Introduction of New Labor Codes
After extensive preparations, the Indian government has implemented significant changes to labor laws. The central government has consolidated 29 existing labor laws into four new labor codes, which will impact nearly all types of workers across the country.
Impact on Workers
According to the government, these reforms will provide formal protections for millions of workers in the unorganized, gig, and platform sectors for the first time. The new codes guarantee minimum wage rights for all types of employment, whether permanent, temporary, fixed-term, or gig work.
Mandatory Employment Records
A press release from the government states that it will now be mandatory for every employee to receive an appointment letter, ensuring formal documentation of employment. Additionally, the scope of social security has been significantly expanded, with benefits like EPF, ESI, and insurance now accessible to employees across various sectors.
Social Security Fund for Gig Workers
A dedicated social security fund will be established for gig and platform workers, requiring aggregator companies to contribute 1 to 2 percent of their turnover. A universal account number linked to Aadhaar will also be created for all workers, facilitating easier access to benefits when changing jobs.
Focus on Women’s Safety and Equality
The new codes place a strong emphasis on the safety and equality of female employees. They include strict prohibitions against gender discrimination and allow women to work night shifts, provided that all safety measures are in place. Furthermore, the presence of female representatives in grievance redressal committees will be mandatory, and the definition of family now includes in-laws.
Health Checks and Safety Regulations
In terms of worker safety, employees over 40 will be entitled to free health check-ups once a year. Safety committees must be established in hazardous industries, and compliance with national safety standards will be required. Notably, accidents occurring during travel will also be classified as workplace accidents in many cases.
Changes for Fixed-Term Employees
A significant change for fixed-term employees is that they will now be eligible for gratuity after just one year of service, compared to the previous requirement of five years. Health and social security benefits for contract workers will be provided by the primary employer. Overtime regulations have been tightened, with provisions for payment at double the normal wage.
Streamlined Processes for Employers
The timeline for salary payments has been reduced, and the right to paid leave will be granted after 180 days of service. Standardized shifts of 8 to 12 hours will be implemented in various industries, including bidi, mining, textiles, and the MSME sector, to reduce work irregularities.
Simplified Compliance for Companies
For employers, the compliance process has been simplified. Companies will now need only one registration, one license, and one annual return instead of multiple forms and registrations. The government has indicated that inspections will shift from punitive to advisory, with officials taking on a guiding role.
Increased Social Security Coverage
According to the government, social security coverage has increased from 19 percent in 2015 to over 64 percent now. The new labor codes represent a significant step towards establishing a ‘pro-worker, pro-women, and pro-youth’ labor system in the country.
