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Analysis of India’s Labour Codes Reforms with Multi-Stakeholders Perspectives

Leave a Comment / Indian Economy, Public Policy, Skills Development Sector, State Economies, Women Empowerment / R. Subramoniam

Analysis of India’s Labour Code Reforms: A Multi-Stakeholder Perspective Analysis of India’s Labour Code Reforms: A Multi-Stakeholder Perspective R. Subramoniam September 23, 2026 Indian Economy, Public Policy, Skills Development Sector, State Economies, Women Empowerment Key Highlights The nationwide implementation of India’s four consolidated Labour Codes from November 2025 marks the most significant restructuring of the country’s labour law regulations since independence. The Codes aim to simplify compliance, extend social protection, and introduce labour market flexibility. Yet implementation faces challenges of federal fragmentation, uneven digital readiness, and contested power dynamics. This article offers a multi-stakeholder analysis of the new reforms through qualitative perspectives. It assesses the doctrinal overhaul of wage structures, social security, industrial relations, and working conditions, with particular attention to gig, platform, and informal workers. The article contributes an Integrated Labour Governance Readiness Model (ILGRM) and recommendations for policymakers, enterprises, and researchers. Introduction Prior to 2025, India’s labour regulatory framework comprised approximately 29 Union laws and over 100 State-level statutes, many of colonial origin. This fragmentation imposed heavy compliance burdens on businesses, especially MSMEs, while leaving nearly 90% of the workforce in the informal sector inadequately protected (NSSO, 2024). Global integration, the rise of the platform-based gig economy, and the demand for greater labour market flexibility made modernisation essential. The reform process, initiated by the Second National Commission on Labour (2002), culminated on 21 November 2025 with the Gazette notification implementing four consolidated Labour Codes. This shift moved from a fragmented, sectoral approach to a holistic, worker-centric framework seeking to balance ease of doing business with enhanced worker welfare and social security. The Four Codes: An Overview The reform consolidates existing laws into four comprehensive Codes: The Code on Wages, 2019: Unifies laws on wages, bonuses, and minimum wages. It introduces a standardised definition of ‘wages’ requiring basic pay to constitute at least 50% of total remuneration, a National Floor Wage, and stricter payment timelines. The Code on Social Security, 2020: Extends provident fund, health insurance, and gratuity to unorganised, gig, and platform workers. Aggregators must contribute 1–2% of turnover to a social security fund. Gratuity eligibility for fixed-term employees is reduced from five years to one year. The Industrial Relations Code, 2020: Raises the threshold for prior government permission for lay-off, retrenchment, and closure from 100 to 300 workers. It extends strike notice periods (to 60 days in public utility services) and requires 51% support for a sole negotiating union. A Reskilling Fund is financed by employers’ 15-day wage contribution per retrenched worker. The Occupational Safety, Health and Working Conditions Code, 2020: Consolidates safety, health, and working-condition standards. It formalises work-from-home, permits night shifts for women with safeguards, reduces annual leave eligibility from 240 to 180 days, mandates health check-ups for workers over 40, and recognises commute accidents for compensation. Key Doctrinal Changes and Implications The 50% wage rule increases long-term social security savings but may reduce take-home pay in the short term and requires payroll restructuring. The inclusion of gig and platform workers is historic, yet delivery through a government fund rather than direct employer contributions creates implementation distance. Raising the retrenchment threshold grants operational flexibility to mid-sized firms while eroding job security for workers in that band. Stricter strike conditions and the sole-negotiating-agent rule are viewed by unions as curtailing collective bargaining power. On the positive side, formal recognition of remote work, expanded leave eligibility, and equal-pay principles for contract labour modernise working-condition norms. Stakeholder Perspectives and Implementation Challenges Employer Concerns Industry bodies acknowledge long-term simplification benefits but highlight short-term cost increases of 4–10% for MSMEs arising from the 50% wage rule, expanded gratuity, and social-security contributions. Federal fragmentation is acute: labour is a concurrent Subject under the Constitution of India, and uneven State rule-making (Gujarat and Karnataka are progressing, others lagging) creates a compliance patchwork for multi-State organisations. Many small employers lack digital readiness for portals such as Shram Suvidha and E-Shram. Worker and Union Concerns Trade unions have labelled the reforms “anti-worker.” The raised retrenchment threshold is seen as facilitating easier lay-offs; fixed-term contracts are viewed as institutionalising temporary work; and the 51% threshold plus extended strike notice periods are perceived as weakening union voice. Gig workers remain outside the Industrial Relations Code’s definition of ‘worker,’ limiting collective bargaining. Delays in E-Shram registration and unclear fund utilisation raise doubts that promised benefits will materialise. Federal and Digital Challenges Divergent States rules produce regulatory uncertainty, uneven worker protections, and inconsistent enforcement under the ‘inspector-cum-facilitator’ model. Mandatory digital compliance risks creating a new digital divide: large corporates and tech-savvy workers may benefit, while rural MSMEs and older informal workers risk exclusion. Managerial Governance and HR Implications: The ILGRM Framework Any successful organisational adaptation requires synchronising five dimensions of the Integrated Labour Governance Readiness Model (ILGRM): Regulatory Readiness: Master Union Codes and relevant State rules. Operational Readiness: Restructure payroll, contracts, policies, and compliance calendars. Technological Readiness: Upgrade HRMS for digital filing and government-portal integration. Financial Readiness: Budget for higher statutory contributions, safety upgrades, and reskilling liabilities. Cultural Readiness: Train managers and communicate changes transparently to build trust. Immediate HR actions include conducting a 50% basic-pay audit, classifying all workers correctly (employee, worker, gig, contract labour), updating contracts and handbooks for remote-work and night-shift provisions, forming grievance-redressal committees where required, and launching E-Shram registration drives. Transparent communication on take-home-pay impacts is essential to mitigate anxiety. Flexibility Vs Security The Codes attempt a flexicurity bargain—greater hiring and firing flexibility in exchange for broader social security. In the initial phase the bargain appears asymmetric: flexibility provisions take effect immediately, while security mechanisms (gig-worker funds, benefit portability) are institutionally complex and will take time to operationalise. Workers may therefore experience the costs of flexibility before the benefits of security materialise, fuelling discontents. Digitalisation is a double-edged sword. It promises reduced corruption and greater transparency, yet presupposes digital access and literacy that remain uneven. Large corporates may gain; many MSMEs and informal workers risk exclusion. Sustainable success also requires revitalised tripartite dialogue on continuous mode. The reform process has been criticised

