Question 101
What major reform did the Government of India implement to simplify workers' rights and labour law compliance in 2025?
- AOption (a)
Merger of 29 labour laws into four Labour Codes
- BOption (b)
Expansion of the Minimum Wages Act only
- COption (c)
Elimination of trade unions and withdrawal of their legal recognition
- DOption (d)
Introduction of universal basic income
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Correct answer
Merger of 29 labour laws into four Labour Codes
Why this answer is correct
The correct answer is Merger of 29 labour laws into four Labour Codes.
Key Points
- The Government of India has undertaken a historic reform by consolidating 29 Central Labour Laws into four comprehensive Labour Codes to simplify compliance and modernize workers' rights.
- This reform aims to improve the Ease of Doing Business by reducing the complexity of multiple definitions and authorities, replacing them with a more streamlined and transparent framework.
- The four codes include the Code on Wages (2019), the Industrial Relations Code (2020), the Social Security Code (2020), and the Occupational Safety, Health and Working Conditions Code (2020). Hence, the main reform is the merger into four codes.
- The reform is designed to extend social security and minimum wage protections to over 50 crore workers in both the organized and unorganized sectors, including the burgeoning gig economy.
- Under these codes, the government has introduced one registration, one license, and one return for establishments, significantly reducing the administrative burden on employers while ensuring better enforcement of labor standards.
Additional Information
- Code on Wages, 2019:
- It amalgamates four major acts: the Minimum Wages Act (1948), the Payment of Wages Act (1936), the Payment of Bonus Act (1965), and the Equal Remuneration Act (1976).
- It introduces a statutory floor wage to be determined by the Central Government, ensuring that no state government sets a minimum wage below this threshold.
- Social Security Code, 2020:
- This code replaces 9 laws, including the Employees’ Provident Fund Act and the Maternity Benefit Act.
- For the first time, it brings gig workers and platform workers under the ambit of social security schemes, such as life and disability cover.
- Industrial Relations Code, 2020:
- It consolidates the Trade Unions Act (1926), Industrial Employment (Standing Orders) Act (1946), and Industrial Disputes Act (1947).
- It increases the threshold for establishments to lay off workers without prior government permission from 100 to 300 employees.
- OSH Code, 2020:
- The Occupational Safety, Health and Working Conditions Code merges 13 labor laws related to factories, mines, and construction workers.
- It mandates free health check-ups once a year for employees above a certain age and formalizes the appointment letters for all workers.
Important Points
- Digitization of Compliance: The Ministry of Labour and Employment has integrated these reforms with the Shram Suvidha Portal to facilitate online inspection and grievance redressal.
- Unorganized Sector Focus: The e-Shram portal was launched to create a National Database of Unorganized Workers (NDUW), which helps in the direct delivery of social security benefits.
- Fixed-Term Employment: The codes introduce fixed-term employment, allowing employers to hire workers for a specific duration with the same statutory benefits as permanent employees, ensuring flexibility and fairness.
- Gender Neutrality: The reforms emphasize gender equality by allowing women to work in all establishments at night (between 7 PM and 6 AM) subject to their consent and safety arrangements.