With the new Labour Code of India, the central government has taken a step towards simplification of the existing labour laws of the country. It has integrated 29 laws to form 4 codes, for a better understanding of the workers as well as the employers.
Currently, the labour codes are categorised under the Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020, and the Occupational Safety, Health and Working Conditions Code, 2020.
Over the past few years, this government has been an advocate of the formalisation of labour. From the Employment Linked Incentive scheme announced by Finance Minister Nirmala Sitharaman last year, to mandating appointment letters through the latest amendments in the labour law, the government’s formalisation of the workforce has been at the core of this government’s multiple agendas.
A key highlight around the formalisation of the workforce is that under the OSH Code (Occupational, Safety, Health and Working Conditions Code) 2020, offering appointment letters has been mandated for better transparency and job security.
Commenting on this, Naveen Tiwari, Co-Founder, Scrabble said, “Other than, say, instant order fulfilment apps, this will have a great impact in sectors like construction, small-scale manufacturing, logistics and warehousing. Sectors like retail and hospitality chains, grooming and salons, F&B, and facility management also stand to be transformed by this development.”
This, according to him, is also beneficial for the recruiters as the previous structure thrived on opacity. Now with written proof of wages and entitlements, companies would need to step up as tech-enabled organisations, following fair trade practices.
Further, some other key points from the 2025 amendments, to consider as a part of the formalisation drive are:
- The Social Security Code mandates the inclusion of gig workers into the PF, ESIC, insurance, and other social security policies of the companies, which have been identified as “aggregators” by the government. Earlier, ESIC benefits were restricted to certain geographical areas, which have been expanded pan-India. To facilitate this, the ministry has announced that the number of ESIC dispensaries and hospitals will be increased from 566 districts to all 740 districts of the country.
- Under the same code, ESIC has been mandated for companies in the hazardous industries, even if just one employee is engaged in the hazardous functions.
- The social security scheme has also been extended to include the fixed-term employees (FTE). Under this change, the companies mandatorily need to offer social benefits to the FTEs. The FTEs will also be eligible for gratuity just after one year of employment, unlike five years previously.
- This code further mandates the creation of a Universal Account Number (UAN) even for workers in the unorganised sector.
Naveen Tiwari said that the promise of insurance and ESIC-like protections would bring in some much-needed relief to the gig workers, as even a potential sickness or ailment threatens the financial stability and equilibrium of the household. “This becomes even more necessary for marginalised folks who may not possess any semblance of these safety nets due to displacement, loss to violence, among others.”
However, he is of the view that the real challenge still lies ahead, which is the implementation of these policies and ensuring they reach the most vulnerable section of gig-workers.
In an official statement, Prime Minister Narendra Modi said, “These reforms are very pro-worker. They are now entitled to all benefits and social security even if hired for a fixed term. The labour reforms will help create significant employment while also protecting the worker by ensuring minimum wage reforms, provision for social security for workers in the informal sector, and minimising government interference.”
According to him, such policies will ensure timely payment of wages and give priority to the occupational safety of the workers, thus contributing to a better working environment.
