Labour Codes in India
Indian Economy
- PYQs6
- Articles1
Background
Labour reforms are a significant policy area impacting economic growth, social justice, and industrial relations. UPSC often asks about the objectives, provisions, impact, and criticisms of such reforms on various stakeholders.
India has enacted four new labour codes (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) to consolidate and simplify existing labour laws, aiming to improve ease of doing business and ensure worker welfare.
Facts & tables
- Objective
- Consolidate 29 central labour laws into 4 codes to rationalize labour laws, promote ease of doing business, and ensure worker welfare.
- Implementation Status
- Rules for all four codes have been notified, completing the implementation framework.
- Key Criticisms
- Trade unions and academics argue provisions are regressive, detrimental to worker interests, and may lead to informalisation.
- Specific Concerns
- Issues with Fixed-Term Employment, minimum wage definition, gig worker social security, and trade union recognition thresholds.
| Code Name | Year |
|---|---|
| The Code on Wages | 2019 |
| The Industrial Relations Code | 2020 |
| The Code on Social Security | 2020 |
| The Occupational Safety, Health and Working Conditions Code | 2020 |
| Type | Reference |
|---|---|
| Conceptual area | Industrial Relations |
| Conceptual area | Labour Law Reform |
| Conceptual area | Social Security |
| Body | Role |
|---|---|
| Ministry of Labour and Employment | Formulates and implements labour policies and codes |
Prelims angle
Prelims angle: Multi-statement analysis
Prelims angle: Factual recall
- Four codes: Wages, IR, Social Security, OSHWC.
- Aim: Consolidate laws, ease of doing business, worker welfare.
- Criticisms: Worker vulnerability, informalisation, diluted union power.
- Key issues: FTE, minimum wage, gig workers, union recognition.
- Rules implementation completed, but concerns persist.
| Year | Framing tags |
|---|---|
| 2026 | Factual recall, Multi-statement analysis |
| 2024 | Multi-statement analysis, Factual recall |
| 2021 | Multi-statement analysis, Factual recall |
| 2020 | Multi-statement analysis, Conceptual understanding |
| 2019 | Statement-based questions, Conceptual understanding |
| 2018 | Factual recall, Conceptual understanding |
Timeline
-
Industrial Relations
Conceptual area
-
Labour Law Reform
Conceptual area
-
Social Security
Conceptual area
-
Prelims 2018
Factual recall, Conceptual understanding
-
Prelims 2019
Statement-based questions, Conceptual understanding
-
Prelims 2020
Multi-statement analysis, Conceptual understanding
-
Prelims 2021
Multi-statement analysis, Factual recall
-
Prelims 2024
Multi-statement analysis, Factual recall
-
Prelims 2026
Factual recall, Multi-statement analysis
-
Implementation complete, but workers still vulnerable
The four new Labour Codes aim to modernize India's labour laws by consolidating existing legislation. While intended to improve ease of doing business and worker welfare, their implementation rules have drawn significant criticism for potentially weakening worker protections, promoting informalisation, and diluting trade union rights.
See also
Past papers
2018–2026 · 6 questions
In the news
Implementation complete, but workers still vulnerable
The four new Labour Codes aim to modernize India's labour laws by consolidating existing legislation. While intended to improve ease of doing business and worker welfare, their implementation rules have drawn significant criticism for potentially weakening worker protections, promoting informalisation, and diluting trade union rights.
Try these PYQs
With reference to the casual workers employed in India, consider the following statements:
1. All casual workers are entitled for Employees Provident Fund coverage.
2. All casual workers are entitled for regular working hours and overtime payment.
3. The government can by a notification specify that an establishment or industry shall pay wages only through its bank account.
Which of the above statements are correct?
Statement 1 is not correct: The Government had launched a scheme viz Casual Labourers (Grant of Temporary Status and Regularization) Scheme of Government of India, 1993. As per the scheme, Temporary status would be conferred on all casual labourers who were in employment and who have rendered a continuous service of at least one year, which means that they must have been engaged for at least 240 days (206 days in case of offices observing 5 days week). Statement 2 is correct: The Supreme Court has decreed that casual workers are also entitled to social security benefits as stipulated in the Employees Provident Funds and Miscellaneous Provisions Act. The Court's ruling stemmed from its interpretation of Section 2(f) of the EPF Act, wherein the definition of an "employee" encompasses a broad scope, including any individual engaged directly or indirectly in connection with an establishment's work and receiving wages. A bench of the Supreme Court affirmed this viewpoint. Statement 3 is correct: The government has the authority to specify through a notification that an establishment or industry is obligated to disburse wages exclusively via its bank account.
Which of the following international conventions have **not** been ratified by India?
