New Labor Laws


Labour laws refer to laws regulating and protecting labour, also known as employment laws it is the body of laws, administrative ruling and precedents which address the legal rights of and restrictions on working people and their organisation. Law of the land should be updated continuously with changing times and demands of the society. In India, it is estimated that about 92% of the workforce is employed in the informal sector that has low wages, and low earnings with limited or no social protection. No one can deny the fact that in COVID 19 times, our economy faced a setback, it was the informal labour market which suffered a lot in the cutting down of wages, job losses majorly terminated without prior notice and unemployment. This actually raised questions on basic safety, job security and rights of labourers who constitute a majority of our market and economy. Apart from that, women participation in the workforce has been rising over the years. This has forced the government to revisit, revaluate and amend the old labour laws in accordance with new market trends in order to provide basic rights and safety to the working force of our nation.


The history of labour laws dates back to ancient times when the class of workers were respected and their health and safety were carefully thought about as mentioned in kautilya’s Arthashastra. In due course of time as the British era began, they brought many labour laws in order to empower British employers rather than workers in order to suppress and dominate Indian workers. The British regulation mainly promoted forced labour. Under colonial rule labour rights were mainly regulated by acts mentioned below:

  1. Indian Slavery Act,1843: This act was mainly introduced to abolish slavery, it criminalised buying or selling of slaves and strict punishments for this offence under the Indian Penal Code.
  2. Workmen’s Breach of Contract Act, 1859: This act states the punishments for breaches of contracts by artificers, workmen and labourers. It demanded fines or orders for specific performance of specific services in case of employment breaches.
  3. Factories act 1883 and 1893: This act actually favoured the workers. It was applicable in factories where workers were more than 100. It abolished child labour, fencing of dangerous machines, provision of breaks in between work, compulsory 4-day leaves in a month, introduction to overtime wages and restricted women from working at night.

After world war I, Britishers introduced the Indian Trade Unions Act 1926 and Trade Disputes Act 1929. The registration of trade unions and the laws relating to registered trade unions was stated in the Indian Trade Unions Act 1926 which  forbids the discharge of workers temporarily or permanently because of a shortage of work, making an employee needless or useless. The  Trade Disputes Act 1929 came into effect in order to control and maintain the relationship between workers and employers. Under this act, workers’ rights of the strike were kept under control and the workers were excluded by the employers until they agree to certain conditions at the same time no machinery was provided to take care of disputes. The Workmen’s Compensation Act,1923 also came into effect whose main focus was to provide compensation to workers who met with accidents or sustained injuries during the course of their employment.


As Britishers left and we established our own government, we established new laws too.The welfare and safety of Indian citizens were in the hands of the newly formed central government. Thus the government amended some old laws and made some new laws in order to empower workers. Industrial Disputes Act, 1947 became independent India’s basic structure of labour laws, it provided process and procedure for investigation and settlement of industrial disputes. Some other important acts were as follows-:

  1. The Factories Act, 1948: It was later amended by The Factories Act, 1987, it helped in making national policies with reference to occupational security and welfare of workers.
  2. The Minimum Wages Act, 1948: It specifies minimum wages to be paid to both skilled and unskilled labour. 
  3. Child Labour Prohibition Act: According to this act employing children below the age of 14 years in risky or dangerous jobs is prohibited.
  4. The Employment State Insurance Act: It safeguards workers’ rights to welfare. It extends the worker’s health protection and well-being facilities against injuries and other issues. It enabled them to avail insurance in the events of sickness, maternity etc.
  5. The Dock Workers ( Regulation of Employment Act, 1948 ):This act prohibits the temporary hiring of persons in ports who load and unload ships ( dock workers).
  6. The Plantation Labour Act, 1951: This act was established for the welfare of tea and plantation workers. It regulates their safety and working conditions.


In the 1990s our economy was liberalised as a result our economy went under a huge change in terms of work culture. The government realised that it was time to roll back regulations and laws which were not in sync with our liberalised economy, those rules were changed and the capacity of enterprises to employ and release workers from employment usually in rapid succession, to engage labour in more flexible arrangements and payment of minimum wages. Due to the introduction of the new industrial policy, one can easily see that labourers were less controlled and were given more freedom and liberty in their work at least in the organised sectors and the use of contract labour was seen unlike earlier. The main aim of the government was to control the way laborers work rather than making labourers a puppet.

