Introduction:
“Labour Law as the Backbone of India’s Economic and Administrative Vision”
Labour law in India stands at the crossroads of economic growth and social justice. As India aspires to become a $5 trillion economy, the need to harmonize workers’ rights with industrial flexibility has never been more critical. The transformation of labour laws through the Four Labour Codes—on Wages (2019), Industrial Relations (2020), Social Security (2020), and Occupational Safety, Health and Working Conditions (2020)—marks a watershed moment in the evolution of India’s labour jurisprudence.
Constitutional Foundations of Labour Rights
The Constitution of India provides the fundamental framework and guiding principles for all labour laws in the country. This foundation is primarily established through the Fundamental Rights (Part III) and the Directive Principles of State Policy (Part IV), which together aim to create a just, equitable, and socialistic society, recognizing the dignity of labour.
Fundamental Rights (Part III)
These legally enforceable rights are crucial for worker protection:
Article 14 ensures equality and prohibits discrimination, supporting the principle of equal pay for equal work.
Article 19(1)(c) guarantees freedom of association, forming the basis for trade unions and collective bargaining.
Article 21 has been interpreted to include the right to a dignified life, a safe working environment, and a sufficient livelihood, with denial of minimum wages violating this right.
Article 23 prohibits forced labor, leading to legislation like the Bonded Labour System (Abolition) Act, 1976.
Article 24 prohibits child labor in hazardous occupations for children under 14.
Directive Principles of State Policy (Part IV)
These principles guide the state in policy formulation, though not directly enforceable:
Article 38 directs the state to promote welfare and minimize inequalities.
Article 39 includes provisions for adequate livelihood, equal pay for equal work (leading to the Equal Remuneration Act, 1976), and protection of workers’ health.
Article 41 aims to secure the right to work and public assistance in various situations.
Article 42 mandates securing just work conditions and maternity relief, the basis for laws like the Maternity Benefit Act, 1961.
Article 43 requires the state to secure a living wage and decent working conditions.
Article 43A encourages worker participation in management.
Key Labour Law Reforms in India
The shift from 29 central labour laws to 4 comprehensive codes signifies a major structural reform, aimed at simplifying compliance and reducing overlapping provisions.
1. The Code on Wages, 2019
Objective: To ensure uniformity in wage-related laws and guarantee “equal pay for equal work.”
Merged Laws: Payment of Wages Act, Minimum Wages Act, Payment of Bonus Act, Equal Remuneration Act.
Key Reforms:
- Uniform definition of wages for all labour laws.
- Minimum wages applicable to all employees, not just scheduled industries.
- Digital wage payment promoted for transparency.
- Empowerment of the Central Advisory Board to fix national floor wages.
Corporate Impact: Simplifies payroll structures and reduces multi-law compliance.
2. Industrial Relations Code, 2020
Consolidates laws governing trade unions, employment conditions, and industrial disputes.
Key Reform: Increases the retrenchment threshold for prior government approval from 100 to 300 workers, giving employers flexibility but sparking debates over workers’ security.
3. The Code on Social Security, 2020
Objective: To extend social protection to all workers, including gig, platform, and unorganised sector workers.
Merged Laws: EPF, ESI, Maternity Benefit, Payment of Gratuity, and others.
Key Reforms:
- Recognises gig and platform workers for the first time in Indian law.
- Creation of Social Security Funds for unorganised workers.
- Digital registration through a universal social security number.
Corporate Impact: Promotes inclusive growth but increases reporting responsibility for HR departments.
4. Occupational Safety, Health and Working Conditions Code, 2020
Objective: To ensure safe and humane working conditions.
Consolidates 13 laws related to safety, working hours, and health standards.
Corporate Implication: Imposes stricter obligations for safety audits, welfare officers, and risk assessments—especially in manufacturing and construction sectors.
What is the Difference Between Organised and Unorganised Sector?
Organised sector or formal sector in India refers to licensed organisations, that is, those who are registered and payGoods and Service Tax.
These include the publicly traded companies, incorporated or formally registered entities, corporations, factories and large businesses.
Unorganised sector, also known as own account enterprises, refers to all unlicensed, self-employed or unregistered economic activity such as owner manned general stores, handicrafts and handloom workers, rural traders, farmers, etc
Judicial and Corporate Developments
The judiciary continues to reinforce the constitutional vision of labour rights:
M/s Bombay Chemical Industries v. Deputy Labour Commissioner (2022)
The Supreme Court held that Labour Courts under Section 33-C(2) IDA cannot decide employment relationships when they’re disputed; they can only execute established rights. The case highlights the need for procedural clarity under the new labour codes and warns corporates to maintain transparent employment documentation.
In People’s Union for Democratic Rights v. Union of India (1982), the Supreme Court emphasized that non-payment of minimum wages constitutes “forced labour” under Article 23. This is a foundational worker-rights case.
In Bandhua Mukti Morcha v. Union of India (1984), the Court held that the right to live with dignity includes humane working conditions.
More recently, in Uber BV v. Aslam (UK Supreme Court, 2021)—though not Indian, it strongly influenced global discussions—platform workers were recognized as employees entitled to rights and benefits. Indian courts are likely to reference this in upcoming gig worker litigations.
Corporate Examples:
Uber India Systems Pvt. Ltd. v. Commissioner of Income Tax (2021, Delhi HC)
The Court examined whether Uber drivers are employees or independent contractors. It observed that the degree of control by the platform determines employment status — a principle shaping current Social Security Code provisions on gig and platform workers.
The Byju’s layoffs controversy and Swiggy-Zomato’s contractual disputes underline the ongoing friction between corporate flexibility and workers’ security.
The rise of remote work and freelance contracts during the post-pandemic era demands reinterpretation of what constitutes “employment” under labour laws.
The Gig Economy: The landmark petition Indian Federation of App Based Transport Workers (IFAT) v. Union of India before the Supreme Court is pivotal. The petitioners argued that the denial of social security benefits to gig workers, by classifying them as “independent contractors” rather than “workmen,” violates their fundamental rights under Articles 14, 21, and 23. The Code on Social Security, 2020, attempts to address this by creating a separate welfare framework, but the judicial outcome will define the extent of the aggregators’ responsibility.
Challenges in Implementation and Corporate Compliance
Despite the promise of reform, implementation of the labour codes faces multiple hurdles:
Delayed Enforcement:
Though passed, the codes are yet to be fully notified, leading to ambiguity for corporates and HR departments.
Multiplicity of Jurisdictions:
Labour remains on the Concurrent List (Seventh Schedule)—resulting in varied state-level interpretations and compliance frameworks.
Gig and Informal Sector Coverage:
With over 90% of India’s workforce in the unorganized sector, ensuring real-time registration, benefit distribution, and social security remains a logistical challenge.
Corporate Governance Dilemmas:
For businesses, balancing cost efficiency with ethical labour practices is complex. Overregulation may deter investment; under-regulation may breed exploitation.
Conclusion:
The Evolving Landscape of Labour Law in India is a dynamic arena of conflict and confluence. It represents India’s effort to move away from a fragmented, post-colonial regulatory structure to a modern framework that supports both its aspirational $5 Trillion economy and its constitutional commitment to social justice The Four Codes offer clarity, consolidation, and a legal scaffold for 21st-century work — including recognition of gig workers — but their promise depends on principled implementation: clear rules on worker classification, robust social-security financing, capable enforcement, and active tripartite governanc
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