The legislations are made with 3 objects:
- To regulate,
- To Punish,
- To ensure welfare.
Depending upon the object various legislations are framed from time to time
by the legislature. In a country like India, we follow the quasi-federal system
and the powers have been divided among the Center and States. Some subjects fall
under the exclusive power of Parliament i.e. the central legislature and over
some subjects state assemblies i.e. state legislatures have exclusive power to
make laws, however, this power of state legislatures is not permanent as we
don't have the rigid federalism in India.
But there are certain subjects which fall into the jurisdiction of both the
center and state legislatures. On such a matter, both are empowered to make laws
but in case of conflict among the laws of the central legislature and state
legislature, the law of the center will prevail in general.
Now coming back on the objects of the legislation and relevance of it being
discussed here, depending upon the object and power to make laws, many times the
states and the center end up making various legislations on a similar subject.
As we have discussed till now that various subjects fall under the power of both
the legislatures and hence the laws do not remain the same throughout the
country and this leads to confusing every state as various laws when a central
act is already provided.
When we talk about some of such subjects, labor-related matters fall into both
center and state legislatures' power to make laws. Currently in India, we have
around 44 labor legislations in totality, that are enacted by the central
government but these are not uniformly applicable throughout India as India is a
vastly diversified country, and various factors available in a state may not be
available in other state and the issues of one state might differ from issues of
the other states. On this note, the central legislature made the general
legislations governing the common points but the states were given powers to
amend and make other laws as and when they deem necessary.
While ensuring that all the matters of concern are covered, the legislatures
forgot to keep in mind that so many legislations after having the central
legislations will lead to extreme confusion for the seekers as well as for the
performers of the functions given in those legislations. The key purposes of
such legislations as given below can fail due to such confusion caused due to
the number of legislations.
- It establishes a legal system that facilitates productive individual and
collective employment, relationships, and therefore a productive economy;
- By providing a framework within which employers, workers, and their
representatives can interact concerning work-related issues, it serves as an
important vehicle for achieving harmonious industrial relations based on
- It provides a clear and constant reminder and the guarantee of
fundamental principles and rights at work that have received broad social
acceptance and establishes the processes through which these principles and
rights can be implemented and enforced.
Before moving on toward the important legislations and key points, we must
know about the history and evolution of Labor movements and Labor legislation.
History Of Labour Movements:
The labor movements were started all over the world with the first industrial
revolution in England around the 1750s. If we start discussing world history,
then the only history will cover the whole paper, so we are going to straight
away talk about Labor Movements in India.
Some Important events encouraging the labor movements in India were as given
- In 1860, the first-ever labor movement can be said to be the Indigo
Movement which was started by Dinbandhu Mitra who was a social reformer in
Bengal to protest against the hardships of the indigo cultivators and
- In 1875, Sorabji Shaparji with others started the agitation for women
and children labor in Indian Industries.
- In 1877, a strike over wage rates by workers of the Empress Mill at
Nagpur was the first strike done by the workers.
- In 1884, a Labor Conference by laborer N.M. Lokhande in Bombay
(Currently known as Mumbai).
If we talk about the evolution of labor law in India then the labor laws are
generally known as Industrial Laws and the history goes back to the British
Colonial era which was mainly enacted to protect the interest of the British
employers and first-ever legislation related to the labor matters was the
Factories Act which was first introduced in 1883 because of the pressure brought
on the British parliament by the textile magnates of Manchester and Lancashire.
This was the first legislation that provided for eight-hour work, the abolition
of child labor, restriction on women for night employment, etc.
The earliest Indian statute to regulate the relationship between employer and
his workmen was the Trade Dispute Act, 1929 (Act 7 of 1929). Provisions were
made in this Act for restraining the rights of the strike and lockout but no
machinery was provided to take care of disputes.
The post-colonial era was of the views that no capital i.e. business can survive
without the partnership of labor and hence all the pre-existing laws were
amended and new laws were made accordingly. Ultimately, the Trade Dispute Act,
1929 was repealed and the Industrial Dispute Act, 1947.
Key Legislation Enacted By Central Government:
All 44+ Labor legislations enacted by the central government are useful in one
way or another but discussing all here is not possible hence we are going to
discuss the most commonly used legislation.
- Minimum wages Act, 1948:
This Act talks about the minimum wages that should
be provided to a worker. The wages defer from state to state, categories, and
designations, etc. The wages are fixed and revised by the state governments.
- Payment of wages act, 1936:
This Act talks about the time of payment of
wages/salary to the worker/employee by the employer. It says that the Salary
should be paid by the employer by the 7th of every month. This Act also governs
the deductions from the salary.
