The Indian government’s ambitious drive to simplify and modernise the country’s complex labour laws culminated between 2019 and 2020 with the passage of four major labour codes.
The comprehensive legislations — covering wages, industrial relations, social security, and occupational safety, health, and working conditions — were designed to replace over 44 outdated labour laws and nearly 29 central enactments.
The aim was to promote ease of doing business, standardise key definitions such as ‘wages’, bring gig and platform workers under legal protection, and make compliance easier through digitised systems like self-certification.
The government envisioned that these reforms would lead to long-term benefits, such as reduced compliance burdens for businesses, expanded coverage for both formal and informal workers, and more efficient dispute resolution mechanisms in industrial relations.
However, over five years later, implementation has remained largely incomplete. This is because labour is a subject under the concurrent list of the Constitution, requiring both central and state governments to frame and notify rules. Despite most states and union territories having prepared draft rules by March 2025, many have yet to finalise and notify them.
States like Andhra Pradesh, Telangana, Maharashtra, Uttar Pradesh, Gujarat and Karnataka have initiated steps towards implementation, including changes, like extending daily work hours from nine to 10 and expanding overtime eligibility.
These moves, however, have ignited opposition from trade unions and labour rights groups. They argue that increasing the threshold for layoffs, retrenchments, and closures — from 100 to 300 workers — undermines job security.
Further, clauses that make it harder to form trade unions, prior notice before strikes and a sole negotiating union are seen as limiting workers’ ability to organise and advocate for fair treatment.
This drive for deregulation and greater business flexibility has led many to believe the scales are tipping too far in favour of employers, potentially eroding long-standing labour protections. The Code on Social Security, often hailed as one of the most forward-looking elements of the reform, has faced criticism for being more aspirational than actionable.
Although it formally includes gig and platform workers, its provisions on social security for the informal sector remain underdeveloped. Critics point out that the code lacks clarity on how benefits will be funded, how workers will be registered, and how entitlements like pensions or health insurance will be delivered.
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Given that over 90% of India’s workforce operates in the informal or gig economy, these shortcomings are especially concerning. Workers in these sectors fear the reforms fall short of securing real benefits. Additionally, enforcement mechanisms remain weak.
The government’s emphasis on digital self-certification and fewer physical inspections could allow non-compliant employers to bypass accountability. With inspectorates understaffed and many labour welfare boards facing funding issues, there are doubts about the state’s capacity to ensure that these laws are followed uniformly across regions.
As each state adopts slightly different rules, implementation becomes inconsistent and confusing. What results is a regulatory patchwork that creates uncertainty for employers and workers alike. Businesses struggle to understand which rules apply in which state, while workers often remain unaware of their rights and entitlements under the new regime.
This confusion and lack of uniform enforcement have left many businesses caught in the middle. Companies that operate across state lines face challenges in interpreting and complying with varied regulations.
The fear of inadvertently violating a rule or facing conflicting compliance expectations can discourage businesses from investing or expanding in certain states.
Meanwhile, workers, particularly those in sectors like construction, domestic labour and agriculture, continue to face exploitation and precarious working conditions. For them, the much-talked-about reforms have not translated into real-world improvements.
The implementation delays and weakening of safeguards have led to increasing agitation. Trade unions, such as the All India Trade Union Congress (AITUC), Centre of Indian Trade Unions (CITU), the Communist Party of India (CPI), and the All India Central Council of Trade Unions (AICCTU) have mounted nationwide protests. Their most recent demonstrations, including one on May 20, 2025, were aimed at demanding a rollback of the codes.
These groups argue that the changes restrict workers’ rights and consolidate power in the hands of employers. The political dimension of the issue is intensifying, with parties like the CPI calling on states such as Bihar to halt the implementation process. They claim the reforms serve corporate interests more than the common worker and warn of a growing imbalance in employer-employee relations.
Adding to the unrest, grassroots protests are gaining momentum. Workers in scheme-based employment — such as ASHA workers in Uttarakhand and construction workers in West Bengal — have taken to the streets, saying they have been left out of the reforms’ promised protections. For them, the new labour codes feel like hollow commitments. Many continue to lack access to minimum wages, healthcare, pensions, and secure employment.
In the face of this criticism, the government maintains that the labour codes are vital to India’s economic transformation. Officials argue that these reforms will help formalise the workforce, improve transparency, attract investment and generate jobs in the long run.
Supporters believe that a consolidated and business-friendly labour regime will make India more competitive globally.
However, real-world implementation has been far more complicated. States like Uttar Pradesh, Gujarat and Maharashtra have tried to tailor their versions of the codes to local economic realities, but this has raised concerns about disparities in worker protections.
A uniform and equitable rollout remains elusive. Labour experts argue that for the codes to succeed, they must be implemented fairly and with sensitivity to workers’ needs. There must be consensus across political lines and collaboration among governments, businesses and workers.
Trade unions should not be sidelined; rather, they must be partners in shaping effective and inclusive reforms. Moving forward, several steps are essential:
- harmonising state and central rules
- building inspection capacity
- ensuring transparency
- securing funding for social security
- educating workers about their rights
Equally important is making benefits portable, particularly for gig and migrant workers, so they don’t lose access to entitlements when they move jobs or locations. Without such efforts, the new labour codes may remain ambitious on paper but fall short in practice. They risk leaving behind the very workers they were meant to uplift — those in the informal sector who continue to work without contracts, protection or prospects.
Ultimately, the future of India’s labour reforms depends not just on legislation but on meaningful dialogue, political will and a commitment to equitable growth that puts workers and their welfare at the heart of policy.
Banner image by kailash kumar: https://www.pexels.com/photo/labour-day-12075976/
