territories (UTs) to align their existing labour laws with the spirit and provisions of new labour codes.

Background

  • Between 2019 and 2020, Parliament passed four consolidated labour codes to replace 29 outdated central labour laws:
    • Code on Wages, 2019: Regulates wages, bonus payments, and equal remuneration.
    • Industrial Relations Code, 2020: Deals with trade unions, employment conditions, layoffs, and dispute resolution.
    • Code on Social Security, 2020: Merges laws on provident funds, pensions, insurance, maternity benefits, and gratuity.
    • Occupational Safety, Health and Working Conditions Code, 2020: Consolidates regulations on safety, working hours, health, and welfare.
  • The reforms were intended to streamline regulation, improve working conditions, and support industry growth.
  • The new Social Security Code contains provisions for extending benefits to gig and platform workers also.

Progress at the State Level

  • Labour being on the Concurrent List, states must frame their own rules under the new codes.
  • Many states have proactively begun amending their respective labour laws to reflect the intent and provisions of the new codes.

Key Amendments Undertaken by States and UTs

  • At least 20 states and UTs have amended laws to increase the threshold for prior government approval for retrenchment, layoff, or closure from 100 to 300 workers.
  • 19 states and UTs have doubled the worker threshold for the application of the Factories Act:
    • From 10 to 20 workers (where power is used in manufacturing).
    • From 20 to 40 workers (where power is not used).
  • Contract Labour Act Applicability: 19 states and UTs have raised the threshold for application from 20 to 50 workers.
  • Night Shifts for Women: 31 states and UTs have allowed women to work night shifts (subject to specific safety conditions such as transport, lighting, and security).
  • All states and UTs have notified reforms requiring prior compliance notices before prosecution, a major component of the codes meant to reduce inspector raj.

Challenges in Implementation

  • Delayed Notification by the Centre: Although the codes were passed between 2019 and 2020, they are yet to be formally notified for implementation at the central level.
    • The absence of a clear central timeline has created uncertainty for states, industries, and workers alike.
  • Need for Synchronised and Uniform Rollout: While many states have moved ahead with individual reforms, the lack of coordination between Centre and states can lead to:
    • Legal ambiguities and overlaps in enforcement,
    • Compliance difficulties for firms operating across multiple states,
    • Uneven labour standards, undermining the concept of a national labour market.
  • Opposition from Trade Unions: Multiple national trade unions have opposed the codes, alleging that;
    • They dilute job security, especially with relaxed norms for retrenchment and fixed-term employment.
    • The emphasis is more on employer flexibility than on worker welfare.
  • Infrastructural Gaps: Many state labour departments lack the capacity—both in manpower and digital systems—to implement new compliance and inspection frameworks.

Way Forward

  • The Centre must provide clarity on notification timelines to facilitate coordinated implementation.
  • Capacity-building and awareness at the state level are essential for effective enforcement.
  • A balanced approach is required to ensure both worker welfare and industrial competitiveness.
  • There should be inclusive consultations with trade unions, industries, and civil society groups to address concerns.

Concluding remarks

  • The proactive role of states in aligning with labour reforms underscores a shared objective of improving industrial investment and employment generation. 
  • However, the Centre must now move decisively to ensure nationwide implementation, especially in areas like social security for gig workers, to realise the full potential of these landmark reforms.

Source: BS

 

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