- Equal Remuneration Act, 1976:
This Act ensures equality at the workplace
and makes sure that no employer is discriminating on any grounds of sex,
religion, race, caste, etc., for example, the female or male employees working
at the same position and holding the same qualifications. Equal salary is to be
provided to them.
- Employees Provident Fund And Misc. Provisions Act, 1952:
This act governs
the money that is to be provided from Provident Fund and Pension during
retirement. It also governs the deductions for PF i.e. 12% from the Basic salary
+ Dearness Allowances from the side of the Employee, and the Employer is
supposed to contribute 12 + 1%, the compulsory limit for the deduction and it
says that deductions should not be more than Rs. 15,000 (it can be exceeded if
the employer and employee agree).
- Employee State Insurance Act, 1948:
This Act mainly focuses on medical
insurance for both Individual + the family of the Employee and Accidental
Insurance to the individual employees. It regulates the limit of cover provided
by the insurance i.e. maximum Rs. 21,000. The Act also governs the deductions
that can be done for this Insurance that is being provided. The total part of
wages which can be reduced from an employee is restricted to .75% of his wages
whereas the employer is obliged to contribute 3.25% of the total wages as
provided to the employee so that eventually the total part becomes 4% for the
- Bonus Act, 1965:
This Act makes a mandate of providing statutory bonus
having a lower limit of 8.33% which can be increased by the employers based on
their profitability, policies, and strategies.
- Gratuity Act, 1972:
This Act makes an effort on ensuring respect for the
employees who have worked for dedicated time for an employer and has retired or
has been removed by the employer due to some reason. It makes sure that if an
employee works for 5 years or more then the employer is bound to provide the
gratuity to such employees irrespective of the wages given during the
- Professional Tax Act:
This Act is governed from Article 276 of the
Constitution of India. The maximum deductions under this Act can be till Rs.
2,500 per annum. This Act is not applicable in all the states of India but
function in 15: 16 states.
- Maternity Benefit Act, 1961:
This Act has been made to provide the social
equality to the women and also under the constitutional right to provide laws
for the protection and promotion of children and women under Article 15(3). This
Act makes sure that the employer provides 26 weeks of paid leave for female
employees for maternity Purposes.
- Shop and Establishment Act, 1954:
This Act differs from state to state and
this Act simply provides the mandate to all the employers to provide weekly
leave and right to the employees with or without wages except the employer's
family. This Act governs the leaves and holidays as given by the employer.
- Industrial Dispute Act, 1947:
This Act governs the relations of employees
and employers. This Act also governs the rules for hiring, firing, compensation
at the time of termination, and all the disputes arising out of the employment
- Factories Act, 1948:
This Act has been implemented with the intent to
provide adequate safety measures and to promote the health and welfare of the
workers employed in factories. It provides the Facilities and Conveniences to be
provided to the workers, welfare schemes by the employers, facilities to be
provided in case of large factories, safety measures to be ensured in the
factories, working hours for the factory workers, overtime wages to the workers,
- Trade Union Act, 1926:
The right to form peaceful ad legal association as
provided in the Constitution of India under Article 19(1) (c) is acknowledged in
the context of labor workers. The labor workers are free to form trade unions
and this Act provides some advantages and obligations to be complied with. It
provides for Registration, Obligations, Status after registration, rights as a
registered trade union, the procedure of changing names, etc, and Dissolution
procedure of trade unions.
- Industrial Employment (Standing Orders) Act, 1946:
The intent behind
enacting this Act was to prevent the exploitation of the workers employed by
manipulating the terms and conditions as at the time of employment, the terms
and conditions were not prescribed in the employment agreement. This Act gives
the provisions for the formation of standing orders and to set the
accountability of the employers in case of any violation of any set model of
New Labor Codes: A Step Towards Unification:
The recent step of the central government has brought 4 codes for the various
labor law legislations as there is a vast list of legislations as some of them
have been discussed above.
The second National commission for labor in 2002 recommended the labor laws
to be unified and to be divided into 5 subheads:
- Industrial relations
- Social security
- Welfare and working conditions
The four codes that have been introduced in the houses of Parliament, contain
various legislations having the similar objectives together for reducing the
number of legislations and to bring some clarity in the existing legislation as
there are various legislations which are formulated by the state governments as
well. So moving on to the codes for discussion one by one, the four codes are
- The Code on Wages, 2019
- The Occupational Safety, Health and Working Conditions Code, 2020
- The Code on Social Security, 2020
- The Industrial Relations Code, 2020
To begin with the analysis of the Labor codes, we will first understand the
status of the Code, then the Acts comprising in that code then a brief sections
scheme of the Code and analysis if there is any specific thing missing in the
code which was there in Act or needed a reform.