  1. CHANGES IN WORKFORCE: After 1991, India witnessed a fair change in the economy but the general direction of growth of employment patterns is unchanged. India is an agricultural country as about 60 % to 70%  of the population, i.e. about two-thirds of the population derives their livelihoods from agriculture. The Indian labour market is divided into organised and unorganised sectors. The unorganised sector is not driven by government regulations as a result jobs are irregular and low-paid, and workers are usually fired without prior notice or reason. Sadly, the majority of Indian workers are employed in this sector, a total of 43.7 crore people out of 46.5 crores are employed in the unorganised sector. Domestic help workers, weavers, handloom workers etc fall under this category, on the other hand, organised sector is regulated by the government, rules and regulations made by government are followed, employees enjoy job security i.e. they can’t be fired without any specific reason or on short notice, they have fixed working hours and are paid a bonus for working overtime, they even enjoy medical and other benefits. Only 2.8 crore people out of 46.5 crores are employed in this sector. Government employees, people working in MNCs, bankers etc. fall under this category.
  1. WOMEN WORKFORCE PARTICIPATION: According to statistics, India ranks lowest in terms of women’s contribution to the workforce. It was seen that the female labour force participation rate was 31% in 2011-2012 and close to 23% in 2017-18, it is quite visible that it fell drastically instead of growing. In rural areas the situation is worse, the female LFPR fell by more than 11%. Nevertheless, the women workforce suffered during COVID 19 lockdown like others and is not able to recover yet according to Bloomberg’s reports 90% of women are shut out of the workforce. And the female workforce in India has declined to 9% since the pandemic. World Bank reports indicate that the women workforce in India constitutes only about 20.3% as of 2021 which is a not good sign. India is even far behind its neighbours 48% of the Indian population are women but they only give only 17% of GDP compared to 40% in China. As Indian families get richer they tend to keep women at home, Lack of safe workplaces, unable to manage both household work with work commitments, and lack of suitable jobs are the main reasons which prevent women’s participation in the workforce.
  1. UNEMPLOYMENT: A state where people don’t have paid jobs or any other mode of livelihood to sustain themselves and their families is referred to as unemployment . Many youngsters are victims of unemployment. In recent years the unemployment rates have been as follows, 2017-18 6.1% , 2018-19 5.8%  and in 2019-20 at 4.8% .About 7.8% of the total Indian workforce is unemployed in June 2022 it was due to a rise in rural unemployment however it’s the lowest percentage India saw in the last one year. The unemployment rate in rural areas is 8.03%  which was 6.62% in the month of May 2022 and it is clearly visible that it has increased by 1.41%. A  rapid increase in population, many people prepare for government exams like UPSC and spend many years of their lives in it and hence don’t apply for jobs or work elsewhere, lack of extensive and adequate employment policy and wide gaps between wages and productivity are some of factors responsible for unemployment in India.


The Parliament has passed three labour code bills in order to help workers of our nation. Now 29 labour laws are simplified, codified and combined into 4 labour codes. The bills represent a big change in labour laws as for the first time the migrant workers and gig workers are talked about and the workers in the self-employment sector will be provided with social security. The reform is set to target about 50 crore workers working in both organised and unorganised sectors. The new codes are as follows:


Under this code, wage security, social security and health security are provided to workers. It assures minimum wages which will be now determined according to skills and geographical area of workers and their review in 5 years, timely payment of wages to all workers, and equal remuneration to males and females without any gender biasness. It also works towards removing regional disparity in minimum wages as under it floor wage has been introduced.


Under this code, the central government has combined and simplified 9 labour laws into the social security code in order to safeguard workers’ health rights like insurance, maternity benefits, gratuity etc. It deals with all elements of the legal framework for providing social security to workers. Free treatment is available under hospitals and dispensaries of ESIC, which are to be expanded to the district level, even if a single worker is engaged in dangerous work he is entitled to ESIC. Plantation workers are now entitled to get the benefit of ESIC too and it is now compulsory for institutions working in the hazardous area to get registered with ESIC. It gives workers many other benefits too like removal of the requirement of minimum service for payment of gratuity, creation of social security funds, Aadhar-based universal account number for ESIC, EPFO and unorganised sector, creation of a national database of workers through registration and opportunity for fixed-term employees to get social security as permanent employees.


Under this code,  workers in the organised sector who lost their jobs will get benefits under Atal Bimit Vyakti Kalyan Yojna in form of financial aid from the government, tribunals will ensure faster justice for workers as worker’s disputes to be resolved within a year, workers will be getting 15 days wages for re skills in case of retrenchments, faster disposal of cases for which industrial tribunals will have 2 members. A trade union with 51% votes is recognised as the sole negotiating union while in industrial establishments which have no trade unions with 51 % votes a negotiating council of trade unions shall be constituted for making agreements with the employer.


This seems to ease the lives of the inter-state migrant workers as they can now register themselves as inter-state migrant workers on the national portal it will help workers to get their own legal identity so that they could avail of benefits from social security schemes, and workers will now be provided with travelling allowances by the employers annually for taking to and fro journey to his native place. provision of appointment letters and free annual health checkups to be provided by the employers, provision of ration to workers where they are working and to their families where they are residing, every state will now have helpline facilities to seek worker’s grievances. Most interestingly workers will now be entitled to one day’s leave for every 20 days of work done.



