Major Labour Laws and Acts in India

Labour law in India is designed to regulate wages, working conditions, industrial disputes, social security, and workplace safety. Since labour is on the Concurrent List, both Parliament and the states can make laws on the subject, subject to constitutional limits.

For exam revision, the most important development is the consolidation of multiple older labour statutes into four Labour Codes, aimed at simplifying compliance and expanding social protection for workers.

Constitutional Basis of Labour Law

• Concurrent List: Labour falls under the Seventh Schedule, especially Entries 22, 23, and 24.
• Entry 22: Industrial disputes.
• Entry 23: Social security and insurance, employment and unemployment.
• Entry 24: Welfare of labour, including conditions of work, provident funds, employers’ liability, workmen’s compensation, invalidity and old age pensions.
• Directive Principles: Articles 39, 41, 42, and 43 provide the constitutional basis for just and humane conditions of work, maternity relief, and a living wage.

The Four Labour Codes

• Code on Wages, 2019: Consolidates wage-related laws and standardises wage definitions.
• Industrial Relations Code, 2020: Deals with trade unions, standing orders, and industrial disputes.
• Code on Social Security, 2020: Covers provident fund, gratuity, maternity benefit, employee insurance, and welfare of gig and platform workers.
• Occupational Safety, Health and Working Conditions Code, 2020: Brings together laws relating to factories, mines, plantations, contract labour, and safety standards.
• Purpose: The codes were introduced to replace a large, fragmented body of central labour laws with a simpler framework.

Exam fact: The four Labour Codes consolidate 29 older central labour laws.

Key Changes in Wage Regulation

• Wage definition: Basic pay and excluded allowances together must form at least 50% of total monthly remuneration.
• PF and gratuity impact: This wage floor affects the base on which provident fund and gratuity contributions are calculated.
• Timely wage payment: Full and final settlement of wages must be completed within two working days of resignation, dismissal, or termination.
• Significance: The reform reduces manipulation of salary structures and strengthens statutory wage compliance.

Social Security for New-Generation Workers

• Gig and platform workers: The Code on Social Security, 2020 gives formal statutory recognition to these workers.
• Welfare funding: Aggregators are required to contribute between 1% and 2% of annual turnover.
• Contribution ceiling: The contribution is capped at 5% of the amount payable to workers.
• Fixed-Term Employees: They are entitled to wages, working hours, and social security benefits on par with permanent employees.
• Gratuity for FTEs: Fixed-Term Employees can receive pro-rata gratuity after one year of service.

Industrial Relations and Workplace Safety

• Layoff and retrenchment threshold: Prior government permission is required for establishments with 300 or more workers, replacing the older 100-worker limit.
• Industrial relations framework: The code streamlines rules relating to trade unions, strikes, lockouts, standing orders, and dispute resolution.
• Annual health checkups: Workers above 40 years of age are to be provided free annual health checkups.
• Grievance Redressal Committee: Establishments employing 20 or more workers must set up a GRC with equal representation of employers and workers.
• Safety objective: The occupational safety code attempts to unify and modernise safety norms across sectors.

Implementation and Administrative Setup

• Central Rules: The Government of India notified the final central rules for all four codes in May 2026.
• State rules: Implementation at the state level remains uneven, and many states are still in the draft stage.
• Gujarat: It is the only major state to have finalised and notified rules under all four codes.
• Ministry: The Ministry of Labour and Employment administers these reforms.
• Ministerial charge: Dr. Mansukh Mandaviya serves as Union Minister of Labour and Employment, and Shobha Karandlaje is Minister of State.

Key Prelims Takeaways

• Constitutional position: Labour is a Concurrent List subject under Entries 22, 23, and 24.
• Constitutional support: Articles 39, 41, 42, and 43 guide labour welfare and decent working conditions.
• Major reform: 29 older central labour laws have been consolidated into four Labour Codes.
• Wage rule: Basic pay and excluded allowances must be at least 50% of total remuneration.
• FTE benefit: Fixed-Term Employees can get pro-rata gratuity after one year of service.
• Layoff threshold: Prior government approval applies to establishments with 300 or more workers.
• Worker welfare: Gig and platform workers are brought within the social security framework.