The Code On Wages, 2019:
This is the first code that has been passed by the Parliament and has also
attained the consent of the President. This Act is enacted right now but not
enforced as the enforcing rules have not been notified in the official gazette
yet for enforcement purposes. The draft rules are out for public comments.
The code of wages, 2019 talks about the unification of all the labor laws having
the same objective of regulating wage systems in industrial establishments. The
code of wages mainly involves:
- The payment of wages Act,
- Minimum wages Act,
- Payment of Bonus Act,
- Equal remuneration Act,
The code of wages 2019 mainly talks about payment of wages to the employees and
workmen employed under any employer falling under the definition as given in the
code then it talks about floor wages, this code is not only applicable to the
employees drawing a salary from a particular employer but also applicable on the
and is selected as well as on the organized sector labor with word floor which
in this code ensures that a minimum as a prescribed in the floor which is
provided to the worker or employee as prescribed depending upon their industry.
Key points of the code of wages 2019
- This code for the first time gives a uniformed definition on wages as applicable
to minimum wage payment of wages and payment of bonus as well.
- This code also provides for or the definition of worker and employee separately
and the term employee has a wider meaning that includes managerial and
administrative work as well where is the definition of worker is inclusive of
working as journalist and sales promotion employees
- The definition for the equal wages Act was Vague which has been properly defined
in this code.
- The code also talks about equal remuneration in case of the same work for work
of a similar nature done by employees and concerning the recruitment of
employees for the same work or work of similar nature.
- The concept of the floor which it was introduced in the minimum wage act was on
the discretion of state government as the state government had the power of
changing the minimum prescribed wage in a particular industry and this wage
changed from industry to industry and state to state. Now as per the new
provisions under this act the central government will fix a floor wage and the
employer cannot in any circumstances fix the minimum wage rate which is lower
than this floor rate as a fixed by the central government. Also, these floor
wages are to be reviewed after a few years not exceeding five years by the
- The code also talks about the wage rate in case of overtime that is if an
employee works for more than the prescribed working hours in his employment
contract then the employer is bound to pay him for every hour or part of an hour
or so work done access and the overtime rate which this act prescribed should
not be less than twice the normal rate of wages.
- This code also introduces which period which can be daily weekly fortnightly on
monthly basis it also stimulates the time limit for payment by the employer
under each of such wage periods. This Scheme was absent in the payment of wages
- The code has also introduced various disqualifications for employees in case of
disqualification from bonus including dismissal from service due to conviction
for sexual harassment at the workplace.
- The code further provides for provision for inspector-cum-facilitator who will
advise the employer and employee regarding the compliances of this code and the
other function will be to conduct inspections for ensuring that the code is
- There have been various changes in penalties and punishments provided in
contravention of the provisions of the code. The code has introduced a staged
punishment system as there was no difference between the first offender and the
frequent offender. The penalty in the case of the first offender is very lenient
in comparison with the provisions of the payment of wages act, minimum wage act,
etc. Where the first offender was punished with imprisonment and fine here the
offender having contravened the provisions for the second time within five years
from the first attempt will liable for imprisonment.
- The code has increased the amount of penalty which is to be levied upon in case
of any contravention in a good ratio if compared with previous legislation.
Code On Social Security
The code on social security has been frame with the intent to replace 9 Central
labor legislation including:
- The employee compensation act,
- The Employee State Insurance Act,
- The employees' provident fund and miscellaneous provisions act, the
maternity benefit Act,
- The unorganized workers' social security act, etc.
The code on social security is presented with the intent to bring all the social
security-related legislation under a code. This code focuses on the benefits
that are to be provided to the workers and employees. Along with this the
proposed code also intends to utilize technology and to bring transparency and
accountability e and facilitating is of compliance with the provision that will
ultimately lead to benefit to the workers. The code has been passed from
Loksabha on 23rd September 2020.
Key points of the code on Social Security, 2020:
- Under this code, the welfare schemes will apply to the workers of both organized
and unorganized sectors this also means that the PF related schemes, the
pension-related schemes, the deposit insurance schemes, etc. will be valuable to
the workers of the unorganized sector as well.
- The definition of wages has been expanded in this code and is now divided into
three parts that are:
- Inclusions of basic pay dearness allowances and retaining allowance.
- Specified exclusions provided funds pension and gratuity house rent and
conveyance allowance etc. These are excluded as long as these do not constitute
a part of the total of more than 50% of the remuneration being paid.
