Beginning of Much Needed Reforms in Labour Laws of India

India is home to at least 40 central Labour laws and numerous state labour laws regulating the very relationship between an employer and employee, and also arching over other supplementary aspects in connection to such relationship. However, having such a scattered set of labour laws clipped with an endeavor by the government to regulate each and every aspect of labour is something one must not feel proud of.

India is now a sixth biggest economy of the world after surpassing France and is projected to overtake United Kingdom in 2019. One of the major driving force of such achievement is India’s demographic dividend. Demographic dividend refers to the growth in an economy that is the resultant effect of a change in the age structure of a country’s population.

Such positive change in the age structure of the population of India had started in the year 2005-06 and is forecasted to last till 2055-56. At the current economic stage, India is blessed with a working population of approximately 62.5 % of its total population which means that India can boast to the world that out of 1.37 billion people, it has a youthful working population (Under the age group of 15-59 years) of 85.6 billion. To manage and milk the benefits of such an abundant labour requires comprehensive planning and control. Therefore, it is high time to reform the current structure of labour laws and tuning them in a way that serves to the greatest advantage of all stakeholders.

One such step towards the reformation of laws has been just initiated by the government by bringing in two bills, namely The Occupational Safety, Health and Working Conditions Code, 2019 and The Code on Wages, 2019. With the passage of such bills in the last monsoon session of Parliament, the government aimed to consolidate and repeal 17 obsolete labour laws thereby fulfilling the objective of ‘Less Government, More Governance’.

The Occupational Safety, Health and Working Conditions Code, 2019 and The Code on Wages, 2019 were introduced in Lok Sabha by the Minister of Labour and Employment, Mr. Santosh Kumar Gangwar, on July 23, 2019.



The Code applies to establishments employing at least 10 workers, and to all mines and docks.  It does not apply to apprentices.  Further, it makes special provisions for certain types of establishments and classes of employees, such as factories, mines, and building and construction workers. The Code repeals and replaces 13 labour laws relating to safety, health and working conditions. Its features are:-

  • Relevant authorities: All establishments covered by the Code must be registered with registering officers.


  • Advisory Bodies: The central and state governments will set up Occupational Safety and Health Advisory Boards at the national and state level, respectively.


  • Duties of employers:  The code includes:
    • (i) providing a workplace that is free from hazards that may cause injury or diseases, and
    • (ii) providing free annual health examinations to employees, as prescribed



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  • Rights and duties of employees: These include:
    • (i) taking care of their own health and safety,
    • (ii) complying with the specified safety and health standards, and
    • (iii) reporting unsafe situations to the inspector.


  • Working Hours: Work hours for different classes of establishment and employees will be provided as per the rules prescribed by the central or state government. For overtime work, the worker must be paid twice the rate of daily wages. Female workers, with their consent, may work past 7pm and before 6 am, if approved by the central or state government.


  • Leave: No employee may work for more than six days a week. However, exceptions may be provided for motor transport workers. Workers must receive paid annual leave for at least one in 20 days of the period spent on duty. During medical leave, the worker must be paid half his daily wages.


  • Working conditions and welfare facilities: The employer is required to provide a hygienic work environment and other welfare facilities such as separate bathing places and locker rooms, canteens, first aid boxes, and crèches.


  • Offences and penalties: Under the Code, an offence that leads to the death of an employee will be punishable with imprisonment of up to two years, or a fine up to five lakh rupees, or both. Further, courts may direct that at least 50% of such fine be given as compensation to the heirs of the victim. For any other violation where the penalty is not specified, the employer will be penalized with a fine between two and three lakh rupees.  If an employee violates provisions of the Code, he will be subject to a fine of up to Rs 10,000.



It seeks to regulate wage and bonus payments in all employments where any industry, trade, business, or manufacture is carried out.  The Code replaces the following four laws:

(i) the Payment of Wages Act, 1936,

(ii) the Minimum Wages Act, 1948,

(iii) the Payment of Bonus Act, 1965, and

(iv) the Equal Remuneration Act, 1976.


  • Coverage: The Code will apply to all employees. The central government will make wage-related decisions for employments such as railways, mines, and oil fields, among others.  State governments will make decisions for all other employments.


  • Wages include salary, allowance, or any other component expressed in monetary terms. This does not include bonus payable to employees or any travelling allowance, among others.


  • Floor wage: The central government will fix a floor wage, taking into account living standards of workers. Further, it may set different floor wages for different geographical areas. The minimum wages decided by the central or state governments must be higher than the floor wage.


  • Fixing the minimum wage: The Code prohibits employers from paying wages less than the minimum wages. Minimum wages will be notified by the central or state governments.  This will be based on time, or number of pieces produced.  The minimum wages will be revised and reviewed by the central or state governments at an interval of not more than five years.


  • Overtime: The central or state government may fix the number of hours that constitute a normal working day. In case employees work in excess of a normal working day, they will be entitled to overtime wage, which must be at least twice the normal rate of wages.




  • Deductions: An employee’s wages may be deducted on certain grounds including:
    • (i) fines
    • (ii) absence from duty
    • (iii) accommodation given by the employer
    • (iv) recovery of advances given to the employee, among others. These deductions should not exceed 50% of the employee’s total wage.


  • Determination of bonus: All employees whose wages do not exceed a specific monthly amount, notified by the central or state government, will be entitled to an annual bonus. The bonus will be at least 8.33% of his wages or Rs 100, whichever is higher.  In addition, the employer will distribute a part of the gross profits amongst the employees.  This will be distributed in proportion to the annual wages of an employee.  An employee can receive a maximum bonus of 20% of his annual wages.


  • Gender discrimination: The Code prohibits gender discrimination in matters related to wages and recruitment of employees for the same work or work of similar nature.


  • Advisory boards: The central and state governments will constitute advisory boards. Central Advisory Board will consist of:
    • (i) employers
    • (ii) employees (in equal number as employers)
    • (iii) independent persons
    • (iv) five representatives of state governments.  State Advisory Boards will consist of employers, employees, and independent persons.  Further, one-third of the total members on both the central and state Boards will be women.


  • Offences: The Code specifies penalties for offences committed by an employer, such as
    • (i) paying less than the due wages
    • (ii) for contravening any provision of the Code. Penalties vary depending on the nature of the offence, with the maximum penalty being imprisonment for three months along with a fine of up to one lakh rupees.



Being still stuck with obsolete and archaic labour laws dating back to 1923 has proved to be a stumbling block in realization of the true objectives of flagship programmes of the government such as ‘Make In India’ and ‘Skill India’ because if the benefits of such ambitious schemes of the government aiming for the growth of work and workmen are not percolated to the working class, especially low or daily wage earners due to such a complex labour law structure, then we are in a dire need to reform to, adapt and follow new, simplified and globally practiced labour laws.


Hence, the enactment of the above discussed bills is the beginning of a new India paving the way for development, prosperity and achievement.

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