Clipped from: https://www.thehindubusinessline.com/opinion/labour-codes-could-have-achieved-more/article70331917.ece
They leave too much to the rules and let small industries off the hook in compliance
Safety concerns in smaller factories ignored | Photo Credit: Siva SaravananS
The entire debate on labour law reforms was pitched on ‘ease of doing business’ (EoDB). However, EoDB and labour rights (LR) can coexist. Adequately, even well-paid, healthy workforce assured of social security coverage and safe workplaces would be far more efficient than otherwise. Sadly, the lawmakers used the four labour codes (wages, industrial relations, occupational health and safety and social security) to enhance EoDB, while tinkering with labour welfare clauses.
The threshold for the application of the Industrial Employment (Standing Orders) Act, 1946 has been relaxed from 100 to 300. This law, apart from making regulations transparent and uniform, provides security against unfair dismissals. The government has also legalised fixed term contracts to provide numerical flexibility to employers. Though it has some provisions favouring labour there are no caps on the number of renewals. In China, post-two renewals, workers should be given an open-ended contract.
The major objective of industrial relations laws is to devise institutions and mechanisms to deliver quick justice to workers/employers. The CIR dispenses with Labour Courts and retains only Industrial Tribunals (ITs) among others. IT will have two presiding officers (judicial and administrative). Workers first go to an IT and in the absence of unanimity between two officers wait for the third officer to join the IT. The high number of vacancies for officers and bureaucratisation will only delay the process of workers getting justice. The IT system can confuse legally illiterate workers.
Tall promises
The Wage Code (WC) has universalised minimum wages (MW). The Central government shall notify the National Floor Level MW and no State shall have MW below it. However, these are gigantic promises given the huge workforce of around 500 million (MW applicable to agriculture also) and poorly staffed enforcement machinery.
The government has claimed that workers’ safety has been increased in the Occupational Health and Safety and Working Conditions Code (OSHWCC). OSHWCC is applicable to factories with 20+ workers using power and 40+ not using power. The coverage of OSHWCC is much less than that covered by the Factories Act.
The Factories Act, 1948 stipulates the compulsory constitution of a bipartite safety committee in every factory in which hazardous processes/substances are used. The appropriate government “may” by a general or specific order require the constitution of a safety committee (s.22). OSHWCC requires the appointment of a safety officer in a factory with 500+ workers and a factory carrying on a hazardous process (250+). [s.22(2)(a,b)]. What was once an enshrined legal right is now subject to the pleasure of the executive. Is safety not a concern in smaller factories?
In line with its presumption that workers in smaller establishments do not need legal coverage, the OSHWCC has relaxed the threshold of contractor/principal employer from 20 to 50 contract workers. It has virtually allowed contract labour in all activities (perennial/non-perennial). It is well-known that smaller contractors are less dependable in law compliance. In China, in the reform in 2013, the government raised the minimum registered capital from ¥500,000 to ¥2,000,000. It also capped dispatch labour at 10 per cent of the total workforce and provided for equal pay for equal work (dispatch and directly employed).
In the SSC, the thresholds concerning EPF and ESI have not been changed, which is regrettable. The only positive aspect is the inclusion of gig/platform workers for social security. But they have been left out in the other codes, so issues like minimum wages are left unanswered. SSC does not contain labour welfare schemes for the unorganised workers, does not mention the sources for funding and has not determined the rate of contribution by the sources to the Fund. These are left to the rules.
The government boasts of fewer clauses primarily because procedural and substantive issues have been left to rule-making. The codes shift the legal power from the Parliament/Assembly to the executive. This is troublesome.
The writer is Professor of Practice, MDI, Gurgaon
Published on November 28, 2025
aniltikotekar4sme.com 