By Saumya Dhyani ~ Army Institute of Law, Mohali


The COVID-19 pandemic had an unprecedented negative impact on the economy. Lockdown resulting in the shutting down of establishments brought economic losses not only to the owners of these establishments but also to the migrant workers working there. Many states with an aim to revive the economy suspended Labor laws in their states. Gujarat, Uttar Pradesh, Madhya Pradesh and Himachal Pradesh were the first states to do so. However, there was an ongoing discussion about reforming labour laws from quite a long time now. The parliament passed the 3 Labour Codes amidst the political drama and consequently, received the President’s assent on September 28, 2020. These 4 codes have subsumed within themselves 29 out of the 40+ central laws. Out of these four codes, the Codes on Wages was passed in the year 2019 itself; however, the rest three were passed in 2020. The four codes are –

Code on Wages, 2019[1], The Occupational Safety, Health and Working Conditions Code, 2020[2] The Code on Social Security, 2020[3] and The Industrial Relations Code, 2020[4]. Agitated by the parliamentary proceedings which took place in the Rajya Sabha, the opposition decided to boycott these bills; as a result, the bills were passed in the parliament without the opposition. ‘Labour’ is a subject matter of the concurrent list; hence, both the Central as well as the State governments can legislate in this field as a result of which 40 Central Laws and 100 other state laws operate in the country. This led to a seamless web of legislations which were anarchic, contradictory to one another and hence, resulted to failed implementation. The 2nd National Commission which was established in the year 1999, submitted a report in 2002 and suggested that the labour laws of the country be classified under the following five heads (a) industrial relations; (b) wages; (c) social security; (d) safety; and (e) welfare and working conditions. In furtherance, the Parliamentary Committee suggested 100 changes, amongst which 74 were implemented. These codes were introduced to increase production and employment opportunity in the economy in such a manner that the interest of the workers doesn’t get compromised.


This code simplifies, amalgamates and codifies 3 statutes-

(a) the Trade Unions Act, 1926;

(b) the Industrial Employment (Standing Orders) Act, 1946; and

(c) the Industrial Disputes Act, 1947.

The objectives of this Act is the protection of the worker’s rights and minimizing friction between the employers and the workmen by providing, a broader framework for trade unions, etc. The ultimate aim is to promote industrial peace and harmony and enhance the progress of the industries by bringing harmony and cordial relationship between the employers and the workers.


  1. The definition of workers has been expanded to include working journalists and sales promotion employees under its ambit as defined under Section 2(f)[5] and Section 2(d)[6] . The definition of a strike has also been expanded and it now includes casual leaves on a given day if taken by fifty per cent or more workers employed in an industry. The definition of the industry has also been revised under this code. This bill also provides for setting up of a re-skilling fund.
  2. The strikes and lockouts have been prohibited, in a way that no worker could go out on a strike without giving a notice 14 days prior to the strike and it would be valid for 60 days.
  3. This act waived off the requirement of industries that they mandated that they had to seek prior permission of the government to lay off or retrench workers. This necessity has now been done away with.
  4. It also mandates that any establishment which has more than three hundred workers will have to make standing orders (regulations) regarding holidays, paydays, workers classification etc.
  5. The current redressal system involves multiple adjudicating bodies like the Court of Inquiry, Board of Conciliation and Labour Courts. This code aims to replace all of these authorities with the Industrial Tribunals.


  1. This code replaces nine laws[7], some of them include The Employees’ Provident Fund Act, 1952, the Maternity Benefit Act, 1961, and the Unorganized Workers’ Social Security Act, 2008. The code has expanded the definition of workers and it now includes unorganized sector, gig workers, platform workers, and also film industry workers, inter-state migrant workers, workers providing services in Ola and Uber etc. It states that separate social funds should be maintained by the central as well as the state governments.
  2. This act aims the establishment of a National Social Security Board which would recommend the central government to formulate and notify suitable welfare schemes relating to employment injury, an educational scheme for children etc.
  3. Under this code, the employee’s share in provident funds has been reduced from 12% to 10%, whereas, the employer’s share remains at 12%. Therefore, it helps the employees as their take-home pay has been increased.
  4. This code has now removed the mandatory five years of continuous work as an eligibility criterion for obtaining gratuity. It has now been different for different workers depending upon the tenure of work. For working journalists, the term has been reduced from five years to three years.


  1. The 2020 Code has amended the threshold of workers in the definition of factory. The threshold has been increased from ten workers to twenty workers in case the premises doesn’t use power and in case the premises uses power the no of workmen have been increased from twenty to forty.
  2. The code has fixed the maximum working hours to eight hours a day.
  1. The code has clarified that women are entitled to be employed in all types of establishments for all types of work and it is the responsibility of the employer to provide all types of safeguards to women in case they are involved in hazardous activities.
  1. Those persons will be considered as inter-state migrant workers whose earnings are maximum up to 18,000 per month. These workers can get themselves registered on the online portal with the help of Aadhar.
  1. It talks about the establishment of the National Occupational Safety and Health Advisory Board and the State Occupational Safety and Health Advisory Board at the central and the state level respectively. Their work would be to advise the governments on occupational safety, health and working conditions of workers.


The industrial sector of the country needed a massive reform, as most of the laws were either of the British Era or had their origin in the early 20th century. Since science and technology are undergoing innovations and is ever advancing so should be laws of the country. It is high time that labour disputes are addressed not in the form of litigations but rather in the form of amicable settlements with dispute resolution as their aim. In the current scenario reviving the economy is the primary concern of the nation, and it can only be done if there is productivity in all the sectors of labour employment. Once the government notifies rules and regulations related to various provisions only then will the big picture be completed.



[1] No. 29 of 2019

[2] No. 37 of 2020

[3] No. 36 of 2020

[4] No. 35 of 2020

[5] Working Journalists and other Newspaper Employees (Conditions of Service)

[6] Sales Promotion Employees (Conditions of Service) Act, 1976.



Highlights of the Labour Codes, 2020

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