The nationwide rollout of the Four Labour Codes marks a structural transformation of India’s labour governance by consolidating 29 fragmented laws into four unified codes. With implementation beginning in November 2025, these reforms aim to modernise labour regulation, expand social security, and enhance ease of doing business in a rapidly evolving economy.
Significance of the Four Labour Codes:
1. Simplification & ease of compliance:
- Single registration, single licence, single return system.
- Unified definition of “wages” reduces litigation.
- Raises layoff threshold from 100 to 300 workers, providing flexibility to MSMEs.
- Helps India improve its Ease of Doing Business competitiveness.
2. Universal wage protection:
- Minimum wages extended to all workers which benefits 50 crore workforce.
- Introduction of National Floor Wage to reduce inter-state wage disparities.
- Mandatory timely wage payments and digital wage slips increase transparency.
- Promotes “equal pay for equal work” and prohibits gender wage discrimination.
3. Expansion of Social Security:
- First-time recognition of gig & platform workers benefitting 7.7 million workers.
- Aadhaar-linked portability via national portal (e-Shram database already has 29+ crore registrations).
- Expanded EPFO & ESIC coverage across sectors and regions.
- Leads to expansion of social security coverage from 19% in 2015 to 64% in 2025.
4. Investment Boost:
- Fixed-Term Employment (FTE) ensures parity in wages & gratuity after one year.
- Encourages formal hiring over informal contracting.
- It boosts manufacturing under Make in India & PLI schemes.
5. Workplace Safety:
- OSH Code extends safety norms to establishments with 10+ workers.
- Free annual health check-ups for workers aged 40+.
- Women allowed night shifts with safety safeguards.
- Expanded definition of interstate migrant workers.
Key challenges in implementation:
1. Informality dominance:
- 80–90% of India’s workforce remains informal.
- Only 25% currently contribute to formal social security schemes.
- Thus, legal entitlements risk remaining symbolic without formalisation.
2. Dilution of job security:
- Raising layoff threshold to 300 workers may weaken bargaining power.
- For e.g., Rajasthan’s earlier reform saw increased contract hiring at the cost fixed jobs.
3. Enforcement deficit:
- India’s labour inspector-to-worker ratio remains low while digital compliance is also weak at state level.
- Variation in rule notification across states creates federal asymmetry.
4. Gig worker ambiguity:
- Aggregator contribution mechanisms are not uniformly defined.
- Sustainability of welfare funds is uncertain without stable financing.
5. Federal coordination gaps: States like Gujarat, Karnataka, UP notified rules early while others lagged. Such uneven implementation may create regulatory arbitrage.
Way forward:
- Link flexibility with protection: Mandate reskilling funds alongside 300-worker threshold.
- Strengthen inspection architecture via digital inspections & AI-based compliance.
- Tripartite oversight councils consisting of worker – employer – state.
- Targeted informal worker onboarding via e-Shram integration.
- Clear guidelines for gig-worker co-contribution fund mechanism.
Conclusion:
The Four Labour Codes attempt to recalibrate India’s labour regime from rigid, fragmented regulation to a unified, growth-oriented yet welfare-sensitive framework. These codes can support formalisation, industrial growth, and inclusive development, strengthening India’s trajectory toward a resilient and competitive labour ecosystem.
‘+1’ Value Addition:
- India has over 50 crore workers, second-largest labour force globally.
- Germany’s Kurzarbeit model cited as balancing flexibility with worker protection.
- Tamil Nadu’s tripartite boards offer an example of social dialogue mechanisms.
- Rajasthan’s Gig Workers Welfare Fund allocated ₹200 crore as pilot support.
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