A person having a paid job directly or through any agency in any sector i.e. organized, unorganized, secondary, primary or tertiary sector to do any manual, skilled, unskilled or semi-skilled or supervisory work in exchange for monetary benefits termed as a worker.


According to new labor laws, the companies can change working hours by increasing them but in return, they need to give workers 2 days off a week and 4 day work week. Now the workers will have the option to work 12 hours a day instead of 8-9 hours and get an additional day off in lieu of higher working hours. The objective of the government is not to reduce working hours and at the same time give workers more time to pursue their interests and maintain a work-life balance without altering working hours and output. With the introduction of new labour codes, there is an increase in the limit of overtime hours too from 50 hours to 125 hours in a quarter across industries.


The employees are allowed to take three weeks off and in return, they have to work for a time period of not more than 48 hours, workers working for 8 hours a day are entitled to 1 week offs, and workers working 12 hours a day get 3 week offs while the workers working 9 hours a day are entitled to 2 week offs. The workforce is now entitled to get leave every 180 days instead of 240 days as used to happen earlier.


There is now going to be a notable change in employees’ provident fund and their in-hand salaries as working hours increase, PF contributions are likely to increase too while in-hand salary of workers is likely to decrease especially for private sectors. The new codes are likely to fix an employee’s basic salary at 50 % of the gross salary ( gross salary means an employee’s salary without deductions ). Pension and gratuity will also increase which will ease the life of workers after retirement.


Labour codes also have new rules for payment and settlement of final wages. It is now mandatory to make the payment of wages to employees leaving an organisation within 2 working days, whether it is the removal, dismissal or resignation. They cover all employees and do not quote any certain limit on salary thus making this timeline omnipresent. It is important for the employers to make sure that only specifically allowed deductions are deducted from their salaries such as PF, tax etc. and 50% is the maximum deduction one could have.


In simple words, women empowerment can be defined as raising the status of women through education, awareness, respect, literacy and training. It also encourages a women’s sense of self-worth, to stand and take on their own decision without any interference or judgement. Women empowerment is important for the economy of the nation as well as society. Educated women can undoubtedly contribute to full of their potential to our nation’s economy and can help significantly to boom it. Also, in terms of human rights, women’s empowerment plays a key role as they too deserve the right to education, the right to practice and profess the occupation they want, right to take decisions of their own life, depriving women of such basic rights violates their fundamental and human rights.  Understanding the importance of women’s empowerment in today’s society government tried to make women empowered through new labour codes as they provide the right to female workers to work in all kinds of establishments, women by their consent and even work at night and it is the responsibility of the employer to make appropriate arrangements so that they could work at night and are same at the same time. The government has amended the maternity benefit act, which increased their paid maternity leave from 12 to 26 weeks with a compulsory nursery for babies and young children in any business organisation or public institution with at least 50 or more workers.


Amidst the claims that the new labour codes will empower workers and strengthen our economy, there are a few challenges with it too. Though they are empowering, they fall short in some aspects too. Some major issues concerning new labour codes are as follows -:

  1. Absence of provisions for part time employees.
  2. It reduces hand salaries of workers which upsets many workers as in these inflationary and uncertain times everyone needs good hand salaries in order to fulfil their needs and even save for the future , which will be difficult now due to decrease in hand salaries.
  3. Since it  increases retirement funds it is not supported by a large section of employers as it increases their employee costs and lead to more expenses on their part.
  4. It has increased the Burden on firms and employers as they now have to bear higher provident fund liability.
  5. There is going to be a negative impact on workers as industrial strikes will become harder to do which will curb their right to peaceful protest and will kind of suppress their views, in case they are not in sync with that of the organisation they are working with.
  6. In view of the present situation, small businesses are not in a position to adopt , abide and effectively implement  these new codes and rules. 


As we have seen in the past how workers were given a status of honour and respect in earlier days but it was somewhere lost as we reached till middle century, but now the government is trying to revive those times by the virtue of their power by amending existing laws and introducing new laws. New labour laws are one such initiative, they are a positive approach in order to empower the Indian workforce and strengthen its economy. It will make a huge impact on the lives of workers and how they are treated by their employees  Not only it will provide flexibility by introducing short-term work contracts but it will also benefit the women workforce and will hopefully bring them forward to contribute to our economy and bring gender equality in working dimensions but there are still aspects which are ignored and yet to be taken care of which government should look into, they are definitely not perfect but a way forward. It’s now the responsibility of the state to effectively implement these rules and regulations and thoroughly review them in order to reduce the regulatory burden. Furthermore, communication among states is very important in order to make standardisation easy and the establishments can act in accordance to meet the specified standards and bring uniformity across the nation. On the other hand, authorities should show integrity and honesty while implementing these laws so that we could achieve our desired goals and utilise the potential of our workforce to the fullest.

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