The new Labour Codes – Denying Rights, Depriving Protections: Unpacking the Propaganda and the Lies of the Modi Government
By PUCL Bulletin Editorial Board
On 21st November, 2025, the NDA government notified the four Labour Codes: Code on Wages 2019, Industrial Relations Code, 2020, Occupational Safety, Health and Working Conditions Code, 2020 and Code on Social Security, 2020. The Government claimed that the Labour Codes are building a workforce that is protected; that they empower workers, extend social security cover to all, including gig workers, provide for a right to minimum wages, provide equal opportunity to women by permitting women in night shifts. The Labour Codes were touted as the biggest reforms since Independence.
These claims are not only far from true but a cruel joke on the Indian working class. Firstly the rights codified in the Labour Codes existed in the earlier legislations. Each and every right are the hard-won outcomes of decades of collective struggle by workers, trade unions and labour movements. Effectively, no new right or protection has been added.
The right to fair conditions, minimum standards, collective bargaining, safety, and social security represent victories of labour and unions against entrenched power and exploitation. Ironically, while the Government touts simplification and modernisation, what the Codes actually do is rob workers of critical protections, eroding the very rights that were fought for over generations. The Codes for the most part are a mere reproduction of the earlier legislations with a mere re-ordering and numbering of provisions. What is most dangerous however, are the few insidious additions and alterations which effectively have stripped the working class of entitlements and rights secured after decades of struggle.
Alteration of `coverage thresholds’ is one such insertion. Under the Industrial Employment (Standing Orders) Act, 1946, employers were required to define employment conditions and certify Standing Orders in industrial establishments with 100 or more workers. These orders provide transparency and clarity on terms of employment, disciplinary procedures, and grievance mechanisms to workers and once certified, they have statutory force. Under the Industrial Relations Code, 2020, this threshold has been raised sharply to 300 workers, meaning that only establishments with 300 or more workers are now legally required to frame Standing Orders. This potentially leaves a large swathe of industrial and manufacturing workers without statutory clarity on terms of employment, disciplinary standards, termination procedures, or redressal norms. A vast majority of Indian formal sector establishments are small and medium in size—suggesting that lakhs of workers who were hitherto covered would now be excluded from the purview of the Standing Orders.
Similarly the Factories Act, 1948 — subsumed into the Occupational Safety, Health and Working Conditions Code, 2020 — applied to manufacturing premises where 10 or more workers were employed with power, or 20 or more workers without power. This threshold has been altered to 20 and 40 respectively. The Factories Act provided in great detail the duties of the owner to maintain clean and healthy premises with adequate ventilation and lighting, protection from heat, dust, dangerous fumes, protection of eyes, prevent overcrowding, provide safe drinking water, sanitation etc. The Factories Act stipulated mandatory safety precautions such as secure fencing of machinery, adequate training to handle moving machine parts and many other safety measures in the installation and handling of various types of machinery, explosive or inflammable substances etc. The Code by excluding factories engaging less than 20 workers in a manufacturing process with power, or less than 40 workers in manufacturing without power has in one stroke removed even the basic physical safety measures to large numbers of workers. Thus many smaller establishments that historically attracted regulation will operate without immediate statutory safety oversight, placing worker lives at risk.
Previously, under the Industrial Disputes Act, 1947, establishments with 100 or more workers required prior government permission for closure, lay-off or retrenchment—a safeguard against arbitrary termination of jobs by employers. The Industrial Relations Code now raises this threshold to 300 workers, reducing protections for smaller establishments and giving employers considerably greater freedom to lay off or retrench workers without prior approval. Thus, by redefining coverage thresholds, the Labour Codes shrink the ambit of enforceable worker rights—precisely at a time when job insecurity and casualization are rising and many industries are moving to sub-contracting as a mode of functioning.
As to the erosion of labour rights, the process had begun much before the Labour Codes. The restrictions on registration of trade unions was brought in 2001 itself by the then NDA Government headed by Prime Minister Vajpayee. The Labour Code has merely re-enacted this provision as amended in 2001. Every Trade Union must have a membership of at least 10% of the workers engaged or employed in the industrial establishment or one hundred workers whichever is less, as a pre-condition to even getting the union registered. Any reduction in the membership will entail cancellation of registration by the Registrar of Trade Unions. This has resulted in more governmental control over the very existence of trade unions. The constitutional validity of this pre-condition for registration of trade union has not been seriously tested as against the fundamental right to form Associations guaranteed under Article 19(1)(c) of the Constitution though the Allahabad High Court in 2008 had in a very cursory manner upheld it in Lohia Machines Karamchari Sangh case. The Allahabad High Court has glibly held that the amendment did not prevent formation of unions but only regulated the registration of unions. It must be borne in mind that the crucial protection to a trade union is the immunity against civil and criminal liabilities for trade union activities; this however enures or applies only to a registered trade union and not an unregistered one. Hence by controlling registration of trade unions, members of unregistered trade unions can be mired in tortious and criminal liabilities which literally sets the trade union movement back to the pre-1926 era. One cannot forget how the Trade Union Act was the result of the civil courts awarding damages of several lakhs for losses incurred on account of a strike demanding a higher share of profits as bonus on members of the first Labour Union in India – the Madras Labour Union.