1. Employment Policy Convention
2. Abolition of Forced Labour Convention
3. International Convention on the Protection of the Rights of All Migrant Workers and Members of Their Families
4. Geneva Convention Relative to the Protection of Civilian Persons in Time of War
5. Convention on Reduction of Statelessness
Select the answer using the code given below:
Statement 1 is Incorrect: The Employment Policy Convention, 1964 (ILO No. 122) is one of the International Labour Organization's governance (priority) conventions. India ratified it on November 17, 1998. Statement 2 is Incorrect: The Abolition of Forced Labour Convention, 1957 (ILO No. 105) is a fundamental ILO convention. India ratified it on May 18, 2000. Statement 3 is Correct: The International Convention on the Protection of the Rights of All Migrant Workers and Members of Their Families (1990) is a UN multilateral treaty. India has neither signed nor ratified this convention. Statement 4 is Incorrect: The Geneva Convention Relative to the Protection of Civilian Persons in Time of War (1949) (also known as the Fourth Geneva Convention) was ratified by India on November 9, 1950, and implemented domestically via the Geneva Conventions Act, 1960. *(Note: The question setter likely confused this with the 1951 Refugee Convention, which was adopted in Geneva and which India has not ratified).* Statement 5 is Correct: The Convention on Reduction of Statelessness (1961) has not been signed or ratified by India. India is not a party to the 1951 Refugee Convention, the 1954 Convention on Statelessness, or this 1961 Convention. *Conclusion:* Factually, only conventions 3 and 5 have not been ratified by India. However, among the given options, there is a discrepancy as no option perfectly matches "3 and 5". Since any correct answer must include the unratified conventions 3 and 5, Option D is the only possible choice by elimination.
With reference to Corporate Social Responsibility (CSR) rules in India, consider the following statements:
1. CSR rules specify that expenditures that benefit the company directly or its employees will not be considered as CSR activities.
2. CSR rules do not specify minimum spending on CSR activities.
Which of the statements given above is/are correct?
* Statement 1: Correct. The Corporate Social Responsibility (CSR) rules in India state that expenditures aimed at benefiting the company's business interests or its employees (such as those related to employee welfare or activities that are a direct business benefit) will not be counted as CSR activities. The focus of CSR is on activities that benefit society at large and not just the company or its direct stakeholders. * Statement 2: Incorrect. Under the Companies Act, 2013, CSR rules do specify a minimum spending requirement. Companies meeting certain criteria (like having a net worth of ₹500 crore or more, or an annual turnover of ₹1,000 crore or more, or a net profit of ₹5 crore or more) must allocate at least 2% of their average net profits over the last three years towards CSR activities. So, the correct answer is: A. 1 only
Consider the following statements :
As per the Industrial Employment (Standing Orders) Central (Amendment) Rules, 2018
1. if rules for fixed-term employment are implemented, it becomes easier for the firms/companies to lay off workers
2. no notice of termination of employment shall be necessary in the case of temporary workman
Which of the statements given above is/are correct?
Statement 1 is correct: Fixed-term employment and ease of layoff. The amendment introduces the concept of "fixed-term employment" for the first place. While it doesn't automatically make layoffs easier, it allows companies to hire for specific projects or periods without them becoming permanent employees. This can potentially make restructuring or downsizing during economic downturns easier for companies with fixed-term employees compared to permanent ones (who have greater job security). Statement 2 is correct: Notice period for temporary workmen.
The amendment clarifies that no notice period is required to terminate the employment of a "temporary workman," which is someone hired for a specific, non-continuous job or for a short period.
With reference of the Indian economy after the 1991 economic liberalization, consider the following statements:
1. Worker productivity (per worker at 2004-05 prices) increased in urban areas while it decreased in rural areas.
2. The percentage share of rural areas in the workforce steadily increased.
3. In rural areas, the growth in non-farm economy increased.
4. The growth rate in rural employment decreased.
Which of the statements given above is/are correct?
Statement 1 is incorrect. After the 1991 economic liberalization, worker productivity increased both in urban and rural areas. While urban areas experienced higher growth, rural areas also saw improvements, especially with the rise in non-farm activities. Statement 2 is incorrect. The percentage share of rural areas in the workforce has steadily decreased since liberalization. This is because more people have moved to urban areas for employment in the industrial and service sectors, contributing to the growing urban workforce. Statement 3 is correct. In rural areas, the growth of the non-farm economy increased significantly. With liberalization, the diversification of rural economies into sectors like manufacturing, construction, and services grew, reducing the dependency on agriculture. Statement 4 is correct. The growth rate in rural employment decreased after 1991. While the rural economy diversified, the agricultural sector did not provide enough employment opportunities to absorb all the labor, leading to lower growth in rural employment. Hence, option B is the correct answer.
Show 1 more PYQs
International Labour Organization's Conventions 138 and 182 are related to -
The International Labour Organization's Conventions 138 and 182 are both related to child labour. Convention No. 138 is the Minimum Age Convention. It requires member countries to set a minimum age for employment and work towards the elimination of child labour. Convention No. 182 deals with the Worst Forms of Child Labour. It calls for the prohibition and elimination of the most severe forms of child labour, such as slavery, forced labour, and trafficking. These conventions are considered fundamental by the ILO, meaning all member states must respect, promote, and work towards their aims regardless of ratification.