- Apart from the inclusions and exclusions the third category which has been
identified as wages are benefits in kind. The 15% of total wages which has been
provided as a benefit in kind will be counted as wage for ensuring does social
security benefit will be at least 50% of overall compensation.
- This code also provides for various authorities for administrating the social
security schemes on a ground level such as:
- A central body of trustees headed by central provident fund commissioner.
- National and state social security board headed by central and state ministers
for labor and employment to administer schemes for unorganized workers.
- The state-level building workers' welfare board it's headed by a chairman as
nominated by State Government for the administration of the schemes for building
- There has been a change in the contributions that are required for these social
security schemes. Like in the PF scheme the employer and employee will each make
the matching contributions of 10% of wages or such other rate as notified by the
government. Whereas all the other contributions towards payment of gratuity,
maternity benefit, cess for building workers, and employee compensation will be
borne by the employer only. the schemes for Greg walkers platform workers and
unorganized sector workers may be financed through a combination of contribution
from the employer and employee and the appropriate government which may be
Central or the state as the case Maybe.
- As already discussed scored as enhanced the Ambit of workers by including
various workers such as gig workers platform workers and unorganized workers
etc. which were not covered in any legislation in past.
- It can be concluded that the code not only aims towards simplification of the
complex labor laws in India but also intents to modernize the law and to make it
in the interest of both employer and employee.
Industrial Relations Code 2020
The code on Industrial relations aims on unification of various legislations
having the same objective of governing Industrial relations.
The court will be
replacing three major acts such as:
- Trade union Act,
- Industrial relations (standing orders) Act, and
- Industrial dispute Act.
The code on Industrial relations mainly talks about reforms in the labour laws
relating to Industrial relations including the trade unions and their procedures
and powers relating to registration, dissolution, suspension etc. and, the
dispute resolution and addressing system in industries along with the code of
conduct for both employers and employees.
Key features of the code on Industrial Relations, 2020
This court further restrict the unfair labour practices as listed in the
schedule of the code these fair labour practices include:
- The definition of worker in the score person in supervisory capacity getting
wasted up to 18000 rupees or as may be prescribed. Further, in order to provide
permanent employment to the employees all the benefits including gratuity except
for notice period after the conclusion of expanded and retrenchment compensation
is to be provided by employer. The employer has been provided with the
flexibility of employing the employees for the term as may be required without
restriction on any sector.
- The definition of industry has also been re-defined through this code and now
industry is any systematic activity carried on with the cooperation of employer
and employee for the production supply and distribution of the goods and
services with a view to satisfy human needs and wants except those which are
really spiritual or religious in nature with certain exceptions as laid in the
- This code identifies the concept of trade union as similar to identification
provided in trade unions act. Further this code also provides for negotiation
unions in case of an industrial establishment having multiple trade unions. The
trade unions having 51% of of the the votes from the workers of that industrial
establishment will be the sole negotiator union for that industrial
- Restricting workers from forming trade unions
- The employer's sponsored Trade union of workers
- Using force threat or version on the workers to make them join a particular
- Damage to employers property
- Preventing any worker from attending work
The court not only provides for unfair labour practices but it also provides for
fine ranging from 10000 to 2 lakh rupees on people indulged into such unfair
In context of standing orders the code holds the same applicability and criteria
as it was mentioned in Industrial relations (standing orders) act. The
provisions relating to model standing order is given in schedule 1 of the code
The code also provides for provisions relating to notice to change in any of the
provisions of standing orders to all the employees.
The code mandates formulation of grievance redressal committee consisting of 10
members when the total number of employees is 20 or more. It further talks about
proportional representation of women in the committee in similar proportion of
women working in that industrial establishment against total workers employed.
The act also talks about establishment of industrial tribunal consisting of one
judicial member and one administrative member replacing the current tribunal
having only one judicial member who presides the tribunal. The trade union also
has Bheem given the right to approach the industrial tribunal in case of
cancellation or denial of registration by the registrar of trade union. The
industrial tribunal will replace multiple adjudicating bodies like the Court of
enquiry Board of conciliation And Labour courts.
It further provides for the time of commencement of conciliation proceeding and
ensures that the conciliation proceedings shall be deemed to have commenced on
the date when first meeting with the conciliation officer is done after
receiving the notice of strike or lockout.
A mandate to provide notice of 14 days before organizing any strike or lockout.
It can be concluded by saying that the code on Industrial relations not only
aims to unify the laws governing Industrial relations but also aims at
safeguarding the interest of both employer and employee.
