India’s Evolving Labour Laws: Key updates you should watch

India is home to over 500 million workers, the vast majority of whom belong to the unorganised sector and lack access to formal social security.

To take care of the workers in both organized and unorganised sectors, the government revised some of the labour laws. To ensure workers’ right to minimum wages, the Central Government has amalgamated four laws in the Wage Code, nine laws in the Social Security Code, 13 laws in The Occupational Safety, Health and Working Conditions Code, 2020, and three laws in the Industrial Relations Code. The revision in labour law includes a revised gratuity ceiling, wage ceiling, and review of minimum wages after five years, among others. 

Labour reforms undertaken since 2014

• For transparency and accountability, the usage of IT-enabled system for inspection has been made mandatory.
• The ceiling limit of gratuity has been increased from Rs 10 Lakhs to Rs 20 Lakhs on 29.03.2018.
• On 16.02.2017, Payment of Wages Act enabled payment of wages to employees by cheque or crediting it to their bank account.
• Maternity Benefit Amendment Act, 2017, which came into effect on 01.04.2017, increased the paid maternity leave from 12 weeks to 26 weeks.

The government also announced to provide wage security, social security, and health security to 50 crore workers, covering organized and unorganized sectors.

• The guarantee of minimum wages is available to 50 crore workers of organized and unorganized sectors.
• Review of minimum wages in every 5 years.
• Guarantee of timely payment of wages to all workers. Equal remuneration to male and female workers.
• For the first time, around 40 crore workers of unorganized sector in the country have got this right.
• To address regional disparities, the government introduced a provision for floor wages—ensuring a standardized minimum across states.
• The determination of minimum wages has been made easy. It will be based on criteria such as skill level and geographical area.
• From 28.08.2017 Payment of Wages Act has increased the wage ceiling from Rs. 18000 to Rs. 24000.

Social Security for everyone

To ensure security for all workers, the Central Government has amalgamated 9 Labour Laws into the Social Security Code in order to secure the right of workers for insurance, pension, gratuity, maternity benefit etc.

Through this Code, a comprehensive legal framework for Social Security has to be created so that workers can receive social security completely.

Under this, in a step wise manner, a system would be institutionalized for the contributions received from employer and worker.

The Government can fund the contribution of workers from disadvantaged section.

These sweeping reforms reflect the government’s focus on modernizing labor governance and ensuring greater inclusivity for India’s diverse workforce. As implementation progresses, it will be vital for employers to stay updated and align HR practices with these evolving regulations.