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New Delimitation and Women’s Reservation Bill: Constitutional Interlinkages and Policy Challenges

New Delimitation and Women’s Reservation Bill New Delimitation and Women’s Reservation Bill: Constitutional Interlinkages and Policy Challenges Prayaga Venkata Rama Vinayak May 12, 2026 Democracy and Institutions, Public Policy, Women Empowerment The defeated Delimitation Bill has been at the centre of political debates, since the last delimitation exercise, which was based on 1971 census, when the population was less by 39% than it is now. Delimitation is the process of redrawing the boundaries of parliamentary and assembly constituencies. This process is constitutionally mandated to ensure equal representation based on population. Article 82 clearly empowers parliament to enact the Delimitation Act to redefine constituency boundaries after every census. So far, the delimitation exercises have been conducted 4 times: 1952, 1963, 1973 and 2002. The delimitation processes have been relatively smooth in the past. In 1976, when the 42nd Constitution Amendment Act was passed, the total number of seats was frozen to the current number of seats, based on the 1971 census. This was done to encourage population control measures and was also brought about by keeping the interests of the southern states in mind, which have effectively implemented the population control measures among other factors like faster economic growth. This aimed to ensure the best performing states in terms of population control would not lose in terms of representation. Initially, this freeze was applicable until 2001 census. Subsequently, the Union Government had enacted the 84th Constitutional Amendment Act, which extended the freeze till 2026 census. It is pertinent to look at the long-overdue women’s reservation bill to critically analyse the delimitation bill, as both are inter-related. The current women’s reservation bill has been demanded for almost 30 years. The women reservation bill mandates 33% of total seats in Lok Sabha and state assemblies to women as their population have crossed over 50% in the country. The first women reservation bill was introduced in 1996 by HD Deva Gowda’s government. But this faced huge criticism from the opposition who demanded quota within the quota, and finally, the bill lapsed. Between the years of 1998 to 2004, there were several attempts made by Atal Bihari Vajpayee’s NDA Government to re-introduce the bill, but it did not materialise due to a lack of support in the parliament. In 2008, the UPA government tried to introduce the 108th Constitutional Amendment bill, which was passed by the Rajya Sabha but failed in the Lok Sabha. The final breakthrough was achieved by Modi’s government when 128th Constitutional Amendment Act was passed in 2023. This women’s reservation is applicable to the current SC/ST seats as well. The reserved constituencies change rotationally over a period of 15 years. But this Act was not immediately enforceable, as it depended on the 2026 census or after the completion of the delimitation process. Technically, after the 2026 census, both women’s reservation and delimitation are unavoidable. The reason for the current stalemate is the Modi government’s intention to implement the women’s reservation before 2029, which the opposition fears might generate some positive sentiments among women voters towards the ruling party. If political mileage is the main factor for derailing the implementation of women’s reservation now, women may be forced to wait till 2034 general election, when the next opportune moment would be available. In that context, the 131st Constitutional Amendment Bill to fast-track women’s reservation process by linking it with the delimitation based on the 2011 census data is timely and welcome. The opposition opposed delimitation based on 2011 census data, as they rightly worried about the decrease of the parliamentary representation of the southern states, where they are politically stronger comparatively. However, the Union Government assuaged the apprehensions by assuring that there will be no decrease in current representation in the parliament for the southern states, by proposing a proportionate 50% increase uniformly for all states. If the current 543 seats are to be increased to 850 seats as per the 50% formula, the individual state’s seats, including the southern states, will remain unchanged, as shown in the below table. The very slight deviation arises due to the rounding off, as decimal number of seats cannot be increased. Southern States Current No. of Seats in Lok Sabha Current % of Representation in Lok Sabha Proposed No. of Seats in Lok Sabha Proposed % of Representation in Lok Sabha Andhra Pradesh 25 4.60 38 4.47 Telangana 17 3.13 26 3.06 Tamil Nadu 39 7.18 59 6.94 Karnataka 28 5.16 42 4.94 Kerala 20 3.68 30 3.53 Average Representation of Southern States 4.75 4.59 Total Representation of Southern States 129 23.76 195 22.94 Source: Authors Calculations Unfortunately, the delimitation bill introduced in April 2026 did not detail the methodology of delimitation. The verbal assurances do very little when it comes to enforcing. We have seen instances like the announcement of special status to Andhra Pradesh by then Prime Minister Dr.Manmohan Singh in Parliament, which never fructified on the ground. The ruling establishment also argues that the delimitation increases productivity of legislatures as they will have less average population they are representing. It also allows diverse people to have a voice in the parliament. Delimitation is very much essential which in turn triggers the much-awaited women reservation in Parliament. These historic and game changing moments can be achieved with consensus from all stakeholders. The recent rejection of the bill allows our policy makers to rethink and re work on the short comings in the current draft with wider consultations across the country. The Author is Public Policy Fellow at AgaPuram Policy Research Centre, Erode The views expressed by the author are personal and does not reflect or represent the views of the AgaPuram Policy Research Centre.