The Occupational Safety Health And Working Conditions Code
The code on occupational safety health and working conditions aims to provide
for a unified law governing day occupational state help and working conditions
for laborers and workers. This act aims to replace 13 currently existing
legislations with this code namely:
- The Factories Act, 1948;
- The Plantations Labour Act, 1951;
- The Mines Act, 1952;
- The Working Journalists and other Newspaper Employees (Conditions of
Service and Miscellaneous Provisions) Act, 1955;
- The Working Journalists (Fixation of Rates of Wages) Act, 1958;
- The Motor Transport Workers Act, 1961;
- The Beedi and Cigar Workers (Conditions of Employment) Act, 1966;
- The Contract Labour (Regulation and Abolition) Act, 1970;
- The Sales Promotion Employees (Condition of Service) Act, 1976;
- The Inter-State Migrant workmen (Regulation of Employment and Conditions
of Service) Act, 1979;
- The Cine Workers and Cinema Theatre Workers Act, 1981;
- The Dock Workers (Safety, Health and Welfare) Act, 1986;
- The Building and Other Construction Workers (Regulation of Employment
and Conditions of Service) Act, 1996.
The code aims at providing a unified legislation aiming for workers safety
health welfare and working conditions.
Key Features Of The Code On Occupational Safety, Health And Working
The code provides for single registration of all the industrial establishments
covered in the code to be registered within a period of 60 days from the date of
commencement of this code. This is step will design a central database and it
will develop the ease of doing business as it will restrict multiple
registrations under multiple acts.
The Oxford that provides for free annual health check ups for the age as
prescribed by the appropriate government and tests as per the requirements of
the industry in which the employee is working. This is step has been taken in
order to to ensure that employees are healthy and by this way the employer will
be benefited by knowing the level of productivity of the employees.
As per this code the appointment letter has been made compulsory to all the
employees engage in their establishments by the employer. This will prevent the
exploitation of employees.
School also provides for a body named occupational safety and health advisory
board that will set up various committees concerning various subject matters
having representation from trade unions employee associations and state
This code also specifies the working hours of women also the night shift which
shall start after 7 p.m. and before 6 a.m. and the timings are required to be
approved by the central or a state government.
This code provides for various rights and duties to the employees including the
duty of taking care of their health complying with the safety and health
measures reporting unsafe situations to the inspector etc. The code also
provides right to gain information regarding the safety and health standards of
The code also imposes duty on the employer that the employee is required to keep
safety measures in hazardous conditions and an annual health check up is
required apart from that the relevant authorities are required to be informed
when an accident leads to death or bodily injury of an employee.
The employer is duty bound to provide hygienic work environment along with
proper ventilation sufficient space clean drinking water changing rooms/ locker
The code also provides for specifying working hours for different classes of the
establishment and employees as per the rules prescribed by the central or state
government. It also the provisions regarding paying the toys of the rate of
daily wages in case of overtime by an employee one day weekly leave is also
given in the four except for the motor transport workers. It also identifies
various paid and medical leaves for various sets of employees.
The code also covers various offence and penalty for contravening the provisions
of this code. In an offence resulting the death of any worker, the punishment
can be provided as two years of imprisonment or find up to 5,00,000 rupees or
both. It is on the discretion of the court (facilitator cum inspector all any
other person as may be appointed by central or state government) to provide the
50% of the fine amount to the the hairs of of the deceased worker. Another
contravention not specifically provided in the code, amount of 2,00,000 to
3,00,000 rupees used as fine amount for such contraventions.
It can be concluded that the code on occupational help and working condition not
only AIMS at providing a unified law for occupational safety health and working
conditions but also intense to be beneficial for both employee and the
Labour Codes In India: A Revolutionary Change?
Coming back to the topic of discussion weather the labour codes as introduce in
India are revolutionary change or not?
By discussing the confusion that was there in India before introduction of these
codes and the complexity of labour laws as in force we can see the difficulty
faced by the normal employees who don't really understand the legal language and
tries to protect his own interest. Even after having a number of labour laws
protecting from the exploitation there were many instances when the employee
could not oppose owing to the complexity of labour legislations as well as the
arguments of employer having found loopholes aur overlap in the acts.
The labour legislations are as old as 1926 and needed reforms as per the modern
requirements. Even now the step of passing Labour Codes cannot be said to be
revolutionary because the unification demand has been raised by various
commissions in past as well however it is a welcoming move from the side of the
legislature that they have finally thought of reducing the complexity of labour
The codes not only unified the legislations having similar objectives but also
work on various requirements of reform in the old laws.