It is to be noted that the Code provides for recognition of negotiating union or negotiating council but is silent on the mechanism for recognition, once again leaving it to be ‘verified in such manner as may be prescribed’. It has been the longstanding demand of Trade Unions to have the mechanism of secret ballot or check off system to ascertain the majority union. But the Code has not used this ‘reform-moment’ to include this very crucial aspect for recognition of majority union.
One key definition in the Industrial Relations Code which in one stroke denies workers access to courts in case of illegal dismissal or discharge and protection in case of lay off and retrenchment, is the definition of industry. The definition of ‘industry’ under the Code reverses the inclusive interpretation given by the Supreme Court in `Bangalore Water Supply & Sewerage Board Vs. A Rajappa’ (1978) which introduced the ‘triple test’ of (a) systematic activity, (b) cooperation between employer and employee and (c) production/ distribution of goods or services to satisfy human wants. This resulted in hospitals, educational institutions, charitable bodies, clubs, temples and all government departments and local bodies being brought within the definition of industry, thereby providing the large sections of workers employed in these sectors access to courts and protection under the Industrial Disputes Act.
The first legislative attempt to reverse the said ratio was made in 1982, when the Industrial Disputes (Amendment) Act, 1982 was passed. However, the said amendment was never notified on account of strong opposition by the Trade Unions. After 43 years, this anti-worker provision has now been successfully introduced in the Industrial Relations Code, 2020, which excludes institutions owned or managed by organisations wholly or substantially engaged in any charitable, social or philanthropic, activities relatable to the sovereign functions of Government and any other activity as may be notified by the Central Government stand excluded from the definition of industry. This virtually turns the clock back to the pre 1978 situation and we will find many sections of workers out of coverage of worker protection laws and effectively being remedy-less.
One area which screamed for reform is the removal of ceilings under the Employees’ State Insurance Act, 1948 (ESI) and Employees Provident Funds and Miscellaneous Provisions Act, 1952 (EPF). The current ceiling of Rs.21,000 salary for inclusion in the ESI scheme is irrational. Over the years the ESI has developed a vast infrastructure of hospitals, built entirely out of the contributions made by the workers and the employers. Removal of the salary ceiling would bring all workers into the fold thereby reducing the load on government hospitals. It would also provide affordable health care to large sections of workers who are otherwise dependent on the private hospitals and private insurance. This long pending demand has been ignored.
Similarly, the ceiling of Rs. 15,000/- for contribution towards EPF also requires to be removed. Even if the compulsory employer contribution is capped so that the burden on MSME is not unreasonable, the option to increase contribution voluntarily by employees and employers should not be denied as it has the potential to provide the much-needed social security to workers, post-retirement. As per media reports, the EPFO holds Rs. 8,505 crores in inoperative accounts. These sums together with enhanced contributions can offer good pensions to workers. The Labour Code ‘reforms’ has completely overlooked this demand from the working class.
The most critical lacuna over the decades, on the wage front, is the lack of a proper statutory formula or criteria in determining the minimum wages. The long-standing demand of legislating the formula evolved by the Supreme Court in `Workmen vs. Raptakos Brett & Co’ case (2008) on what constitutes minimum wage has been once again consciously ignored. Even if this single aspect was introduced now, the Labour codes would have served the purpose.
The numerous other laws specially enacted for mine workers, dock workers, plantation workers, construction workers, cinema workers, migrant labour etc were enacted to suit the peculiar working conditions in each of these sectors and the peculiarities of those industries. It was not out of lack of imagination that earlier Parliaments thought it fit to enact separate enactments. With the subsuming of all these enactments by the single Occupational Safety, Health and Working Conditions Code, the sector-wise focus is lost.
This apart, many States have Welfare Boards functioning for the benefits of workers in the unorganized sector and the future of these Boards remains uncertain. The Code on Social Security merely provides for framing of welfare schemes by the Central Government and State Government from time to time, to unorganized workers, gig and platform workers; but no specific rights have been recognized.
Many of the state governments are yet to formulate the rules under the four Labour Codes. The devil is always in the detail and it remains to be seen what further chaos will be unleashed on the workers of our country. The shrill propaganda that the Labour Codes bring in `ease of doing business’ remains just that – propaganda. The lack of ease of doing business was never caused by labour or were the result of the provisions offering them some basic protection against exploitation. Hurdles in doing business were always caused by the government bureaucracy. The Labour bureaucracy and the penalty sections remain intact and hence the employers will have to continue to make their ‘regular payments’ to keep the government at bay.
At the end of the day the Labour codes legitimize exploitation of labour and emasculation of trade unions even as they offer little respite from the ‘license raj’ to the employers. At the end of the day, it is the Executive which is having the last laugh!