India’s Labor Codes: States and UTs to Finalize Rules by March 31, 2025

Posted by Written by Archana Rao Reading Time: 3 minutes

India’s 28 states and 8 union territories are expected to finalize and pre-publish the harmonized draft rules for the four labor codes by March 2025. The four labor codes, namely the Code on Wages, Code on Social Security, Code on Industrial Relations, and Code on Occupational Health & Safety, subsume 29 central labor and industrial laws.

India’s Union Ministry of Labor and Employment has outlined a target for all 36 states and Union Territories (UTs) to finalize and pre-publish the harmonized draft rules for the four labor codes by March 31, 2025. The four labor codes, namely, Code on Social Security (2020), Occupational Safety, Health, and Working Conditions Code (2020), and Industrial Relations Code (2020), represent an overhaul of the country’s labor law framework, aimed at modernizing regulations and simplifying compliance procedures.

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As per a press note released by the central government on December 28, 2024, all but five states and UTs have already completed the pre-publication process, paving the way for the much-anticipated implementation of these codes in the coming year. According to the labor ministry, between August and October 2024, six regional meetings were convened to bring together stakeholders, address challenges, and accelerate the drafting and harmonization of rules.

Dual legislative responsibility

Labor laws in India fall under the concurrent list of the Constitution, enabling both the central and state governments to draft rules. However, in cases of conflict, central laws typically take precedence unless a state law is granted presidential assent. This dual responsibility underscores the importance of harmonizing state rules with the central framework to ensure uniformity across the country.

Objectives of the labor codes

The four labor codes, introduced between 2019 and 2020, consolidate 29 existing labour-related acts into a unified framework.

India’s Labor Reforms

Labor codes

Acts of legislation subsumed

Code on Wages, 2019
  • Payment of Wages Act, 1936;
  • Minimum Wages Act, 1948; 
  • Payment of Bonus Act, 1965; and 
  • Equal Remuneration Act, 1976

Occupational Safety, Health and Working Conditions Code, 2020
  • Factories Act, 1948; 
  • Mines Act, 1952; 
  • Dock Workers (Safety, Health and Welfare) Act, 1986; 
  • Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996; 
  • Plantations Labour Act, 1951; 
  • Contract Labour (Regulation and Abolition) Act, 1970; 
  • Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979; 
  • Working Journalist and other Newspaper Employees (Conditions of Service and Miscellaneous Provision) Act, 1955; 
  • Working Journalist (Fixation of Rates of Wages) Act, 1958; 
  • Motor Transport Workers Act, 1961; 
  • Sales Promotion Employees (Condition of Service) Act, 1976; 
  • Beedi and Cigar Workers (Conditions of Employment) Act, 1966; and 
  • Cine-Workers and Cinema Theatre Workers (Regulation of Employment) Act, 1981

Industrial Relations Code, 2020
  • Trade Unions Act, 1926; 
  • Industrial Employment (Standing Orders) Act, 1946, and 
  • Industrial Disputes Act, 1947

Code on Social Security, 2020
  • Employees’ Provident Funds and Miscellaneous Provisions Act, 1952; 
  • Employees’ State Insurance Act, 1948; 
  • Employees’ Compensation Act, 1923; 
  • Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959; 
  • Maternity Benefit Act, 1961; 
  • Payment of Gratuity Act, 1972; 
  • Cine-workers Welfare Fund Act, 1981; 
  • Building and Other Construction Worker’s Welfare Cess Act, 1996; and 
  • Unorganised Workers Social Security Act, 2008

The four labor codes aim to simplify regulatory compliance, foster trade and investment, and enhance ease of doing business. Additionally, the codes strive to address labour market rigidities while prioritizing worker welfare and rights. Key highlights include:

  • Decriminalization of minor offences: Several minor infractions have been decriminalized to reduce litigation and compliance burdens.
  • Focus on skill development: The codes emphasize building a skilled workforce to meet the demands of a dynamic economy.
  • Efficient dispute resolution: Mechanisms for resolving labor disputes have been strengthened to ensure fairness and efficiency.

Extending social security to gig and platform workers

As per reports, India’s central government is working to expand social security coverage to gig and platform workers under the Social Security Code, 2020. This initiative has involved extensive consultations with stakeholders such as aggregators, knowledge partners, platform worker organizations, and state governments to create a well-rounded framework.

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Additionally, India’s ministry of labor and employment, in collaboration with the International Labor Organization (ILO), is conducting a comprehensive study to better understand the gig and platform economies. The study focuses on:

  • Estimating the number of platform workers.
  • Analyzing prevalent business models.
  • Evaluating potential social security schemes and their financial implications, including aggregator contributions.
  • Developing a roadmap for implementing tailored social security measures.

A roadmap for reform

The implementation of the four labor codes represents a critical reform in India’s labor landscape. By consolidating and modernizing laws, India aims to strike a balance between the interests of workers and businesses. With efforts to harmonize rules, extend social security, and address the needs of emerging workforces, the country aims to usher in a new era of labor reforms, reinforcing worker rights while enhancing economic productivity.

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