Implementation of India's Four Labour Codes (2026)

Why in News?

The Government of India notified the Rules for all four Labour Codes in May 2026, completing the legislative framework nearly six years after the Codes were enacted between 2019 and 2020. While the government views this as a major labour reform, trade unions and labour experts argue that the Rules leave several important issues unresolved, particularly regarding job security, wages, social security, trade union rights, and occupational safety.

Background

India's labour laws were previously governed by 29 Central labour legislations, many of which had overlapping provisions and created regulatory complexity. To simplify and modernise the labour law framework, these laws were consolidated into four Labour Codes between 2019 and 2020.

The notification of Rules in May 2026 enables these Codes to become fully operational across the country.

The Four Labour Codes

Code on Wages, 2019

The Code on Wages, 2019 consolidates laws relating to minimum wages, payment of wages, bonus, and equal remuneration. It extends the concept of minimum wages to all employees, regardless of sector, and empowers the Central Government to prescribe a national floor wage, below which States cannot fix minimum wages.

Industrial Relations Code, 2020

The Industrial Relations Code, 2020 governs trade unions, industrial disputes, retrenchment, layoffs, and closure of establishments. It introduces Fixed-Term Employment (FTE) as a regular form of employment and seeks to simplify dispute resolution while promoting industrial harmony.

Code on Social Security, 2020

The Code on Social Security, 2020 consolidates various social security laws relating to Employees' Provident Fund (EPF), Employees' State Insurance (ESI), maternity benefits, gratuity, employee compensation, and welfare schemes.

For the first time, the Code recognises gig workers, platform workers, and unorganised workers, enabling the government to design dedicated social security schemes for them.

Occupational Safety, Health and Working Conditions (OSHWC) Code, 2020

The OSHWC Code integrates laws relating to workplace safety, health standards, welfare facilities, contract labour, inter-state migrant workers, factories, mines, plantations, and working conditions.

It aims to create safer workplaces while simplifying compliance for employers.

Importance of Rules

The Rules provide the operational framework for implementing the Labour Codes. While the parent legislation establishes broad legal principles, the Rules specify procedures, implementation mechanisms, compliance requirements, and safeguards.

Since many provisions in the Codes were broadly worded, the Rules offered an opportunity to strengthen worker protections. However, critics argue that several important safeguards have not been adequately incorporated.

Major Concerns with the Labour Codes Rules

Fixed-Term Employment (FTE) and Job Security

The Industrial Relations Code formally recognises Fixed-Term Employment, allowing employers to hire workers for a specified duration without creating permanent employment.

However, the Rules do not prescribe any minimum contract period or place any limit on repeated renewals. This creates the possibility of employers continuously renewing short-term contracts instead of offering permanent employment, thereby reducing job security and increasing employment uncertainty.

• Issues Relating to Minimum Wages
• Although the Code on Wages introduces the concept of a national floor wage, the Rules do not clearly distinguish it from the minimum wage, creating uncertainty regarding implementation.
• The consultation process with State Governments for fixing the floor wage has also not been clearly defined, raising concerns that consultations may become merely procedural.
• Another criticism relates to the continued use of an outdated family consumption unit while determining minimum wages. The wage calculation assumes that an adult woman consumes 0.8 units compared to 1 unit for an adult man, a practice criticised for perpetuating gender bias.
• The Rules further define the hourly wage simply by dividing the daily wage by eight hours, instead of fixing an independent hourly minimum wage. Labour experts argue that this disadvantages part-time workers, domestic workers, and gig workers, who may not obtain eight hours of work every day.

Social Security for Gig and Platform Workers

The Social Security Code legally recognises gig workers and platform workers, but the Rules continue to classify them as part of the unorganised workforce rather than as employees.

Consequently, they remain outside several statutory labour protections available to regular workers.

The Rules also fail to operationalise the provision relating to mandatory gratuity insurance, leaving workers vulnerable if employers fail to pay gratuity.

Trade Union Recognition

The Industrial Relations Rules require a registered trade union to secure at least 30% membership of workers in an establishment before it can be recognised as the sole negotiating union.

Critics point out that this 30% threshold does not appear in the parent legislation and has been introduced through subordinate legislation. Smaller unions may therefore find it difficult to gain recognition, weakening collective bargaining and workers' negotiating power.

Occupational Safety and Contract Labour

The Occupational Safety, Health and Working Conditions Rules do not adequately specify which activities may be outsourced to contract labour and fail to distinguish between core and non-core activities.

This ambiguity may encourage greater dependence on contract labour even in core operations, accelerating the informalisation of employment.

The Rules also omit certain welfare measures for plantation workers, particularly relating to housing and medical facilities, which were available under earlier labour laws.

Government's Perspective

The Government maintains that the Labour Codes aim to simplify India's labour regulatory framework, improve the ease of doing business, encourage formal employment, reduce compliance burdens for industries, and create a more flexible labour market while extending social security coverage to previously excluded categories such as gig workers.

Concerns Raised by Trade Unions and Experts

Trade unions argue that the Labour Codes shift the balance in favour of employers by increasing labour market flexibility while reducing long-term employment security.

They contend that vague provisions relating to Fixed-Term Employment, wage determination, contract labour, gig worker protection, and trade union recognition weaken labour rights and could accelerate informalisation of the workforce.

Way Forward

• India's labour reforms should balance economic competitiveness with social justice by ensuring stronger protection for workers alongside regulatory simplification.
• The Rules need greater clarity regarding minimum wage calculations, fixed-term employment safeguards, contract labour regulation, gig worker rights, gratuity insurance, and occupational safety standards.
• Strengthening social dialogue among governments, employers, and trade unions will be essential for creating a labour market that supports both ease of doing business and decent work, consistent with the International Labour Organization (ILO) principles.