Introduction
India’s labour laws, long criticized as outdated and complex, have been overhauled by four new labour codes (2019–2020). These reforms aim to simplify compliance, boost business growth, and improve worker rights. Here’s a detailed comparison of key changes before and after the reforms.
1. Simplified Legal Framework: Fewer Laws, Easier Compliance
Pre-Reform:
– Over 40 central laws and 100+ state regulations.
– Overlapping rules created compliance chaos, especially for SMEs.
Post-Reform:
– Four consolidated codes replace the maze of laws:
– Wage Code: Merges 4 laws (e.g., Minimum Wages Act).
– Industrial Relations Code: Combines 3 laws (e.g., Industrial Disputes Act).
– OSH Code: Replaces 13 safety laws.
– Social Security Code: Integrates 9 schemes (EPF, ESIC, etc.).
– Impact: Reduced paperwork, streamlined audits.
2. Easier Hiring and Firing Rules
Pre-Reform:
– Government approval needed for layoffs in firms with 100+ workers.
– Stifled job creation in formal sectors.
Post-Reform:
– Threshold raised to 300 employees for government approval.
– Pros: Encourages formal hiring.
– Cons: Unions fear reduced job security.
3. Fixed-Term & Contract Labour Reforms
Pre-Reform:
– Contract workers lacked benefits; fixed-term roles were ambiguous.
Post-Reform:
– Fixed-term employees get equal benefits (leave, gratuity).
– Contract workers guaranteed fair wages and conditions.
4. Wage Structure & Social Security
Pre-Reform:
– “Wages” excluded allowances (HRA, travel), reducing PF contributions.
Post-Reform:
– Wages now include basic pay, DA, and allowances (capped at 50% exclusions).
– Minimum wages apply universally; bonus eligibility raised to ₹21,000/month.
5. Working Hours & Flexibility
Pre-Reform:
– 48-hour workweek standard; state-level variations.
Post-Reform:
– National 48-hour cap, with optional 12-hour shifts (4-day week).
– Women permitted night shifts with safety safeguards.
6. Expanded Social Security Coverage
Pre-Reform:
– Only 10% of workers had EPF/ESI; gig workers excluded.
Post-Reform:
– Gig/platform workers now covered.
– Universal ID to track benefits.
7. Transparent Inspections & Compliance
Pre-Reform:
– Frequent, corrupt inspections harassed businesses.
Post-Reform:
– Randomized, web-based inspections.
– Single digital return per code.
Challenges & Criticisms
- Job security concerns due to relaxed layoff rules.
- Slow state-level implementation (only a few states have adopted rules).
- Informal sector inclusion remains patchy.
Conclusion
India’s labour reforms aim to balance employer flexibility with worker protection. Success hinges on consistent enforcement and bridging gaps for informal workers. As the codes roll out, their impact on India’s workforce and economy will become clearer.
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