Relevance: GS III (Economy – Employment) & GS II (Social Justice) | Source: Ministry of Labour & Employment

1. The Context: One Code to Rule Them All

On November 21, 2025, India overhauled its labour market by merging 29 complex central laws into just 4 comprehensive Labour Codes.

• The Goal: To balance “Ease of Doing Business” for employers with “Social Security” for workers. This dual approach is often called “Flexicurity”.
• The Shift: The old “Inspector Raj” (policing) is replaced by “Inspector-cum-Facilitators” (guiding), signaling a trust-based compliance regime.

2. The 4 Pillars of Reform

The overhaul rests on four specific pillars:

• Code on Wages (Universal Pay):
  • Floor Wage: The Central Government will fix a “National Floor Wage”. No state can set a minimum wage below this benchmark.
  • Universal Coverage: Minimum wage rights now apply to all workers (previously only 30% of the workforce was covered).
• Industrial Relations Code (Hiring & Firing):
  • The 300 Rule: Companies with up to 300 workers (previously 100) can now retrench staff or close down without seeking government permission. This encourages MSMEs to grow without fear of rigid laws.
  • Fixed Term Employment (FTE): Contract workers are now entitled to the same benefits (wages, hours, social security) as permanent employees, discouraging exploitation.
• Social Security Code (The Gig Safety Net):
  • Gig Workers: For the first time, “Gig and Platform Workers” (e.g., Zomato, Uber drivers) are legally recognized.
  • Funding: Aggregators (companies) must contribute 1-2% of their annual turnover to a dedicated Social Security Fund for these workers.
• Occupational Safety, Health and Working Conditions Code, 2020 (OSHWC) Code (Safety & Women): 
  • Women in Night Shifts: Women can now work night shifts (7 PM – 6 AM) in all sectors, provided the employer ensures safety, transport, and obtains their consent.
  • Health Checks: Free annual health check-ups are mandatory for workers above a certain age (e.g., 45).

3. Strategic Impact

• For Youth: The “Gig Economy” recognition is crucial as India’s gig workforce is expected to reach 2.35 crore by 2030.
• For Women: Removing the ban on night shifts can significantly boost India’s low Female Labour Force Participation Rate (FLFPR).

UPSC Value Box

Q. With reference to the new Labour Codes in India, consider the following statements:

1. The Code on Social Security, 2020 mandates that platform aggregators contribute a percentage of their turnover towards a social security fund for gig workers.
2. Under the Industrial Relations Code, 2020, establishments with up to 100 workers can retrench employees without prior government permission.
3. The concept of a “National Floor Wage” was introduced under the Code on Wages, 2019, which is binding on State Governments.

Which of the statements given above is/are correct?

(a) 1 only

(b) 1 and 3 only

(c) 2 and 3 only

(d) 1, 2 and 3

Correct Answer: (b)