Discuss the merits and demerits of the four Labour Codes
As per recommendations of 2nd National Commission on Labour, 29 labor laws in India have
been consolidated into Four comprehensive labor codes which aim at boosting the ease of doing
business, while also extending social security to millions of workers, particularly in the informal and
gig economy.
1) Code on Wages: Standardized wage and bonus payments.
2) Industrial Relations Code: Streamlines dispute resolution and labour relations.
3) Occupational Safety, Health, and Working Conditions Code: Ensures safe and healthy working
conditions.
4) Code on Social Security: Expands social security benefits.
Merits of Labour Codes:
1. Enhancement of Worker Rights: The Codes address long-standing disparities, strengthening
worker rights and access to benefits.
For example: The online portal for interstate migrant workers ensures they are registered for
social security benefits.
2. Simplification of Compliance: The consolidation of multiple laws reduces bureaucratic hurdles,
making compliance easier for employers and improving accountability.
3. Improved Industrial Relations: Provisions for dispute resolution and collective
bargaining promote smoother employer-worker negotiations, reducing the risk of industrial
strikes.
For instance: The Industrial Relations Code, 2020, introduces guidelines for strikes, ensuring
more structured dispute resolution processes.
4. Focus on Social Security: Expansion of social security coverage to previously excluded workers
like migrants, gig, and platform workers.
For example: Gig and platform workers are now legally recognised for social security benefits
under the Code on Social Security, 2020.
5. Promoting Safety and Health: New safety standards for industries, particularly hazardous ones,
ensure improved working conditions.
For instance: The Occupational Safety, Health and Working Conditions Code,
2020 mandates better safety provisions in high-risk industries like construction.
6. Flexibility in Hiring and Firing: The Industrial Relations Code allows firms with up to 300
workers (previously 100) to hire and fire employees without requiring government permission.
7. Gender Equality – The Code of Wages prohibits discrimination in remuneration and recruitment
of employees for work of similar nature.
8. Maternity benefits: the SS Code continues to ensure 26 weeks of paid maternity leave along
with creche facilities funded by the employer.
9. Minimum wage: It is to be determined by the Central government based on the minimum living
standards
Demerits of the Four Labour Codes:
1. Ambiguity in Definitions: Some definitions, like what constitutes
a “worker” or “wages,” remain unclear, leaving room for misinterpretation.
2. Limited Awareness and Implementation: Lack of awareness, particularly in the informal
sector, limits the impact of these reforms.
For example: Informal sector workers in rural areas are less informed about their rights under
the Social Security Code, 2020.
3. Resistance from Trade Unions: Trade unions have opposed provisions limiting the right to
strike and introducing fixed-term employment, fearing job insecurity.
4. Impact on Informal Sector Workers: Although designed to benefit all workers, the Codes may
unfairly impact informal sector workers who are often underrepresented. Eg. Migrant workers
5. Impact on Trade Unions and Collective Bargaining: A requirement that 75% of workers in a
company must vote for a strike before it is legally recognized can weaken the role of trade
unions
6. Weakening of Workers’ Rights and Protections: The increased ambit for government
permission for layoffs is criticized for potentially weakening job security.
